Options for Exchanging Bills of Lading in the Age of COVID-19

We have heard from some clients that there are consignees out there that are not accepting or signing bills of lading due to concerns over the coronavirus. Some have signs posted to that effect at their facilities. Others are requesting electronic copies of the bills of lading instead of originals from drivers. While we make no judgment over the reasonableness of their concerns, in this newsletter we offer what we believe is a practical work-around to this problem, although not perfect or simple to manage in every instance.

Bills of lading serve a duel purpose. First, they are the contract of carriage for the load and usually contain important terms and conditions. Those terms and conditions often concern liability for freight charges (“prepaid” vs “collect” and Section 7), limitations of liability (“shipper acknowledges carrier’s tariff shall apply” and “declared value”) and others. Second, bills of lading serve as proof of delivery (“POD”) to the consignee, which must be presented to the shipper in order to get paid for the load. Therefore, it is important, from a legal and business perspective, that bills of lading are exchanged between the parties and signed by the shipper, carrier and consignee.

For that reason, a consignee’s refusal to accept or sign bills of lading upon delivery presents a serious problem. It results in an unsigned POD, which makes it harder for the carrier and broker to be paid for the load, and it denies the carrier easy and certain proof that the load was delivered to the consignee without loss or damage noted by the consignee upon delivery.

However, in this digital age, where the exchange of documents and information is far easier, a workable solution is attainable. We suggest the following approach when a consignee either will not accept or will not sign the bill of lading because of the virus:

1) Have the driver take a digital photo of the bill of lading using their cell phone once the load is picked up and signed for by the shipper at origin. This will probably take some communication by your company to the carrier beforehand to let them know to have the driver take the picture and to tell them why it is important and necessary in order for them to get paid without any issue.

2) Have the driver email a pdf of the photo of the bill of lading to your company as soon as the photo is taken.

3) Once your company receives the pdf of the photo from the driver, email the photo to the consignee so they already have a copy before the load arrives for delivery. It is a good idea at this time to also email the photo to the carrier’s dispatch as well so they have a copy and will know that their driver has taken the photo and sent it to you. That way everyone is on the same page.

4) Once the load is delivered to the consignee, have the consignee print and sign the pdf version of the bill of lading that your company emailed them earlier which already has the shipper’s and driver’s signature on it. The consignee could then either, 1) scan the bill of lading after they sign it and email your company the signed version (BEST - because your company could then email it to the carrier and shipper), or 2) leave the carrier’s copy of the signed bill of lading for the driver to take at a predetermined spot on the dock – (OK).

We believe this solution is workable because it results in there being one version of the bill of lading with the signatures of the shipper, carrier and consignee on it. It also addresses the concerns of some (thankfully few) consignees that exchanging bills of ladings with drivers at the dock is dangerous because of the virus.

Let us know what you think, and good luck in this unusual and uncertain time.

Alan Howarth