What is a Bill of Lading?
Past: History and Overview of Freight Billing
What is a Freight Bill or Bill of Lading (BOL)?
A freight bill, also known as a bill of lading (BOL), is a legal contract between the shipper and a carrier. Freight bills include the important details of the transaction and generally are signed by both the shipper and the carrier.
Freight bills are used by accounting departments for support documentation to validate billing either by the shipper or the receiver for a successful delivery of goods.
History and Overview of Freight Billing
History and Overview of Freight Billing Originally called ‘Bills of “Loading”’, BOLs have been around for many centuries. Early transportation contracts made their debut as early as the 13th century. At that time, they only served as a receipt for goods received by a master or ship owners.
Over time, they have developed into a receipt that also contains the contract of carriage between shipper and carrier. As commercial activity began to increase, these transportation documents became essential in order to generate and/or prevent disputes, as well as to serve as a proof of shipment to protect both shipper and consignee.
Centuries later, many protocols and rules have shaped the characteristics seen in today’s modern bill of lading which include the limitation of parties, practices of bill of lading exchanges, shipper’s, consignee’s and carrier’s legal rights.
Bill of Lading (BOL)
The Bill of Lading (BOL) is the contract between the shipper and the carrier. This transportation contract identifies the freight, consignee, shipper, and the terms of the agreement.
A payment facility audits and pays freight bills for other companies. A company whose purpose is to audit and pay freight bills for other companies.
A claim is filed to request payment from a carrier due to loss or damage alleged to have occurred while they possessed the shipment. A claim is filed to request a carrier for refund of an overcharge. See Overcharge.
Less Than Truckload
Less than truckload (LTL) is an amount of freight that is less than what is required for the application of truckload rates. LTL freight shipping is the easiest and most economical way to move large and bulky items.
The manifest is a document that describes the shipment or the contents for a vehicle, container, or ship.
A carrier can be an individual, partnership, or corporation that is in the business of transporting goods.
Proof of Delivery (POD)
Proof of Delivery (POD) is a document that is used when a shipment is delivered. The consignee signs this document to confirm delivery. See also Delivery Receipt.
The shipping order consists of instructions to a carrier regarding the transportation of a shipment. The shipping order is typically a copy of the bill of lading.
Imaging is a system that is used to store digital images of documents.
A contract is a legal document between parties. In regard to freight, a contract states specifics of the freight shipment process.
The maximum rate is the highest contracted rate that might be charged.
The minimum rate is the lowest contracted rate that might be charged.
Prepaid terms mean that the shipper or a Third Party is responsible for the freight charges.
Third Party Billing
Third party billing is a scenario where neither the shipper nor the consignee is responsible for paying the freight charges – instead there is a third party who is responsible for the charges.
A statement is a list of one or more bills.
The rate is the cost of transporting freight.
Terms state who is responsible for paying the freight charges.
Why BOL Processing is Important
The primary use of the BOL is to be a receipt distributed by the carrier once the goods have been loaded onto the container. This receipt can be used as proof of shipment for the carrier, as well as used for customs and insurance needs.
Having a clean BOL becomes especially important when it comes to looking for ways to improve accuracy rates and turnaround times.
1. Accuracy Rates
Accurate BOLs are very important. They must be signed and dated correctly so to record the actual date that the cargo was loaded. If a BOL is post-dated there can be serious consequences: the company can be exposed to claims from cargo interests, which in-turn, may mean that P&I cover is no longer available.
BOLs are legal contracts which can be used in litigation. When a BOL is inaccurate a freight claim may be put into action, which opens up a whole can of worms that would be best if avoided in the first place.
2. Turnaround Times
Two words – competitive advantage. If you want the be on top, your turnaround times have to be faster, better, smarter and more accurate than the other guys.
Shipping goods in an efficient manner is crucial for the success of a business. Be that as it may, many companies do not have the capacity to process bill of lading documents. This hinders their supply chain and can decrease the speed of shipment. In these cases, it is recommended to outsource this part of the back office process to experts such as DDC FPO, who have the capacity and expertise to consolidate BOL data entry and improve the efficiency of your logistics procedures. Read more about our solutions here.
3. Customer Satisfaction
A satisfied customer is a loyal customer. And these days customers have changing expectations. They want full transparency into where their delivery is at all times. Now, the location of a package is as interconnected as your social network. In fact, as customer expectations have increased, their willingness to pay for fast shipping has decreased -with just about 64 percent of consumers unwilling to pay anything extra for less than two-day shipping (Schiller, Maier, and Büchle, Global Truck Study 2016).
4. Cost Containment and Savings
There is a lot of great advice out there on how to make improvement when it comes to cost-containment and savings. In particular, when examining BOLs, a significant path to success comes with automation.
By automating and optimizing manual BOL processes, a company can reduce dependencies on staff, and production operations can be centralized to lower-cost areas that will create a more proactive approach to maintaining customer satisfaction. Employing an automated, cost-effective transportation / logistics system also allows a company to implement vital strategic changes that provide visibility, reduce costs and increase customer service levels.
Present: Where We Are Now
What Are The Current Trends
Perhaps the most popular trend when it comes to the Bill of Lading is the push to make them electronic. It is hard to believe that many of these BOLs still have paper trails. This can be attributed to the fact that there isn’t the trusting relationship that is needed that can bridge the economic and legal distance between countries, not to mention concerns about security and authenticity.
The solution to help build this trust would be to deploy a software solution that allows for all parties to access the bills as an electronic document. Electronic BOLs are the legal and functional equivalent of a paper BOL. While there have been many efforts to create a negotiable electronic bill of lading that would replicate all the functions of their paper version, the development has been slow.
