When shipping goods overseas, you’ll need to correctly complete an ocean bill of lading. It’s just a standard bill of lading… how hard can it be?
Not so fast! Though the bill of lading forms are a template, they still require attention to detail in order to avoid mistakes that can cost you.
We spoke with Andrew Danas, a partner with the law firm Grove, Jaskiewicz and Cobert, LLP, who specializes in international trade and transportation, to find out some of the common mistakes exporters make when completing the ocean bill of lading. Here are the eight common mistakes he shared:
1. Using the wrong commodity description.
Solution: Describe the goods correctly and thoroughly.
2. Using the wrong piece count.
Solution: Be careful here to describe the number of goods in each container, if necessary, as opposed to describing the number of containers. For example: One container of widgets—or one item—as opposed to one container consisting of 750 packages of widgets — or 750 items.
3. Not following all of the bank’s instructions.
Solution: Make sure you follow the banks instructions when completing the ocean bill of lading and other export documents. And make sure your paperwork is consistent in every document. If it’s not, a bank can deny your letter of credit.
4. Using the wrong notify party.
Solution: Pay careful attention to this area and choose the correct party.
5. Incorrectly identifying and listing hazardous materials.
Solution: Make sure your company knows the laws and has at least one employee who knows, understands and takes responsibility for packing hazardous goods. The cost is high for ignoring or incorrectly labeling dangerous goods and hazardous materials. If you’re unsure about whether or not your company is correctly identifying and listing hazardous materials, you have several options:
- Find out more about the requirements for shipping dangerous goods.
- Take an on-site or online training course on dangerous goods shipping requirements.
6. Failing to meet the carrier requirements for documentation.
Solution: Plan early, communicate clearly, and automate processes to make sure you are completing and sending all of the required documentation correctly and on time. Documentation requirements vary from carrier to carrier, and it’s your responsibility to contact them far in advance to make sure you’re completing the paperwork (or, if you’re using a freight forwarder, to make sure you’re providing accurate information to them).
Whether you’re completing the documents yourself or partnering with a freight forwarder, you can streamline the process and avoid expensive errors with Shipping Solutions software. Register for a free online demo so you can see how easy it is to use.
7. Not listing the service contract number on the bill of lading.
Solution: Be certain you include the service contract number in the paperwork. This is a common problem that can cost your company millions.
Bills of lading are evidence of a carriage contract, as are service contracts; however, if your goods are shipping under a bill of lading contract and the terms in the two differ, terms you think apply may not actually apply under the contract. Your shipment could be re-rated at a much higher price.
The bill of lading terms for loss of damage claims, credit terms, and where you are legally permitted to bring suit may apply instead of those terms you negotiated in your contract. You need to pay attention to these.
8. Failing to read the terms and conditions in the bill of lading.
Solution: Make sure you (or someone in your company who understands and can take responsibility for your exports) carefully and completely reads the documentation. If you have a contract, non-negotiated contract terms precede the bill of lading terms. These are very important if you have a contract. You are responsible for your contracts, documentation and paperwork whether you have taken the time to read the documentation or not!
Things to consider in your bill of lading:
- Be aware that bills of lading have costly restrictions on your recovery and how you can sue. For example, there may be provisions that your claim must be arbitrated in Tokyo. Can you practically handle the costs of travel, lodging and other fees?
- The bill of lading may incorporate terms that may or may not be included on the physical contract, but may be present on the carrier’s website.
How to Avoid Making These Mistakes
1. Have your freight forwarder complete the ocean bill of lading for you. This option costs money, but you’re trusting your documentation to an expert who can complete it—based on information you provide, of course. (Here are seven questions to consider when choosing the your freight forwarder.)
2. Have a dedicated employee who’s knowledgeable and works with forwarders complete the documentation.
3. Purchase insurance.
4. Ask your carrier if they have standardized formats or guides on how they want goods prepared. Make sure you and your employees are completing the information the way your carriers want.
5. Have redundancies. Don’t fill it out once and send it out. Double- and triple-check the ocean bill of lading, especially with letters of credit. Compare the bill of lading with your bank documents, and go through and check accuracy.
6. Be careful!
If you complete your ocean bill of lading incorrectly, you could face delays in delivery, delays in getting paid, denial of claims, incidental costs incurred through delays in delivery, and even penalties (which may apply for fraudulently completing the bill of lading form). You can also be fined for incorrect documentation for hazardous materials or dangerous goods.
Rely on your in-house representatives and your partners, but realize that it’s ultimately your responsibility to know all the appropriate information about the goods you ship.
This article was first published in January 2015 and has been updated to include current information, links and formatting.