What is a Bill of Lading and why is it important?

There are many important documentation processes that get used every day in order to ensure that deliveries and pickups are happening in good order. One of these integral documents is the bill of lading. Here are some key things to know about bills of lading:

What is a bill of lading?

A bill of lading is a legal document between the shipper of goods and the carrier, and details the type, quantity, and destination of the goods being carried.

The bill of lading also serves as a receipt of shipment when the goods are delivered at the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper, and receiver.

Why is a bill of lading important?

The Bill of Lading is the evidence of the contract entered into between the carrier and the shipper, or freight owner, in order to carry out the transportation of the freight as per the contract between the buyer and the seller.

This document is also used as a receipt, signed by the carrier, to confirm that the goods match the description listed on the paperwork, and that they have been received by the carrier in good order.

Lastly, the bill of lading is used to determine who pays for the freight charges and any customs fees, and to outline the liability and responsibility for the goods transferred from the seller to the buyer.

What information must be listed on the Bill of Lading?

There are many critical pieces of information that must be noted on a bill of lading. These include:

Shipper’s and consignee’s names and full address.
Piece count – meaning the total skids, cartons, etc.
Description of the goods.
Any special instructions for the carrier to ensure prompt delivery.
The date of the shipment.
PO and/or special account numbers used between the shipper and consignee for order tracking.
The ‘Must Arrive By Date’ or ‘Required By Date’.
All dangerous goods identifications and requirements.
The exact weight of the shipment.
The declared value of the shipment, if there is one.
Any special requirements for transportation and delivery — i.e. heat required, tailgate, etc.

What does F.O.B. stand for?

F.O.B. stands for Free On Board.

Free On Board indicates the point in the supply chain where the seller gives up ownership and the buyer accepts ownership of products purchased in a specific transaction.

Here are a few different examples:

F.O.B. Origin, Freight Collect:

FOB Origin refers to the legal fact that the buyer assumes title of the goods the moment the freight carrier picks up and signs the bill of lading at the origin pick-up location.

Freight Collect refers to the legal fact that the buyer is responsible for all freight charges. The buyer also assumes all risks of transportation, and is responsible for filing claims in the case of loss or damage.

F.O.B. Origin, Freight Prepaid:

Origin refers to the legal fact that buyer takes ownership at the time of carrier pickup.

Freight Prepaid refers to the legal fact that the seller accepts responsibility for all freight charges and freight claims exposure.

F.O.B. Destination, Freight Collect:

FOB Destination refers to the legal fact that the seller retains title and control of the goods until they are delivered. The seller selects the carrier and is responsible for the risk of transportation and filing claims in case of loss or damage.

Freight collect refers to the legal fact that the buyer is responsible for the freight charges.