Why is language on your bill of lading important? Well, just last week, three different shippers were served with lawsuits because the actual carrier was allegedly never paid for hauling the produce to contract destination. As I have outlined in earlier blogs, one key area that few shippers take little to no time doing is to review their bill of lading to make sure that clear and concise instructions are documented. One of the most important items to review is the issue of who is responsible for paying the freight bill.
If the terms of sale are FOB, this means that the freight charges are to be paid by the buyer at contract destination, making it imperative that the signed bill of lading reflects this agreement at time of loading as the carrier is taking possession of the load. On a FOB sales contract, you want to make it clear on the bill of lading that there will be no recourse against you as the shipper in the event the carrier is not paid by the buyer or the logistics provider. I have linked a sample bill of lading and have also noted below the specific language you need to include on your bill of lading:
THIS SHIPMENT IS FREIGHT COLLECT
(Unless Otherwise Stated)
If the carrier named herein or its agent, delivers this shipment to the consignee or its agent, without payment of freight charges or other lawful charges, the carrier or its agent, does so without recourse to the shipper or its agents.
This simple language on your bill of lading can go a long way towards protecting you against having to pay freight charges on freight collect shipments, not to mention possible attorney fees should you be sued by the carrier who did not receive payment from the buyer or truck broker.
In addition to incorporating the ‘No Recourse’ provision on your bill of lading, you should encourage your buyer to be cautious in selecting truck brokers and/or logistic companies, making sure that they are reputable and financially stable to avoid similar payment/collection situations. A carrier that has not been paid by the broker will make every effort to collect its freight charges, including attempts to collect from the shipper.
When initiating a delivered sale I recommend you use an established logistics provider that not only has a history of promptly paying the carrier, but will also take full responsibility with the carrier in settling freight claims. Western Growers considered these very issues when making the decision to partner with C.H. Robinson to provide shipper based transportation services.
On a separate, but just as important matter connected to your bill of lading, is the issue of the Trailer Refrigeration Unit (TRU) compliance regulation of the California Air Research Board (CARB) that went into effect in January 2013. It is critical to remember that regardless if your shipment is originating within, or outside California, if the carrier is ultimately transiting throughout California, you must only load a compliant trailer at origin.
As a shipper, to be able to document your due diligence at time of loading and confirm that you loaded a compliant TRU piece of equipment, all bill of ladings must contain the following statement, adjacent to where the driver signs and acknowledges receipt of the produce.
Carrier or its agent certifies that the TRU equipment furnished for loading this Shipment is in compliance with California Regulations.
Should you have any interest in the Western Growers Transportation Program or have questions regarding bill of lading, please contact me at TommyO@wga.com or 949-885-2269.