What Is A Freight Bill? Guide For Cost-Efficient Shipping

Despite all of the technological advancements that we have seen in shipping over the last few decades, errors still happen. Items may get lost, stolen, or damaged in transit. This is an unavoidable part of the process. The only way to protect your business from shipping errors is by using a freight bill to ensure solid communication at each point in the supply chain.

Consignors (senders), shipping parties (carriers), and consignees (recipients) all need to have proper hand-offs and agreements when exchanging goods. That way, when something goes awry, responsibility can be properly administered.

For this reason, the freight bill is one of the most important documents in any exchange of goods. In this post, we’ll provide an overview of the freight bill and explain why it’s so important.

Here’s what we’ll cover:

• Getting the lowdown on what a freight bill is and its key components
• Understanding the different roles it plays in shipping
• Things to consider before signing a freight bill
• Differences between a freight bill and a bill of lading

What Is a Freight Bill?

A freight bill is a document that outlines the charges associated with the transportation of goods from one location to another. It serves as a billing invoice issued by the transportation carrier to the shipper or the party responsible for paying the freight charges.

The freight bill contains important information related to the shipment, like the origin and destination of the goods, the type of transportation used (e.g., truck, rail, air, or sea), the weight and dimensions of the cargo, and any additional services provided during the freight shipping process.

What Are Included In A Freight Bill? 13 Key Components

A freight bill doesn’t just list numbers; it’s a detailed dossier that lays out the who, what, where, and how much of your shipment. Here’s a breakdown of the 13 major components that you will normally find in a freight bill template.

01

Shipper & Consignee Information

The freight bill begins with the basics – who sent the goods and who is receiving them. The shipper’s details are there, often including their name, address, and contact information. Similarly, the consignee’s information is listed – the entity that will eventually take possession of the shipped goods.

02

Carrier Information

Next, the freight bill includes details about the shipping company or carrier responsible for transporting the goods. This information typically comprises the carrier’s name, address, and contact details. Essentially, it’s a clear indicator of the party responsible for moving the cargo from point A to point B.

03

Invoice Number

An integral part of the freight billing process, the freight bill includes a unique invoice number. This number is the reference point for tracking and documentation purposes. It helps streamline communication between the shipper, carrier, and consignee and ensures that everyone involved can easily refer to the same set of transaction details.

04

PRO Number

The PRO (Progressive Rotating Order) number is like a serial number for the freight shipment. It is a unique identifier assigned by the carrier to a specific shipment. This number is crucial for tracking the movement of the goods throughout the shipping process. It helps in maintaining visibility and accountability, ensuring that the shipment is traceable at every step of its journey.

05

Bill Of Lading (BOL) Number

The bill of lading (BOL) serves as a receipt for the shipped goods, a document of title, and a shipping contract between the shipper and the carrier. The BOL number on freight invoices corresponds to the specific BOL associated with the shipment.

This number ties back to the detailed information about the contents of the shipment, its destination, and the agreed-upon terms of transportation.

06

Shipment Cost & Accessorial Charges

Within the freight bill, you will find a section dedicated to the specifics of the shipment. This includes a detailed description of the goods being transported, their quantity, weight, and any other relevant details crucial for both the shipper and the carrier to understand the nature of the freight shipments.

07

Shipment Cost & Accessorial Charges

The heart of the matter – the cost. The freight invoice outlines the total amount due for the shipment. This includes the base cost of transporting the goods, as well as any additional charges known as accessorial charges.

Accessorial charges can cover a range of supplementary services like special handling, expedited delivery, or other specific requirements that go beyond the standard transportation service.

08

Payment Terms

Clearly defined payment terms are a standard inclusion in a freight bill. This section outlines the agreed-upon conditions for payment between the shipper and the freight company. It specifies crucial information like the currency in which the payment should be made, the acceptable payment methods, and the timeframe within which the payment is expected.

09

Freight Mode

This component identifies the mode of transportation used for the freight shipments. Whether it’s by truck, train, air, or sea, the freight mode is a critical piece of information. It helps in understanding the logistics of the shipment and in determining the overall cost and estimated delivery time.

10

Due Date

This is the date by which the payment for the freight shipment is expected. Adhering to this due date is essential for maintaining a smooth and efficient flow of goods. It ensures that the freight companies receive timely compensation for their services and that the shippers avoid any potential delays or disruptions in their supply chain.

