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Addressing bill of lading myths

LANGLEY, B. C. - Not all shippers, receivers or truck drivers, understand the bill of lading requirements, legal information that might protect against unnecessary freight claims and also provide know...

LANGLEY, B. C. – Not all shippers, receivers or truck drivers, understand the bill of lading requirements, legal information that might protect against unnecessary freight claims and also provide knowledgeable clout when challenging a freight claim, according to Ken Martin, a facilitator for the B. C. Trucking Association.

Martin recently conducted a seminar for the BCTA on this topic. The seminar, How to Handle Freight Claims, explored bill of lading requirements which in B. C. are contained within the Motor Vehicle Act regulations.

There were nine participants who attended the BCTA seminar, and the facilitator suspected that only one had previously read the requirements on bills of lading, which is not uncommon in the trucking industry, he surmised.

“We’re going to spend a lot of time on bills of lading,” Martin said of a course he wrote for the BCTA about five years ago. The animated instructor warned many times, about the cost of ignorance with the bill of lading, and gave many examples of those who had not considered the legal requirements.

According to the facilitator, there are five types of claims: freight damages; over and under charges; misrouting; special damages; and loss. National statistics indicate that annual freight damage loss is approximately $35 million, which Martin disputes. “I take that with a grain of salt. I actually think it is a lot higher.”

Martin estimates the true costs of loss and damage should take into account other peripheral expenses related to the claim.

Martin customized the seminar by asking the participants which areas of freight claims they wanted to discuss. Those topics all related to the terms and conditions of the bill of lading.

“If you’re going to haul freight, you’re going to have to obey them. The only way around the terms and conditions is to be a contract carrier rather than a common carrier. But that brings up a whole different set of problems and regulations,” he said.

Martin explained that a “common” carrier is anyone who intends to transport freight, under a “common” law, which is not unlike the common law that an innkeeper must abide by, which cannot refuse any customer, or a farrier, who cannot refuse to shoe a horse, “provided you have the cash to pay for the service,” he added. “Freightage was a common calling. It still is, unless you don’t have the suitable equipment.”

That lack of “suitable”equipment is a valid reason to refuse to haul, according to Martin, such as a flatdeck vehicle that might be unsuitable for hauling delicate cargo like food products, that needs to be refrigerated. If the freight is a contractual agreement, every haul has to have a fully written agreement, unlike the terms of conditions, which must follow the Bill of Lading Act.

“Occasionally the shipper won’t fill out the bill of lading,” said Martin. “The driver does. The shipper does have to sign the bill in order to validate the contract.”

Once freight is accepted for shipment by, or on behalf of a carrier, there are 15 requirements of the bill of lading, including name and address of the shipper, the date, originating point of shipment, name of originating carrier, names of connecting carriers (if any), name and address of receiver, destination of shipment, and “particulars” of the goods in the shipment, including weight and description.

The description requirement on the bill of lading may be the most misunderstood and neglected part of the agreement, according to Martin, who discussed a freight damage incident that was instigated by a carrier’s flat tire which subsequently caused fire and smoke damage to a load of telephones. It turned out that the carrier was not covered under its cargo insurance policy for electronic freight, an eventual cost of $40,000. That carrier could have walked away from that shipment, according to Martin, if he had previously demanded a full description of the load on the bill of lading, and consequently checked his insurance coverage for electronic freight.

“It’s up to the shipper to read the fine print,” said Martin. “There is a general ignorance and laziness in description, and it will come back to bite you.”

Martin also talked about damaged goods and even warned about the appearance of damage. In this case: if a shipment appears to be damaged, the driver has the right to indicate that situation, on the bill of lading “at the time of pick-up.”

“That’s important, for a driver to have to make notes, right at the time of pick-up. If the shipper won’t allow him to do that refuse the shipment, and pull the driver out.”

Martin also talked about “specified conditions of carriage,” or article one of 19 taken from the bill of lading requirements, which indicates that the carrier (or carrier’s agent) is like a bank, said Martin, which carries goods “in trust,” with some conditions. In other words, the goods (potentially) “come in good condition; are delivered in good condition, unless otherwise provided.” However, if there are two or more carriers (article 2), “you’re all in the soup,” said Martin, and the “terms of the originating carrier flow through, and you as carrier, accept those conditions.”

These are just some of the legal requirements under the bill of lading requirements, which Martin encouraged the participants to become familiar with and stay apprised of, or bear the financial consequences. “It costs money to stay on top of it, but it costs more to pay the claims.”

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2 Comments » for Addressing bill of lading myths
  1. Miko Kutac says:

    This was a great course. Too bad there are not more of them on a regular basis.

  2. Em says:

    Is the BOL Act of Canada applicable to US freight (shipped from Canada by Canadian carrier to US receiver)?

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