WHAT YOU SHOULD KNOW ABOUT YOUR FREIGHT CARRIER'S CONTRACT THE BILL OF LADING The transportation industry, like any other commercial enterprise requires certain kinds of documents or forms to conduct its business. The most important document, for this industry, is the Bill of Lading between the shipper and carrier. Bills of Lading have been in existence for many years, even as far back as the time of the Law Merchant in the Old World, when the law of commercial trading was largely that of the custom of merchants. They were the first legal security upon which bankers loaned money. The Bill of Lading is one of the most extensively used documents in our commercial life and yet is probably the least read document so utilized. To most, the Bill of Lading is more or less an elaborate sheet of paper, often limited as to size, with a lot of printed terms thereon which we never take the time to read, or perhaps it is impossible for some to read with the naked eye due to the small print customarily utilized in the interest of saving space. The law requires that when a carrier receives goods from a shipper to transport, a Bill of Lading must also be issued. The Bill of Lading acts (1) as a receipt issued by the carrier to a shipper for goods received for transportation; (2) As a contract between the carrier and the shipper for the transportation of the goods; and (3) evidence of title to the goods in case of dispute. The Bill of Lading shows in detail: 1. The name, address, and Zip Code of the shipper and receiver of the goods. 2. A full description of the articles being shipped in accordance with the provisions of the National Motor Freight Classification or other applicable tariff. 3. The actual weight of each differently described article shipped. 4. Special services desired or required on the shipment. From the foregoing, it can be seen that it is extremely important that the Bill of Lading be completed accurately, to eliminate any question as to the provisions of the contract. The necessity for accuracy is demonstrated by reference to Section 10 of the Contract Terms and Conditions which reads: "Section 10-Any alteration, addition, or erasure in this bill of lading which shall be made without the special notation hereon of the agent of the carrier issuing this bill of lading, shall be without effect, and this bill of lading shall be enforceable according to its original tenor." Attached as the last page of this booklet, is an example of the most common Domestic Bill of Lading format utilized by motor carriers. To assist in the proper preparation of this important document, each line or section of the Bill of Lading on which information must be inserted is explained below using the identification "Circle 1", "Circle 2", etc. The sample format attached as the last page is marked with a corresponding circled number and proper example. If these instructions are followed, there should be no questions developing as to the information contained on the Bill of Lading. Circle 1 Shipper assigned Bill of Lading number. Circle 2 Freight Bill or (PRO) number (Carrier assigns after shipment is picked up.) Circle 3 Date -- It is very important to show the actual date the shipment is accepted since the legal transportation charges are based upon the date the shipment is actually made or signed for by the carrier. (See printed provisions appearing on the Bill of Lading form marked with the letter A) Note also the carrier signature line (24) at the bottom of the form. If the freight is actually received by the carrier on a date later than that shown initially on the bill of lading, such date should be changed, or if space is provided for a date at the bottom of the bill of lading, such date will supercede the bill preparation date shown at the top of the bill of lading. Circle 4 Carrier Name - it is important that the name of the carrier issuing the bill of lading be shown in this space as that identifies the second party to the Bill of Lading Contract and indicates the carrier who becomes responsible for the shipment and assumes liability. Circle 5 Standard Carrier Alpha Code Designation - (Required only on motor carrier furnished Bill of Lading). Circle 6 Consigned to - Show exact name of the Consignee (Receiver of the goods), whether an individual person, party, firm or corporation. In numerous instances there are organizations, in the same locality, with similar names and without the exact name being fully shown, a misdelivery is possible. NOTE - When tendering a Collect on Delivery shipment, the letters "C.O.D." must be inserted before the name of the consignee, or "C.O.D." in red letters at least one (1) inch in height with a thickness of stroke 1/4 inch thick or greater must be stamped or printed across the face of all bills of lading and shipping orders. Circle 7 Street Address - The street address is very important in all cities or unincorporated communities. The consignee is exceedingly difficult to locate without knowing the exact and proper street address to which the shipment is to be delivered. Therefore, to avoid additional delivery charges, it is imperative that the destination address be the point where delivery of the freight will be made. Circle 7A City - The City or unincorporated community name is important as freight charges are based on the actual destination. Circle 7B County - The County name is not absolutely essential; however some states have several cities, towns or communities of the same name; therefore, it is necessary to pin-point the actual destination point in these cases by indicating the county in which the point is located. Circle 7C State Name - Self evident Circle 7D Zip Code - Mail Zip Code assists in the proper location of the