How to Manage Transport Documentation:

Logistics and Supply Chain

Manage your freight bill, bill of lading, and FOB terms of
sale
•••
BY 
MARTIN MURRAY
 
Updated on December 13, 2018

When items are transported either domestically or internationally the delivery must
be accompanied by the relevant documentation. The amount of documentation
varies depending on if the shipment is within the US or to another country.

As far as interstate transportation of goods in the US, there are three documents that
are of the greatest importance; the bill of lading, freight bill, and the Free On Board
(FOB) terms of sale.

Bill of Lading
The bill of lading is the most important document that is used in transporting goods.
The legal definition of a bill of lading is a contract for the carriage of goods and a
document of title to them.

It provides any and all information that the carrier will need to transport the items. It
contains the shipment origin and the contract terms for the transportation and is
required by a carrier before the shipment is taken.

The bill of lading should include the name and address of the consignor and
consignee, and often it will have the routing instructions for the carrier. It will contain
a description of the goods to be transported, the quantity for each of the
commodities, and the commodity class and rate.

The bill of lading will contain the terms of the contract for the movement of goods by
a common carrier. This is the contract between the shipper and the carrier to
transport the goods on the bill of lading to the consignee (i.e., the buyer). The bill of
lading contract has nine terms:

1. Common Carrier Liability: The carrier is liable for loss and damage of the
goods being transported, except if the goods were improperly packed by the
shipper or if the goods themselves would be liable to a normal loss like
 through evaporation. The carrier is not liable for acts of God, public enemy or
public authority.
2. Delay in Transit: The carrier cannot be held liable if the loss or damage is
due to a delay in the transportation of the goods.
3. Freight Not Accepted: If the goods are not accepted within the time
allocated, the carrier can store the goods at a cost to the owner.
4. Extraordinary Value: The carrier is not liable and does not have to carry
items of extraordinary value that are not on the rated in the published
classifications or tariffs unless a special agreement with the shipper has been
negotiated.
5. Explosives: The carrier has to be given full written disclosure when they are
shipping dangerous material, otherwise, they are not liable for any losses.
6. Recourse: The carrier cannot make additional charges to the shipper after
making a delivery.
7. Substitute Bill of Lading: If the bill of lading is a substitute or exchange for
another bill of lading then the current bill of lading has to include all the
clauses from previous documents.
8. Alterations: The carrier must note any changes or additions to ensure that
they can be enforceable.
9. Claims: This clause specifies the details on how to file a claim against the
shipper and the time period after delivery in which the claim will be accepted.

Freight Bill
The freight bill is the carrier's invoice to the shipper for all the charges that the carrier
has incurred. The carrier’s freight bill will include the details of the shipment, the
items being shipped, the consignee, the origin, and destination, as well as total
weight and total charges.

Some carriers can ask for prepayment from the shipper if the value of the items
being shipped is less than the total expected freight charges. If the charges are not
prepaid then the carrier can present a freight bill on collect. This implies that the
carrier will present the freight bill on the day of delivery.

FOB Terms of Sale

Free on Board (FOB) terms of sales documents which party will be liable for
the transportation costs, which party is in control of the movement of the goods, and
when the title passes to the buyer.

If the FOB terms of sale indicate that it is FOB Delivered then this implies that the
shipper will be responsible for all of the carrier’s costs. If the terms of sale show FOB
Origin, this means that the buyer will take the title of the goods when they are
shipped and they will incur all the transportation costs.
 Project Evaluation and Review
Technique (PERT)
 Difficulty Level : Medium
 Last Updated : 24 Feb, 2020