Many software companies claim to have the perfect solution, but unfortunately, many come with their own bugs and struggle to generate industry-wide adoption. There is still much to be worked through before we can claim that this trend is an industry-standard.
Future: The Future Of Freight Billing
Online Shopping Changed Everything
Brick-and-mortar sales have dramatically shifted to online purchases. The impact of this shift has increased the demands on the transportation infrastructure. It has become more complex and much more collaborative with others across the industry as a whole. It used to be that one truck would move one large load from a distribution center directly to a specific retail location.
Now, that same load may travel on many different trucks filled with less than half of goods to travel the last mile to several different types of locations.
Freight carriers have placed sensors on their fleet and are integrating the data from across the supply chain. This allows for the carriers to create a virtual network that displays the whole delivery from start to end.
Smarter Distribution Centers
In the past, or current depending on how savvy you are, there would be one or two distribution centers, per retailer per state. Smart Lockers have changed this landscape. Smart Lockers are accessible but secure locations that provide retailers, logistic companies, businesses, and individuals space to temporarily store goods for customers to pick up at varying times.
The benefits they provide allow for retailers to combine multiple drop-offs into a single delivery. Beyond being ‘smart’, these lockers are also mobile, which allows them to meet the delivery workers at different locations throughout the city. This helps to minimize the time between drop-offs and increases the productivity of the worker by allowing them to complete more jobs in less time.
Sharing assets provides plenty of benefit to the transportation industry and allows them to accomplish more by leveraging their network’s infrastructure. By sharing assets with a close network, a local carrier is enabled to deliver outside of their typical area, which increases the utilization of their assets purely by expanding their reach.
This is a great idea in theory but it isn’t always as simple when you think of integrating one network with the shared network. It is essential to adopt a transparent, live platform that gives all users visibility into real-time insight.
Alternative Delivery Vehicles
Over a year ago, Nikola Motors showcased an electric truck that is also fueled by hydrogen. This truck demonstrated an impressive 800- to 1,200-mile range with up to 1,000 horsepower. That’s more than 2x the amount of the current diesel truck.
Tesla is also working to create heavy-duty trucks for densely populated urban transportation. It promises to reduce the cost of cargo and improve overall safety.
The addition of drones may become an excellent complement to the trucking industry. They can take the short distance deliveries off the hands of the worker in a much more cost-effective manner.
The Changing Customer Expectation
Customers have changing expectations. They want full transparency into where their delivery is at all times. These days, the location of a package is as interconnected as your social network. In fact, as customer expectations have increased, their willingness to pay for fast shipping has decreased with just about 64 percent of consumers unwilling to pay anything extra for less than two-day shipping (Schiller, Maier, and Büchle, Global Truck Study 2016).
Building The Fleet Of The Future
Telematics is essential to building a connected fleet. Many carriers are making this investment and understand that direct data capture is the first action towards valuable insight. Using this data will be a differentiator as the popularity of telematics loses its luster as well, and the increase of IoT applications become more prominent.
This only means that availability of the data will continue to grow. It will be essential for companies to create actionable insights from the date in real time. Businesses cannot afford to take a week to collect, analyze and decide.
DDC FPO Solutions
Overview Of Expertise And Why We Care
For over the past decade, we have made it our mission to serve as the freight back office partner to professionals in the freight industry. As a result, we process over 30% of all LTL BOLs in the U.S. today. This has given us a very keen understanding of the pain points experienced when it comes to turn-around times, quality, and exceptional accuracy rates in the freight bill entry process.
Remote Freight Billing Solution
Outsourcing your freight billing processes to our team of experts can provide you with the following benefits:
- Fully & Semi-Automated Programs That Can Eliminate The Need For Human Intervention
- Improved Accuracy Of Bill Entry Process & Quicker Data Entry
- Standardization That Allows For Quality Metrics To Be Met
- Adaptability To Meet The Individual Needs Of Your Business
- Enhanced Client Experience
- Immediate Cost Containment & Long-Term Savings
The Auto-Extraction & Structuring Difference
Auto-Extraction & Structuring, our intelligent bill of lading data processing solution automates the entire data extraction and structuring process. It is the leading and most accurate way to extract and structure unstructured data in real time. The structured data is then transmitted directly into your system of choice, so it’s at your fingertips when it's needed most. This solution eliminates manual data processing and volumes of errors and manual re-work.
What’s great about this solution compared to the promises of other software companies offering an automated solution, is that we can effectively integrate and work with your older systems. This is because Auto-Extraction & Structuring leverages artificial intelligence to automatically extract raw data and transform it into actionable insights in real time, dramatically accelerating collections, increasing profitability per shipment, and enabling proactive logistics planning.
Auto-Extraction & Structuring is an intelligent solution that has the capability to read and structure BOL documents in any shape or form. Auto-Extraction & Structuring uses machine-learning algorithms to discover, analyze, and cluster unlabeled datasets without the need for human intervention. And, just like people, the solution becomes smarter and more accurate with each document processed thanks to AI.
You know it’s time for a change when it comes to automating your BOL processes, but making the change doesn’t have to break the bank.
We’ll spend the time on the front-end understanding exactly what your infrastructure needs are and how we can use Auto-Extraction & Structuring to structure your BOL data to significantly improve accuracy rates and faster turn-around times.
In the end, Auto-Extraction & Structuring offers you immediate cost containment and long-term savings, improved accuracy, a streamlined bill extraction and structuring process, and best of all -- an enhanced client experience.
Why wait? Let’s start the conversation today to see how DDC's Auto-Extraction & Structuring can support your success.