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Shipping Documents

Documents

Now that you’ve chosen the correct equipment for your freight; you’ll need to understand the proper documentation to accompany your shipment.  The importance of proper documentation can’t be understated.  The deciding factor in most legal disputes in the transport industry comes down to the proper execution of the paperwork that travelling with the shipment.   Shipping documents can be prepared by different parties, however the individual executing (signing) the document needs to be able verify the information contained within the documentation.

Bill of Lading

The Straight Bill Of Lading (BOL) is by far the most widely referenced document when it comes to shipping freight.  Sometimes referred to as the waybill, the BOL is the legal contract between the shipping party and the carrier.  At its most basic level the BOL contains the following information:  

  1. Where goods are being shipped from
  2. Where goods are being shipped to
  3. What the freight is (size, description & weight)
  4. Who pays for the shipping
  5. Declared value of the product.

Evidence of BOL usage goes back to Roman Times, however, to illustrate its origins imagine being a tobacco farmer in the 1700’s in Virginia and receiving an order to ship a truckload of your product to New York.  After sourcing a carrier (likely a horse & buggy) to haul your product, you would have to consider how you were to be paid for that shipment and how to prevent the carrier from disappearing into the night with your valuable product.  

The first thing you would do is make a contract with carrier outlining the transportation agreement.  Next, to ensure that the same amount of tobacco that left your plantation arrived to the customer;  you and the carrier would have to agree on the weight of the product by affixing your signatures to the details within the Bill of Lading once loaded.  Now,  back in those days, the bill of lading would also be used to pass “title” or ownership of the product so the carrier would also use the document this to ensure that he would be paid properly for completing such a long journey by the responsible party.

To achieve this, every bill of lading had (and stills has) the payment provisions for the freight cost “Prepaid” & “Collect”.  If the cost of the freight was being paid by the shipper the marking “prepaid” would be used.  If the cost of the freight was to be paid by the receiver the term “collect” would be used.  “Collect” can also be used when the carrier is to collect not only the freight charges but the price paid for the cargo as well.  It is also very common in modern times to see the term “Third Party Billing” used in place of “pre-paid” or “collect” when the carrier is to be paid by an intermediary such as a freight broker.

OS&D Claims

BOL’s also serve as the document where a receiver (Consignee) would note OS&D claims

OS&D, or Overage, Shortage & Damage claims are very common.  It is critical that a consignee notes any applicable OS&D on the bill of lading at the time of receiving of the freight for a proper claim to be accepted and paid by the carrier.

Remember from the example when the carrier confirmed that he accepted the freight (quality & amount) when he signed the bill of lading with the shipper.  Now, if the carrier delivers the same shipment in an amount & quality differing from the BOL the consignee can place a claim directly with the carrier.   

After receiving the freight and signing the BOL with an OS&D notation, the customer has the following rights of claim with carriers:

  1. For Damage a Consignee can make a claim up to 60 Days after Delivery.
  2. For Lost freight up to 9 months claimant has up to nine months file.
  3. Claims should generally settled settled within 120 Days. If not, notice of claim status should be provided every 60 days.

*Use caution with these terms as carriers tend to have their own claims policies.

To illustrate the importance of the chain of possession of the BOL;  in one case I had a customer who consistently shipped chocolate from their Toronto, ON plant to a packaging plant in the U.S.A.  We shipped this product weekly on Dry Vans with the same carrier every time.  One particularly hot day in August this shipper requested a truck for their regular shipment.  When this shipment delivered the next day the chocolate product had completely melted.  The shipper  filed a claim for approximately $45,000 stating that they thought the trailer was a Reefer unit and produced a copy of the bill of lading with the word reefer on it.  The claim was later dropped because it was proved by the carrier that the copy of the bill of lading that the driver had signed did not have the word “Reefer” on it.

Packing Slip

Packing slips are used by companies to assist in identifying individual items in a shipments. Most shipments with multiple items should should contain a packing slip displaying the packing date, items included in the shipment and the quantity of each product. Shippers may also include the weight of the product. Many customers use the packing slip as a guide when unpacking their shipment.

NAFTA Certificate

The NAFTA Certificate of Origin is used by the United States, Canada, and Mexico to determine if imported goods are eligible to receive reduced or eliminated duty as specified by the NAFTA. In order to obtain preferential tariff treatment, this document must be completed legibly and in full by the exporter and be in the possession of the importer at the time the declaration is made. This document may also be completed voluntarily by the producer for use by the exporter.

Commercial Invoice
The commercial invoice is the second document we look at when a shipment is crossing an international border.  This form identifies the seller and buyer of products being shipped along with  identifying number “HS codes”.  CI’s also display shipping date, mode of transport, port of entry, delivery and payment terms, and a complete listing and description of the goods or services sold including, quantities, prices, discounts.

This document  is considered the most important document in international trade, because merchandise is not allowed to clear customs at the destination without one. It is important to prepare this as clearly and accurately as possible to avoid problems with customs officials.  The commercial Invoice has nothing to do with carrier terms just as the bill of lading has nothing to do with the customs process.

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