Project Evaluation and Review Technique (PERT) is a procedure through which

activities of a project are represented in its appropriate sequence and timing. It is a
scheduling technique used to schedule, organize and integrate tasks within a project.
PERT is basically a mechanism for management planning and control which provides
blueprint for a particular project. All of the primary elements or events of a project
have been finally identified by the PERT.
In this technique, a PERT Chart is made which represent a schedule for all
the specified tasks in the project. The reporting levels of the tasks or events
in the PERT Charts is somewhat same as defined in the work breakdown
structure (WBS).
Characteristics of PERT:
The main characteristics of PERT are as following :
1. It serves as a base for obtaining the important facts for implementing
the decision-making.
2. It forms the basis for all the planning activities.
3. PERT helps management in deciding the best possible resource
utilization method.
4. PERT take advantage by using time network analysis technique.
5. PERT presents the structure for reporting information.
6. It helps the management in identifying the essential elements for the
completion of the project within time.
Advantages of PERT:
It has the following advantages :
1. Estimation of completion time of project is given by the PERT.
2. It supports the identification of the activities with slack time.
3. The start and dates of the activities of a specific project is determined.
4. It helps project manager in identifying the critical path activities.
5. PERT makes well organized diagram for the representation of large
amount of data.
Disadvantages of PERT:
It has the following disadvantages :
1. The complexity of PERT is more which leads to the problem in
implementation.
2. The estimation of activity time are subjective in PERT which is a major
disadvantage.
3. Maintenance of PERT is also expensive and complex.
4. The actual distribution of may be different from the PERT beta
distribution which causes wrong assumptions.
 5. It under estimates the expected project completion time as there is
chances that other paths can become the critical path if their related
activities are deferred.

Difference Between PERT and CPM

 Difficulty Level : Easy
 Last Updated : 30 Dec, 2020

1. Project Evaluation and Review Technique (PERT) :

PERT is appropriate technique which is used for the projects where the time required
or needed to complete different activities are not known. PERT is majorly applied for
scheduling, organization and integration of different tasks within a project. It provides
the blueprint of project and is efficient technique for project evaluation .
2. Critical Path Method (CPM) :
CPM is a technique which is used for the projects where the time needed for
completion of project is already known. It is majorly used for determining the
approximate time within which a project can be completed. Critical path is the largest
path in project management which always provide minimum time taken for
completion of project

Difference between PERT and CPM :

S.No. PERT CPM

CPM is that technique of

PERT is that technique of project project management which is
management which is used to manage used to manage only certain
uncertain (i.e., time is not known) (i.e., time is known) activities
1. activities of any project. of any project.

It is event
oriented
technique
which
means
that
network is It is activity oriented
constructe technique which
d on the means that network is It is a It is a
basis of constructed on the probability deterministi
event. basis of activities. 3. model. c model.

4. It majorly focuses on It majorly

time as meeting time focuses
S.No. PERT CPM

on Time-
cost trade
off as
minimizing
target or estimation of cost is
percent completion is more
more important. important.

It is appropriate for
It is appropriate for high reasonable time
precision time estimation. estimation.

It has Non-repetitive It has repetitive

6. nature of job. nature of job.

There is
no
chance
of
crashing There may
as there be crashing
is no because of
certainty certain time
7. of time. boundation.

It is suitable
for projects
It It uses which
doesn’t dummy required
use any activities for research It is
dummy representin and suitable for
activities g sequence development constructio
8. . of activities. 9. . n projects.
 Advantages and Disadvantages of
Critical Path Method (CPM)
 Last Updated : 02 Mar, 2020

Critical Path Method (CPM) is a network analysis approach. It find out which
sequence of activities has the least measure of scheduling resilience by which it
predict the duration of the project. It is based on the estimation of the standard time
needed for execution of a activity. CPM manages the both time and cost of the project.
In this method, the critical path of the project is established by identifying the critical
activities of the project. Critical activities are the activities whose total float value is
‘0’.
Advantages of Critical Path Method (CPM):
It has the following advantages:
1. It figures out the activities which can run parallel to each other.
2. It helps the project manager in identifying the most critical elements of
the project.
3. It gives a practical and disciplined base which helps in determining
how to reach the objectives.
4. CPM is effective in new project management.
5. CPM can strengthen a team perception if it is applied properly.
6. CPM provides demonstration of dependencies which helps in the
scheduling of individual activities.
7. It shows the activities and their outcomes as a network diagram.
8. It gives a fair and concise procedure of documenting of project.
9. It helps in determining the slack time.
10. An explicit and clear approach of communicating project plans,
schedules, time and cost performance is developed.
11. It is extensively used in industry.
12. It helps in optimization by determining the project duration.

Disadvantages of Critical Path Method (CPM):

It has the following disadvantages:
1. The scheduling of personnel is not handled by the CPM.
2. In CPM, it is difficult to estimate the completion time of an activity.
3. The critical path is not always clear in CPM.
4. For bigger projects, CPM networks can be complicated too.
5. It also does not handle the scheduling of the resource allocation.
6. In CPM, critical path needs to be calculated precisely.