If you are new to the world of freight shipping, there are vital documents that you will need to use and understand with just about every shipment you make. Two such documents that are required for any delivery are the Bill of Lading (BOL) and Proof of Delivery (POD). Both of these forms are equally important and must be properly filled out, executed, and countersigned for every shipment or delivery, regardless of the size of the shipment.
Whether you are a distributor or a supplier, it is essential you grasp the importance of these documents as well as the difference separating the two. They are not just pieces of paper; they are integral for protecting your company from liability. Briefly, a Bill of Lading is a written receipt of transportation of goods by the carrier, while a Proof of Delivery is a receipt that is signed as confirmation by the consignee after having received the cargo. Below, we will dive into the nitty-gritty of what these documents are and why they matter for freight shipping.
The Bill of Lading
As mentioned, the Bill of Lading is a legally required form that must be filled out prior to a freight shipment being hauled. This bill serves to guard both the carrier and shipper from liability. These forms are typically issued by the carrier to the shipper and will include comprehensive information on the type of cargo, the number of goods being shipped, and the terminal point for these goods.
A BOL can be created by either the shipper, the carrier, or a third person logistics (3PL) acting on the shipper’s behalf. This non-negotiable BOL serves three roles:
- Receipt for the cargo – The BOL is dispensed by the carrier to the shipper and in return are given are a receipt for the cargo. This acts as legal evidence that the shipper has received undamaged cargo.
- A document of title to the cargo – The record of title switches hands and allows for the freight to be handed over to the owner of the BOL. Once they have the BOL, they can hold onto or transfer those goods and BOL.
- A contract of carriage between the carrier and shipper – A BOL is a legally binding contract that evidences an agreement of shipment between the carrier and shipper.
What’s in a Freight Bill of Lading?
There are several details that must be truthfully filled out in order to satisfy legal requirements for any BOL to be considered legitimate. Such aspects include:
- Personal information – The full names, addresses, and contact info for both the shipper and the consignee. This information should be easy to find on the form and readable.
- Freight class: The National Motor Freight Classification (NMFC) has broken down goods into 18 classes based on:
- Density – Calculated by dividing the mass of the object, by the volume of that object. This is the most crucial factor in freight classification.
- Stowability – Is the item normally shaped and would it easily fit on a pallet?
- Portability – Does the item have special handling requirements? Does it require special care or storage? Does it need special machinery or extra people to move it?
- Liability – The probability of freight damage or freight theft, or damage to other freight in the truck.
- Description of items – Shipper notes the number of goods being shipped, the weight, dimensions and any other vital details that are necessary to safely transport these goods.
- Purchase Order Number – These reference numbers are essential for a delivery to be discharged for shipment or transferred after delivery.
- The pickup date – The specific date and time the cargo will be picked up. It can be used as a reference for tracking freight.
- Type of packaging – This will include whether you are shipping pallets, drums, crates, or cartons.
- Hazardous material – If you do have hazardous material, you are legally required to notify the carrier, and the specific rules and safeguards applied.
- Special instructions – If you have any additional requests or specific notes for the carrier, they should be included.
Various Types of BOLs
Your Bill of Lading depends on the specific method of transportation you choose to employ. Some examples of these are:
- Straight Bill of Lading – The most common type of BOL. This is used for shipping goods to a consignee that has already paid for the goods.
- Claused Bill of Lading – a BOL that states that damage has occurred to the cargo or that the products deviated from the delivery specifications. Also referred to as a “dirty bill of lading.”
- “To order” Bill of Lading – To order BOLs are negotiable forms that consent to the transfer of ownership of cargo from one party to another ultimate consignee listed within the document.
- Electronic Bill of Lading – As the name implies, it is simply a paperless, digital version of a BOL.
- Air waybill – AWBs are intended for air transportation. These are non-negotiable documents.
- Ocean Bill of Lading – A BOL meant for transoceanic transportation of cargo. Such documents can either be straight BOLS or to order BOLs.
- Inland Bill of Lading – Typically these are the first form given for an international shipment. These are employed for shipments of goods via road or rail.
- Multimodal Bill of Lading: MMBL is used when you utilize multiple shipping methods. So if you fly cargo from Los Angeles to Florida and then ship that cargo to Europe by ship, you would qualify for an MMBL.
Proof of Delivery Receipt
Currently, when a shipment is delivered, the onus is on the consignee to examine the cargo and ensure that everything is in order. This means that they are not only confirming the goods are present and accounted but that they have arrived without visible damage. A Proof of Delivery is a signed confirmation of these facts, post-delivery. The recipient of the cargo must sign this receipt and include the date of delivery.