11

Route Details

This section in a freight bill provides a comprehensive overview of the journey the shipment took. It outlines the origin and destination points, as well as the specific routes or transit points the freight traveled through. This information is crucial for both the shipper and the carrier to understand the geographical logistics of the shipment.

12

Terms & Conditions

Found in the fine print, the terms and conditions section outlines the legal and operational parameters governing the freight industry transaction. It covers aspects like liability, insurance, dispute resolution, and any specific conditions agreed upon between the shipper and the freight company. This section ensures that both parties are on the same page regarding the rules and expectations of the freight arrangement.

13

Signature Of Shipper Or Carrier Representative

A freight bill is not complete without the stamp of approval. The signature of either the shipper or a representative from the carrier signifies acknowledgment and acceptance of the terms and conditions outlined in the freight bill.

It acts as a formal confirmation that the services were rendered as specified, the goods were delivered in the agreed-upon condition, and both parties are in agreement regarding the financial aspects of the transaction.

The Role Of A Freight Bill In Shipping: How It’s Used

This seemingly routine document plays different roles in the entire shipping process. Let’s discuss these roles in more detail.

01

Record-Keeping & Documentation

The freight bill plays a crucial role in maintaining a comprehensive record of the freight processes. It serves as a tangible proof of the transaction between the shipper and the carrier. Essentially, it’s the paperwork that keeps things in order. This record-keeping function not only helps in tracking the movement of goods but is also vital for legal and compliance purposes.

For businesses, maintaining accurate records is also a regulatory necessity. Tax obligations, audits, and compliance requirements demand a transparent and traceable documentation trail. The freight bill serves as the anchor for this documentation and provides an unambiguous account of the shipping activity.

02

Verification & Payment

Once the goods reach their destination, the consignee or receiver examines the shipment to ensure that it matches the details specified in the freight bill and the right goods have been delivered in the right quantity and condition.

Simultaneously, the freight bill acts as the basis for the freight payment service. The consignee, having verified the shipment, processes the payment to the carrier. The information on the freight bill is used to determine the accurate charges for the transportation services provided. This includes factors like the distance traveled, the weight of the goods, and any additional services or surcharges.

Freight bills also create a clear audit trail for financial transactions. Each bill, with its unique invoice number, becomes part of the financial record. This freight bill audit trail is not only used for internal purposes but also for external audits or regulatory compliance checks.

03

Tracking & Shipment Monitoring

Freight bills provide real-time visibility into the shipment’s status and location. Identifiers like the PRO number and BOL number help in efficient tracking throughout the transportation process. This real-time tracking capability lets both shippers and carriers monitor the progress of each shipment, anticipate potential delays, and proactively manage logistics.

Freight bills are also vital in identifying exceptions or deviations from the planned route or schedule. If there are any unexpected events or issues during transit, the freight bill serves as a reference point to quickly assess the situation, enabling timely intervention and resolution.

04

Communication & Transparency

Shippers and carriers use the information on the freight bill to communicate the specifics of the shipment. This ensures that all parties are on the same page about expectations, delivery timelines, and any special requirements. This transparent communication promotes collaboration and reduces the risk of misunderstandings.

In cases where discrepancies or issues arise, the freight bill becomes a central communication tool. Shippers can reference the bill to clearly articulate concerns or disputes, initiating a transparent dialogue with the carrier. This transparency helps in resolving problems efficiently, maintaining positive business relationships, and ensuring that issues do not escalate.

05

Data Analysis & Decision-Making

Freight bills provide a wealth of information that can be used to assess the performance of carriers and the overall logistics process. Key metrics, like delivery times, adherence to schedules, and any recurring issues, can be extracted from the freight bill data. This analysis helps evaluate the shipping operation’s efficiency.

The data within freight bills is also a valuable resource for strategic decision-making. You can analyze historical shipping data to identify trends, optimize routes, and enhance overall logistics efficiency. This data-driven approach helps you refine your shipping strategies and adapt to changing market conditions.

When Do You Sign A Freight Bill?

A freight bill should never be signed before or during transit. Receiving a notice to sign a freight bill in advance to save time is an indicator that something possibly went wrong during shipping and the carrier is trying to avoid liability.

