Bill of Lading Legal Requirements: What You Need to Know
In the complex world of shipping and logistics, the bill of lading stands tall as a legal document that embodies the rights, obligations, and responsibilities of parties involved in the transportation of goods. The bill of lading legal requirements serve as the backbone of this vital document, dictating its form, contents, and compliance with applicable laws and regulations.
Whether you are a shipper, carrier, consignee, freight forwarder, or any other party engaged in the transportation process, understanding the legal requirements surrounding the bill of lading is one of the most important aspects you need to learn.
If you are looking to familiarize yourself with the legal requirements of the bill of lading, you’re at the right spot. In today’s guide, we will discuss:
- The basics of a bill of lading and its importance
- What role do different stakeholders play in BOL
- What is federally required to be on a bill of lading
- Some additional items that are sometimes on a bill of lading
- Important clauses and provisions on a BOL
- How Vector’s eBOL solution streamlines the whole process
Let’s start right from the top with a refresher.
What Is A Bill of Lading?
A bill of lading is, at its most basic, a legal document. It protects the shipper, the customer, and the carrier—all in one document. The bill of lading acts as a contract between all parties.
Here’s the sequence of events: The shipper signs off that the carrier has loaded all assigned cargo. Then the carrier verifies the information on the bill of lading and delivers the cargo to the consignor. After that, the consignor signs for the product once it arrives as expected.
Your bill of lading is evidence that the shipper has been permitted to haul their goods. Then it’s a receipt for delivery. Finally, the bill of lading acts as a title of ownership of goods.
Initially, the shipper owns the product. Next, the shipper releases the product into the care of the carrier. Finally, the consignee receives and signs to obtain possession of the cargo.
Now let’s review why the bill of lading matters so much.
Why Is A Bill Of Lading Important?
The bill of lading is one of the most important documents in the entire logistics industry. It protects the needs of all 3 major parties in a shipping transaction. Shippers, carriers, and consignees ensure protection during all stages of the process.
Essentially, there’s proof at each step of the process that cargo is being shipped as expected. You’re ensuring the correct type, quantity, and destinations for the product. By having a legal document like a bill of lading, you can pursue legal recourse if something is incorrect.
You might be looking for an example. Let’s say the consignor is anticipating 10 pallets to be delivered to them. The carrier delivers only 9 pallets. The bill of lading now serves as protection for the party that isn’t responsible: either the shipper or the carrier. In this example, the bill of lading states only 9 pallets were shipped. Therefore, the bill of lading protects the carrier from any recourse.
The carrier has delivered exactly what the shipper provided them. This now allows the consignor to communicate with the shipper to find out where the error occurred between them. Meanwhile, the carrier moves on and will receive pay for their work as expected.
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Roles Of Different Parties In Bill Of Lading
When it comes to the bill of lading for road transport, there are 3 key players involved in preparing this important document: shippers, carriers, and freight forwarders. Each of these has specific roles and responsibilities in ensuring that the bill of lading is accurate and complete. Let’s discuss the details and understand the significance of their contributions.
Shippers
Shippers are typically the ones who initiate the transportation process and engage the services of carriers or freight forwarders. In completing the bill of lading, they provide essential information about the shipment. This includes details such as the shipper’s name and address, the consignee’s name and address, the description of the goods being shipped, the quantity or weight of the goods, and any special instructions or requirements.
Additionally, shippers must ensure that the information provided is accurate and reflective of the actual goods being transported. They should also comply with any regulatory requirements or industry standards related to the shipment.
Carriers
Carriers have their own role in completing the bill of lading. Carriers need to carefully review the information provided by the shipper and verify its accuracy. They should ensure that the details mentioned in the bill of lading align with the actual shipment.
Carriers are also responsible for accurately documenting any changes or damages that occur during transportation. They must note any discrepancies or issues that arise in the bill of lading to provide an accurate record of the condition of the goods at the time of pickup or delivery.
Freight Forwarders
Freight forwarders work closely with shippers and carriers to ensure that all necessary information is included in the document. They review and consolidate the information provided by the shipper, validate its accuracy, and liaise with carriers to finalize the bill of lading.
