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Bill of Lading (BOL) Defined & Its Importance

July 1, 2019 Anna Young

Bill of Lading

Definition of Bill-of-Lading (BOL)

Bill-of-Lading (BOL) is a required document in the shipment process that provides all parties, the consignor, consignee and carrier, with the pertinent details needed to ship the product and invoice it correctly.    

BOL complianceThree-Fold Function of the BOL

  • Acknowledges the Receipt of Cargo
  • Provides Evidence of Contract of Carriage
  • Documents Title of Goods

Some fail to recognize is the bill-of-lading exists as a legally binding contract between the freight motor carrier and the shipper that brings with it mountains of written and case law. 

The BOL is the formal contract between the shipper and freight provider, whether a motor carrier or freight broker, if there is not another contract between the parties that supersedes or augments the relationship between the freight provider and shipper.

Proof-of-Delivery (POD) provides written confirmation that the transportation of goods was received complete.  The signing of the BOL to acknowledge the product arrived as documented on the BOL is a critical step in the shipping process, but sometimes overlooked until there is a dispute.  With that said, it is critical the receiver validates the count and there is not damage to the freight before signing off on the BOL.  Once the BOL is signed free and clear, otherwise known as a Free BOL, there is no recourse for short ship or damage because at that point title has transferred as there is no way to prove theft or damage did not occur at the delivered facility.

Key Elements of a BOL include: 

  • keys to BOLDate
  • Name(s) and Address(es)
    • Ship From
    • Ship To
    • Third Party Bill
  • Freight Description
  • Freight Class
  • BOL #
  • PRO #
  • Freight Charge
    • Prepaid
    • Collect
    • 3rd Party
  • Purchase Order or Special Reference Numbers
  • # of Pieces, Packages, Cartons, Skids
  • Weight
  • DOT Hazardous Material Designation
  • Special Instructions

Difference between a Negotiable and Non-Negotiable BOL

A negotiable BOL instructs the carrier to deliver the goods to anyone in possession of the original endorsed negotiable bill, which represents control and title of goods.

A non-negotiable bill of lading designates a specific consignee the goods are to be shipped and does not represent ownership of the goods. 

A negotiable BOL must be used for a documentary sale.

BOL Types and Terms:

  • types of BOL'sStraight - The most common BOL.  It is a non-negotiable BOL that is typically used when the buyer still owes payment on the shipment.

  • Order - Opposite to "Straight BOL".  This is a negotiable BOL commonly when the goods are covered under a line of credit. 

  • Master BOL (MBL) - A MBL is used to summarize multiple BOL's under one document.

  • House Bill of Lading (HBL) - Created by a freight forwarder or non-vessel operating company (NVOCC) for ocean shipments.

  • House Airway Bill (AWB) -  Created by a freight forwarder or non-vessel operating company (NVOCC) for air shipments.

It should also be noted the road-freight industry is becoming increasingly technologically focused.  Paper and phone-based processes are still common.  However, it is hard to deny the impact automation has had and will continue to be had on documents like BOLs and PODs.  

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