A freight bill should only be signed after inventory is thoroughly inspected and unloaded.

How To Sign A Freight Bill? 4 Best Practices

It’s important not to rush the freight bill signing process or leave anything to chance.

Remember: A carrier legally cannot leave the scene of a delivery until the freight bill is signed and completed. Take your time. Make sure that you go through the following steps.

01

Inspect All Boxes & Cartons

Open boxes and cartons, looking for signs of damage that may have occurred in transit. Write down every possible detail, even if the carrier maintains that the item was damaged before shipment. At this point, your only job is to record information – not to point fingers.

Some companies choose to be extra careful and record a description of all items at the time of shipment. Pictures may be taken too, for further evidence. Check your contract before the inspection. That way, you will be aware of the policy about damaged items. You’ll also know your rights and responsibilities.

In some cases, the carrier will have to take the item back immediately. Or it could be your responsibility to process or dispose of unwanted items.

02

Take Thorough Inventory

As you go through each box, make sure to inventory each item and keep a careful record. Remember that, during this process, you are transferring responsibility for the goods. So if something is missing, it needs to be reported.

03

Sign the Document

After you have carefully examined the shipment and taken notes on the condition of your items, it’s time to sign the freight bill. Read the document carefully – especially the fine print. This is even more important when you are dealing with new shipping partners that you haven’t worked with before.

04

Call To Report Any Problems

If you discover any discrepancies during the inspection, call both the sender and the freight company to report the issue.

You should also receive an exact receipt from the carrier at the time of signing. This is very important if you are dealing with a paper transaction. In the past, there have been cases where paper freight bills were either manipulated, lost, or damaged. Do your due diligence to protect yourself and your company from nefarious or careless behavior.

Crucial Factors In A Freight Bill: What You Need to Know

At this point, you should have a basic understanding of what to expect when signing a freight bill. However, there are a few more things to consider during this process.

01

There Can Only Be One Freight Bill

A carrier should never ask you to sign duplicate two or more freight bills. There can only be one legally binding freight bill. If the carrier asks you to sign another document at the time of signing, carefully inspect it to make sure there isn’t any jargon that can nullify your freight agreement.

Some carriers will try to intimidate or manipulate receiving parties into signing away responsibility for shipping. Others may even threaten to hold inventory if the receiving party does not comply. Any suspicious activity should be immediately reported to the proper authorities if this happens.

02

A Freight Bill Is Not A Bill of Lading

A freight bill should not be confused with a bill of lading. While these two documents are similar, they serve different purposes.

The word “lade” refers to loading a vessel (e.g., a shipping container). As such, a bill of lading is a document that’s signed by the sender and the carrier immediately after the cargo is loaded.

A bill of lading can’t replace a freight bill. Both are equally important items and should be treated separately. We will talk about the difference between the 2 in detail a little later as we go through this article.

03

Concealed Damage May Occur

Oftentimes, items will be found to be in bad shape after a freight bill is signed. When this happens, it’s called concealed damage.

Companies tend to have different policies regarding concealed damage. The main point to keep in mind is that consignees accept full responsibility for all items once they sign a freight bill. When this happens, you will likely have to file a separate concealed damage claim with the freight company as a separate transaction.

This is why it’s very critical to pay close attention during the inspection process. Concealed damage claims can be time-consuming. They can require a significant amount of back-end work – especially for expensive or precious items.

Typically, you will have to keep the packaging, take photographs, and make careful notes that detail what was wrong with the item and why it wasn’t discovered and reported before signing the freight bill.

To protect yourself, it’s always a good idea to write “subject to inspection” on a freight bill.

04

Consider Digitizing The Process

As you can see, the freight bill is an important document – one you shouldn’t rush through. In fact, it’s one of the most important shipping documents that you will handle on the job. As such, it pays to be methodical – even if it draws the ire of the carrier that you’re working with.

One way to streamline the process is to digitize the freight bill – making it accessible across mobile devices. Doing so will make it easy for both the carrier and the receiving manager – saving time and reducing risk along the way.

Freight Bill vs Bill Of Lading: What Are The Key Differences?

While both documents are integral to the logistics and transportation industry, freight bills and bills of lading serve different purposes at different stages of the shipping process. Let’s discuss the 4 major differences between both documents.