Legal Requirements Of The Bill of Lading
There’s so much information on the bill of lading. However, federal law requires certain information on a bill of lading. The Federal Motor Carrier Safety Administration, or FMCSA, lists the following requirements:
- Legal or trade name of the consignor
- Legal or trade name of the consignee
- Origin name and address
- Destination name and address
- Quantity of cargo
- Description of freight
- Weight, volume, or measurement of freight (if applicable to the rating of the freight)
Every carrier should carry a bill of lading showing, at a minimum, all of this information during a shipment. This isn’t all of the information on a bill of lading, however.
What Else Is On The Bill Of Lading?
Beyond the legal minimums, bills of lading often include a lot of additional information. Often these are for a carrier’s benefit. Below are some examples:
- Freight payment terms (including whether prepaid or collect-on-delivery basis)
- Special instructions
- Hours of operation for both the origin and destination
- Appointment times, if applicable
- Carrier information (SCAC code, MC number, trailer number, seal number, and so on)
Now that we know what is legally required on a bill of lading, let’s discuss the important clauses and provisions that not only complement the legal requirements but also play a crucial role in safeguarding the interests of all parties involved in the process.
Important Clauses & Provisions In The Bill Of Lading
The bill of lading includes clauses and provisions that define the liabilities and obligations of carriers and shippers. These clauses set the legal framework and provide clarity on the rights and responsibilities of the parties involved. Some common clauses and provisions that may be included are:
Limitation Of Liability
The bill of lading often contains a limitation of liability clause which restricts the carrier’s liability to a certain predetermined amount in case of loss, damage, or delay. This clause helps protect carriers from excessive financial liability while providing a reasonable level of compensation to the shipper.
Indemnity
Some bills of lading include an indemnity clause which states that the shipper will indemnify and hold the carrier harmless against any claims, damages, or liabilities arising from the transportation of the goods. This clause ensures that the shipper takes responsibility for any losses or damages caused by factors beyond the carrier’s control.
Force Majeure
A force majeure clause may be included in the bill of lading to address unforeseen events or circumstances that are beyond the control of either party, such as natural disasters, strikes, or government actions. This clause protects both the carrier and the shipper from liabilities or obligations that may arise because of these unavoidable events.
Insurance Requirements
The bill of lading often specifies insurance coverage sold or procured or provisions that the shipper or carrier must comply with. This ensures that adequate insurance coverage is in place to protect the goods during transit. It includes the type of insurance, coverage limits, and the party responsible for obtaining and maintaining the insurance.
Jurisdiction & Dispute Resolution
Certain bills of lading include a clause that determines the jurisdiction in which any disputes arising from the transportation will be resolved. It also outlines the preferred method of dispute resolution like arbitration or mediation. These clauses provide clarity on the legal framework for resolving any conflicts that may arise.
These clauses and provisions are designed to protect the interests of both carriers and shippers, clarify their respective liabilities and obligations, and establish a framework for resolving disputes. Carriers and shippers carefully review and understand these clauses before entering into a contract of carriage to ensure they are aware of their rights and responsibilities.
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Formats Of The Bill Of Lading
So you know what the bill of lading is. You also know what it’s for and what’s required to be on it. But how do people distribute and process the bill of lading?
For years, paper bills of lading were the only option. If you’re a carrier, you likely got the bill of lading either from a broker or directly from the shipper. There’s no requirement for a company to issue a “standard” bill of lading. They do exist, though, such as the Uniform Straight Bill of Lading.
Shippers often will provide their own crafted bill of lading for you. These are tailored to simplify the necessary information for the shipper in particular.
Here’s a quick side note here. Some shippers may attempt to provide you with only a “work order” or a “pick ticket.” Be wary of this as a carrier because it doesn’t serve the same legal protections as the bill of lading as described above. It doesn’t meet the aforementioned legal requirements of what’s on a bill of lading.
Electronic Bills Of Lading: More Efficiency, Less Risk
In recent years, the electronic bill of lading has become more popular, and with good reason. Aside from simply cutting down on clutter, electronic bills of lading speed up the process for all parties. They also provide a much higher level of efficiency with improved workflows. All of the parties can locate the same information at all times.
You can view electronic bills on a computer or through a mobile device. Furthermore, it’s extremely simple to email the document or even print it out if necessary. Better yet, electronic signatures are now also allowed in many cases, which makes the electronic BOL that much more convenient.