A copy of this POD letter will be sent to the sender. This will confirm the delivery of the shipment in good order, which can then be pulled up for records or legal filings. This will include details like the time of delivery, delivery address, and the name and signature of the person who received the shipment.
Legally, a POD serves three roles that are nearly identical to the BOL:
- Cargo Receipt – This form states that the goods have been delivered. It accounts for the types of goods delivered, as well as all the specifications of those goods.
- Title to Cargo – States who the intended owner of the cargo is.
- Evidence of Contracted Carriage – The POD is the legal contract binding the carrier and consignee.
Boiled down, a BOL is filled out prior to shipment, while a POD is confirmed and signed after the shipment has arrived. The signature on a POD confirms two facts:
- The cargo has been delivered on time and without visible damage.
- The cargo is now the responsibility of the consignee, and any damage that occurs after the fact is the fault of the consignee.
When to Sign the Proof of Delivery
If you are the person receiving the shipment, it is essential that you thoroughly inspect the shipment before signing off on the Proof of Delivery. You must confirm that the shipment was intended for you, that the entirety of the shipment arrived, and that it was delivered undamaged. If you sign it and later find damage, you will have difficulty proving that the damage occurred during transport.
All too often, people receiving a shipment will sign the POD without inspecting the package. Whether this is out of ignorance, laziness, or lack of time, doing so can be a major mistake. A POD is not simply a receipt of delivery, but a receipt that the goods have been delivered safely. Any damage claim procedures start with the PD, so if you do not note issues or visible damage, you will be fighting an uphill battle.
Tips for Cargo Inspection
When your cargo arrives, be sure to do the following before you even consider signing a Proof of Delivery receipt:
- Record the whole procedure – Photograph and video evidence of the freight can make or break a liability battle over a damaged claim. Start collecting this information the moment the freight arrives on your lot and while it is being offloaded. To further protect yourself, request the shipper to photograph the goods before they are shipped off.
- Examine cargo with the driver – The delivery man should walk through this process with you that way they are aware of any issues or damage you note.
- Thoroughly inspect the cargo – Each piece delivered to you should be wholly examined for visible damage. Carefully review the packaging, the shrink wrapping, the pallets, the warning tape, for any issues such as tears, holes, stains, or other such damage. Ensure that packages have not been opened and resealed.
- Damaged freight – If you see visible damage, photograph it and make a detailed note of it on the Proof of Delivery. Even exceptions that look like minor wear and tear should be noted just to cover yourself. If there is serious damage to a package or pallet, point it out to the delivery driver. After that, with the driver as a witness, open the package up and see if the items contained within are also damaged. If items are damaged, make further note of this in the POD.
- Obtain driver confirmation – After you have gone through the entire shipment and made a note of any issues, obtain the driver’s signature or initials next to the damaged items’ notes.
- Look for courier notification – If a box is already ticked stating that the package was improperly packed, liability may shift from the carrier to the shipper.
Who should sign the Proof of Delivery?
Ideally, the person signing the POD should be the recipient that is listed on the shipment. Sometimes, however, the intended addressee is unavailable to physically attend the delivery and signed for the shipment. If this issue pops up, the intended recipient can allow someone to receive the cargo and sign on their behalf. In such times, the chosen substitute should be notified of the consequence of signing the POD prior to inspecting the packages.
That said, when someone else does sign on your behalf, it can muddle damaged shipment claims since it is harder to prove that the cargo was damaged during transit rather than after delivery. This is a reason for the chosen substitute to be extra methodical in their review.
Post POD Damaged Items
If you review the cargo and find damage, there are specific steps you should take in order to have the best chance of receiving compensation. These steps include:
- Take the cargo – Even if it is damaged, do not send the driver away with the goods. Instead, make a note of the damages in the POD and accept the cargo.
- Document everything – It is vital that you document the entire process, especially once you notice damage to the cargo. Document both the first inspection as well as the post-delivery inspection. Take notes of everything and keep copies of all the critical paperwork including the BOL and POD.
- Move the goods somewhere safe – Now that the goods are in your possession, it is your responsibility to prevent any further damage from occurring to those goods, especially because the carrier has the legal right to mitigate losses if they are found to be liable. Put these items somewhere safe and dry; where they will not have to be moved again.
- File the claim right away – You have 14 days to file a claim of damage. It is essential that you file right away and include the items damaged, the shipment number, and the estimated cost of damages.
- Pay the Carrier – In any legal proceeding, the claim will be voided if you do not fulfill your end of the contract by providing payment. Even if the goods are damaged, pay your bill.
The Bill of Lading and the Proof of Delivery are both critical documents that act as receipts and designate the chain of custody. Remember that it is necessary that these forms are filled out accurately and that the POD is not signed until your goods are inspected.
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