delivery point and is a required part of the address. Circle 8 Shipper (the example - John Doe Company) - Complete corporate name should always be shown in this space and in the event the shipment is being made for the account of someone other than the actual shipper, their full name should likewise be shown in this space. Circle 9 Street Name and Number - Should be shown since some companies have several shipping locations in the same city, town or community from which shipments are made under the same name. Any subsequent question as to actual point of pick-up could be traced down immediately with such information. Circle 9A City or Community Name is essential as freight charges are based on the actual point of origin. Circle 9B County Name is not absolutely essential except under conditions set forth in 7B. Circle 9C State Name - Self evident Circle 9D Zip Code - is also required here as an assist to exact location of the shipping point. Circle 10 Routing - The receiving carrier should be shown and if there are to be other carriers involved in the through movement, they should be included, specifically by name and point of interchange. The motor carrier is not obligated to comply with the shipper's instruction beyond its own line; however in most cases carriers will, and do, comply with such instructions. Circle 11 Vehicle Number (on full truckloads only) - It is valuable to the shipper to record this number on the bill of lading for shipment tracing purposes in the event such becomes necessary. Circle 12 Number of Packages - It is extremely important that the correct number of packages be inserted on the Bill of Lading; also, when the transportation company picks up the shipment, an actual count should be made by both the shipper and carrier representative to insure that all packages called for are received and do actually leave the shippers dock. Many loss claims have been filed due to the lack of proper tally and checking at the time the Bill of Lading was issued. it is important to remember that when a number of packages are secured to a pallet, platform or skid, this constitutes a "package" and in such cases the carrier will sign for the number of skids or unitized packages tendered. Circle 13 HM Column - (See Note explanation at the bottom of the Bill of Lading for the use of this column.) Circle 14 Description of Articles, Special Marks and Exceptions - Freight charges are based on the actual articles received in transportation. it is a must that the correct, accurate and complete description be shown, It is the obligation of the carrier to collect the lawful transportation charges on a shipment actually received in transportation. The shipper and carrier are legally responsible that the consignment be correctly described, and both are subject to heavy penalty through court action instituted by the Interstate Commerce Commission for willfully misbilling for purposes of intent to defraud. Failure to properly describe articles for transportation and utilizing a description "one box", "one carton", etc., or the use of Trade Names or Brand Names in place of a proper commodity description, will necessitate and require the carrier to open the packages in order that he may determine the contents and assess the proper charges. Also, in numerous cases the transportation companies have assessed an improper freight charge as a result of not having a full and proper description. Shippers are requested to describe their shipments in terms published in the carriers tariffs. In this connection, it is extremely helpful if the tariff reference and applicable item number is placed on the Bill of Lading following the word description. Where more than a single commodity is shipped, each commodity must be separately described on the bill of lading. A good example of an incomplete or incorrect description is where a commodity is subject to classes based on density (weight per cubic foot) according to the Commodity description in the applicable tariff, and no density is shown in the description of the commodity on the bill of lading. Leaving this vital bit of information out of the description will usually result in the application of higher freight charges than should actually accrue to that shipment. To avoid such improper charges, shippers should be familiar with the process of determining density. Density is ascertained by the following mathematical process: I. Multiply the three extreme dimensions (in inches) of the article. II. Divide the total cubic inches by 1728 (one cubic foot is 12" x 12" x 12" = 1728") the result of the division being the number of cubic feet. III. Divide the weight of the article as packaged by the total number of cubic feet and the result will be the density of the commodity. IV. A sample calculation is: (For Box Size 28" x 32" x 18" - Weighing 26 lbs.) 1. 28" x 32" = 896" 2. 896" x 18" = 16,128 cubic inches 3. 16,128" divided by 1728" = 9.3 cubic feet. 4. 