BILL OF LADING Strategies to Protect Your CompanyPosted On 23th August 2015
Let’s assume you’ve never had a course in the regulatory and legal issues regarding Bills Of Lading – (BOLs), much less attended a logistics training course or formal apprenticeship program; it’s the norm today so don’t feel shortchanged. I’d like to give you a little background so you are not quite so much a “babe in the woods” who will learn the hard way, possibly with dire consequences for your company.
The freight world has been moving rapidly away from the regulated environment of the 1970s. Still with us are such relics of regulation such as carrier tariffs and the NMFC product classification system. Today we have large discounts from the posted tariff prices, but in the past everything used to move AT TARIFF, discounts were illegal and the common carrier sales reps would throw all kinds of goodies – the best ballgame tickets, etc. to those who made the carrier selections. Carriers would also compete on the basis of service and lower transit times; they just were not allowed to compete via the price mechanism.
All this changed with deregulation pushed and approved by President Carter (not Reagan! as many think). Suddenly carriers had to compete on price. Also, the prices had to be adjusted to the supply and demand of each lane. Freight Brokers and 3PLs rushed into arbitrage the uneconomic differences down; it is an exciting new world and technology has only accelerated the pace of change.
However, certain vestiges of the old regulated system and attitude are still with us. These vestiges of the old way of doing business are generally very pro-carrier and overall they conspire to cost the shipping public money. Inflexible tariffs militantly enforced by carriers, the NMFC system with its density and packaging inconsistencies that are patently unfair to shippers of certain commodities, and the legal system whose decisions are based largely on very pro-trucker past where the carriers wrote the tariffs, and the tariffs were the law.
Whether you are a traffic manager, shipping manager, customer service rep, purchasing manager, CFO, or CEO, we all ultimately have the responsibility to aggressively protect our company and clients from unfair charges from carriers. The Bill of Lading, properly amended, is the first and best line of defense.
A key strategy derives from the maxim “Know your freight.” As the shipper or the freight payor, you have the primary and legal responsibility to know the correct NMFC number of each product you ship, its corresponding density, and its corresponding class. Any failure on your part to properly list these descriptions correctly makes all parties to the shipment liable not just for extra charges, but for any and all consequences stemming from that failure. Of course, if you handle hazardous shipments your liability for such negligence skyrockets but it also rises to an unacceptable level under many other circumstances.
Ideally, you will have the weights and measurements of each product in an online catalog or Product Catalog, where, in case of a challenge by an inspection from a carrier, you can point them to the catalog or print it out. FreightRun.com has such a Product Catalog and once you log in it would be a great idea to invest some time and put all your products in there, with their corresponding NMFC number and density. You can then create BOLs automatically for online shipping quickly. Even if you are using the automated LTL or online full truckload (FTL) pricing, your online Product Catalog will come in handy to create those BOLs as well.
On the Bill of Lading, it would be wise to use weights that you have actually weighed on a certified scale, great idea to print out the receipt and attach it to the signed by driver BOL. Don't forget to note on the BOL the outside dimensions of the package you are shipping.
One warning flag for you on NMFC and Class should be if the class you want to ship under is lower than the class Density Class (If you use our Freight Calculator, it will automatically calculate the Density Class for you). If you are going to ship at the lower class be sure you have the correct NFMC number to match the density of the freight. Confer with your Shipping Specialist at FreightRun.com if you are having trouble figuring out the correct NMFC number, they can find the correct NFMC number and description and enter it into the Product Catalog for you.
Know your Receiver and their requirements and customize the BOL so as to protect you both. Use Google’s StreetView to look at the destination address and then call the receiver to check the address you have. Cover all the obvious stuff: is this a delivery at a residential, non-commercial location, or is this a B2B shipment and they have a truck deck high receiving dock, adjustment plate, and normal business hours?
Certain carriers prefer to charge for the use of their liftgate truck and claim driver safety, etc. when it is often driver impatience or convenience that caused the charge. In order to be in a better position to fight such charges that are added by carrier we like to write, especially when we know the receiver expects to hand unload the freight, “NO liftgate required: Receiver will hand unload themselves quickly. No additional charges at destination authorized unless approved in real-time by shipping manager available 24/7 at cell xxx.”
You must also communicate with your receiver that you, and thus they, will be charged for all and any additional charges accepted at the destination. The receiver must be professional and refuse additional services that were not authorized by you the Freight Payor.
Whatever is worth doing in business is worth writing down. Bills of Ladings are no exception. Describing freight properly on the BOL, and knowing your receiver’s requirements precisely, noting allowed accessory charges in advance, and noting to the Carrier that extra service charges beyond those noted are not OK without your explicit authorization, all protect your company in small and profound ways.
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