How You Can Reduce Costs & Improve Visibility With Vector’s E-Bill Of Lading Capabilities?
Vector‘s Yard Management Solution digitizes the bill of lading even if it originated in paper form. In addition to minimizing paper, the solution offers a range of benefits that can help reduce transportation costs and improve visibility throughout the shipping process. Here’s how digitizing the facility carrier experience can improve yard operations:
Cost Savings
Say goodbye to the expenses associated with traditional paper-based documentation. With Vector’s digital documents, you can eliminate the costs of printing, storing, and physically shipping paper documents. This shift to a digital platform significantly reduces administrative expenses and operates more cost-effectively.
Time Efficiency
Vector’s YMS streamlines the entire pickup and delivery process, saving all logistics partners time. The platform enables faster creation, sharing, and processing of shipping documents. By eliminating manual handling and physical transfers, you can expedite your workflow and meet critical deadlines with ease. This time efficiency translates into improved productivity for your business.
Accuracy & Data Integrity
Experience enhanced accuracy and data integrity compared to traditional paper-based processes. Utilizing advanced technology, Vector automatically enhances the quality of images. It efficiently scans the document and converts them into digital data. Moreover, the app also recognizes and converts handwritten information into digital text, ensuring accurate and seamless digitization of documents.
Real-Time Visibility
Gain better visibility and real-time tracking of activity happening in your yard. With Vector, you can monitor the progress of your goods at every stage, from pickup to delivery. This heightened visibility allows you to proactively address any issues, mitigate risks, and make informed decisions to optimize your logistics operations. Stay in control of your shipments with ease.
Seamless Collaboration & Communication
At Vector, our electronic bill of lading software facilitates seamless collaboration and communication among all stakeholders. Shippers, carriers, consignees, and other parties can securely access and share shipping documentation in real time. This eliminates physical document exchanges, reduces communication gaps, and enables efficient collaboration.
Integration Made Easy
Our eBOL solution seamlessly integrates with your existing systems and processes. You can incorporate the digital platform into your current workflow without disruptive changes or costly infrastructure updates. Enjoy smooth data exchange and compatibility with other supply chain management tools and systems you rely on, maximizing the value of your existing investments.
Roadside Inspection Requirements
Finally, let’s address driver responsibility and legal requirements concerning road safety and inspections.
Roadside inspections are an unavoidable eventuality for every driver. Drivers and carriers are looking to avoid violations during these inspections. You can read more about why here.
So what are the legal requirements of the bill of lading during a roadside inspection?
The short answer is: There aren’t any.
Shippers should be providing carriers with bills of lading. Some carriers may have their own internal bill of lading for use inside the truck. Yet others may be using the aforementioned electronic bill of lading. But ultimately by FMCSA standards, there’s no regulatory requirement to keep a copy of the bill of lading inside the vehicle for inspection purposes.
At most, you may wish to provide a copy as a courtesy to the officer. Any of the above methods would suffice for this.
The only real FMCSA regulation regarding bills of lading is that a carrier must retain each of them for at least one year. However, these aren’t required to be kept inside the truck itself.
Easier Than You Think
The bill of lading, despite its significance in the logistics industry, is ultimately a straightforward document with simple requirements and uses. It’s understandable that in the logistics industry, legal jargon makes paperwork and documentation a tad overwhelming. However, the bill of lading legal requirements is nothing to fret over.
To streamline your operations and eliminate potential risks associated with paper documents, embrace the electronic bill of lading. Invest in the future, be proactive, and take control of your documents. With the electronic bill of lading, you can stay ahead of the curve, simplify your processes, and ensure the smooth flow of your shipments.
Now is the time to make a choice that will positively impact your logistics operations. Embrace the power of technology and explore Vector’s electronic bill of lading software. With our user-friendly and efficient solution, you can revolutionize your documentation processes, reduce errors, and gain a competitive edge in the industry.
Don’t wait any longer. Take action today and discover how Vector’s electronic bill of lading software can transform your logistics operations. Contact us now for a demonstration or to discuss how our solution can specifically benefit your business.
This post was written by Matthew Zandstra. Matt has been working in transportation and logistics dispatch for the past six years, both as a broker and direct to drivers. He’s familiar with various facets of relationships, technical systems, pricing mechanics, and commodities.