26 lbs. divided by 9.3 cu. ft. = a density at 2.8 pounds per cubic foot. NOTE -- This space on the Bill of Lading is also used to give the carrier special instructions in handling the shipment, e.g. shipper load, consignee unload, inside delivery, etc. Circle 15 Weight -- This is an essential part of the process of determining the transportation charge, as in most cases the total transportation cost is based on a rate per 100 pounds. Here again, through misbilling by virtue of less than the actual weight, the shipper and carrier are subject to penalty by action of the Interstate Commerce Commission where willful intent to defraud is shown; therefore, it is necessary that the correct weight of the commodities tendered be inserted on the bill of lading. Where several different commodities are shipped, and more than one line is used, the individual entry weight should be determined and shown on the bill of lading. Total weight for all commodities tendered should also be shown. Circle 16 Class - This may be inserted where known as an assist to the transportation company. Circle 17 Collect on Delivery - This provision is used only in cases where it is necessary for the motor carrier to collect the amount of an invoice directed to the consignee by the shipper. Confusion often exists on this term, as it does not apply to the actual collection of freight charges on collect shipments. The C.O.D. service is available for the benefit of a shipper who may not be familiar with the financial status or credit rating of his customer. The terms "C.O.D." must be shown on the face of the bill of lading when this service is to be performed. and on each individual package in the shipment, or otherwise noted on the shipping containers themselves to alert carrier operating personnel. (See Note against Circle 6 herein.) (Insert the amount of the C.O.D. in the space provided to be collected.) Only the following forms of payment will be accepted in payment of C.O.D. amounts: (1) cash, up to a maximum of $250.00; (2) bank cashiers checks; (3) bank certified checks; (4) money orders; or (5) personal checks of the consignee when so authorized in writing or by endorsement on the bill of lading and shipping order by the shipper. All checks and money orders should be made payable to the shipper (consignor). Circle 18 Remit C.O.D. to _____ This blank is used to insert the name and address of the party to whom the monies collected are to be forwarded. This is of course necessary since the shipper address shown on the bill of lading where the freight was received may have been a warehouse and be different from the address of the general office of the shipper where monies are to be received. Circle 19 C.O.D. Charges To Be Paid By - This question on the bill of lading relates to the fee that the carrier assesses for the collection of the C.O.D. amount, and is paid by the party indicated, either by the shipper, in which case the fee would be "Prepaid" or by the consignee, with the fee being "collect". Circle 20 Valuation Certification -- Some commodities are subject to classes which are dependent upon released value, a limitation of the carriers' liability in the event of loss or damage. It is essential that this certification be inserted on the bill of lading at time of shipment, where applicable, in order to enable assessment of the proper transportation charges. When this certification is made, the carrier is under no obligation to pay more than the actual figure shown in the certification in the event of loss or damage. For example, on the shipment of Engines used as an example, weighing 3,000 pounds, released to a value not exceeding $2.50 per pound, the actual invoice value, as indicated in the C.O.D. amount is $5.33 per pound ($16.000.00 - 3,000 lbs.). However, the carrier would pay no more than the $2.50 per pound released value certified. Of course the release as to value carries with it a reduced transportation charge and is only available on specified commodities. In these instances it is also helpful if the description of the commodity in the "Description" section of the bill of lading contains reference to the value provisions being used. Circle 21 Non-Recourse Clause - This may be executed where the shipper does not want to be responsible for the inability of the carrier to effect collection of the freight charges from the consignee at destination. With this stipulation being signed by the shipper, the carrier does not have recourse for collection of charges from the shipper, on a freight charges collect shipment in the event the consignee cannot, will not, or does not pay the lawfully assessed transportation charges. In some cases the consignee desires to reconsign or divert to some destination beyond, and with this stipulation signed, the shipper could not be held responsible for the entire transportation charge from point of origin to the new destination. Circle 22 Freight Charges - Fairly well self-explanatory, however the bill of lading terms and conditions state that the carrier will collect all freight charges due before releasing the shipment unless the bill of lading is marked "To Be Prepaid". Circle 23 Name of the Shipper and Permanent Address - This information should be shown in the space provided together with the party who actually prepares the bill of lading for signing. Again, the street address, city, state and zip code, should be shown so as to have a properly valid contract in the event some subsequent question arises as to responsibility on some phase of the transportation. Circle 24 Carrier - The name of the carrier, his agent, and the date of actual pick-up should be indicated by the carrier's agent. This date will be used in the determination of the freight charges applicable. If these instruction are followed, many of the problems in the transportation of products caused by improper shipping papers will be eliminated and will expedite the movement of your shipment by motor common carriers. The Sample Bill of Lading does not contain the Bill of Lading Terms and Conditions, but by reference to the "Classifications and Tariffs in effect on the date of issue of the Bill of Lading" it makes applicable the standard or Uniform Bill of Lading Terms and Conditions, as published in the National Motor Freight Classification. These terms and conditions are included as an Appendix for your information. It is hoped that the foregoing, and the attached, will be of assistance to you in the preparation of this important transportation document.