01

Purpose

Freight Bill

The primary purpose of a freight bill is to serve as a billing document between the shipper and the carrier. It outlines the charges for the transportation services provided by the carrier, including freight charges, accessorial fees, and any additional costs associated with the shipment.

Bill Of Lading

The bill of lading (BOL) has a broader purpose. It acts as a detailed receipt issued by the carrier to the shipper, confirming the receipt of the goods for transportation. Beyond serving as a receipt, it also functions as a document of title, a contract of carriage, and a transferable instrument, depending on the type of BOL.

02

Content

Freight Bill

A freight bill typically includes information related to the financial aspects of the shipment. This includes details like the names and addresses of the shipper and consignee, carrier information, invoice number, payment terms, and a breakdown of charges associated with the transportation services.

Bill Of Lading

BOL is more comprehensive in terms of content. It has details about the goods being shipped, such as their description, quantity, weight, and packaging. Additionally, it outlines the terms and conditions of the transportation contract, the mode of transport, and any special instructions for handling the cargo.

03

Legal Status

Freight Bill

The freight bill is primarily a financial document. While it is legally binding in terms of the agreed-upon payment for services, it doesn’t carry the same legal weight as a BOL in terms of establishing ownership or serving as proof of delivery.

Bill Of Lading

BOL holds a significant legal status. It allows for the transfer of ownership of the goods during transit. Additionally, it acts as a contract of carriage, outlining the terms and conditions under which the goods are being transported. The legal status of a bill of lading makes it a crucial document for various stakeholders in the shipping process.

04

Timing

Freight Bill

The freight bill is generated after the goods have been delivered. It is a post-shipment document, created to request payment for the services rendered.

Bill Of Lading

BOL is usually issued before the goods are loaded onto the carrier for transportation. It serves as a receipt acknowledging that the carrier has received the goods and commits to transporting them to the specified destination. BOL is required for the release of the goods upon arrival at the destination.

	Freight Bill	Bill of Lading
Purpose	Billing document between shipper and carrier.	Detailed receipt, contract of carriage, and document of title.
Content	Financial details, shipper, consignee, carrier info, charges breakdown.	Goods description, quantity, weight, packaging, transport terms, and conditions.
Legal Status	Primarily a financial document, not proof of ownership.	Legal document serving as proof of ownership, contract of carriage.
Timing	Generated after goods are shipped for payment.	Issued before goods are loaded, serves as receipt and commitment to transport.

How Vector Can Help You Save Money On Freight Bills?

Vector is a cloud-based platform that empowers you to manage and monitor the movement of assets within your yards. With the real-time visibility it provides, you can make informed decisions and optimize resource utilization. Its user-friendly interface simplifies the task of managing and prioritizing inbound and outbound freight.

Let’s take a look at how Vector can help you cut costs on your freight bills.

• Vector’s YMS provides a variety of reports and analytics. This information can be used to negotiate better rates with carriers.
• Vector maximizes the efficiency of your loading and unloading operations which reduces labor costs and improves shipment turnaround times.
• Vector accurately tracks driver arrival and departure times so that you are only charged for the time that drivers are actually waiting at your facility.
• Vector’s dynamic scheduling and real-time visibility features can help you get drivers in and out of your yard faster. This reduces dwell times and lowers fuel costs for your carriers.
• Vector’s digital check-in and detention fee calculation help reduce errors in your freight billing process. As a result, there are fewer disputes with your carriers and more accurate freight bills.
• With Vector, you can electronically capture and store freight bills. It automates many of the manual tasks like data entry and document verification. This improves the accuracy and efficiency of freight bill processing and reduces errors and delays.

Conclusion

Freight bill is all about moving goods smartly, economically, and sustainably. So be vigilant, be informed, and be proactive. Stay updated on what’s happening in the industry, continuously assess and refine your strategies, and never underestimate the impact of efficient freight bill management on your profits.

Vector’s yard management system is a powerful tool that can help you reduce costs and streamline your freight billing process. With Vector, you can avoid costly mistakes, get drivers in and out of your yard faster, and improve the accuracy of your freight bills. Book a free consultation to know more.

This post was written by Justin Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can help workers be more productive. In his spare time, he likes seeing or playing live music, hiking, and traveling.