Freight bill definition
A freight bill is an invoice from a logistics company that details the various costs charged for moving freight.
A freight bill, like any other invoice, informs you of what your business owes the logistics company for moving your freight.
Another important freight-related document called a bill of lading (BOL) can also be referred to as a freight bill.
“The difference between a freight bill and a bill of lading is like night and day,” says Jean-François Laurin, a BDC consultant who helps entrepreneurs with international logistics and compliance. “When you hear the term freight bill, stay open-minded, alert. Is the person really talking about a freight bill?”
He says it’s essential that you know the difference between the two documents in order to protect your business from the risk of misunderstandings, shipment delays, and disputes between trading partners.
How is a freight bill used?
The freight bill presents detailed information about the shipment carried on your behalf. It also itemizes every penny of your costs.
For that reason, financial teams see it as key to analyzing transportation costs as well as planning future business projects.
In a world where supply chains are in upheaval, staying on top of your transportation costs can make a huge difference to your profitability.
What is the difference between a freight bill and a bill of lading?
A freight bill is simply an invoice.
In contrast, a BoL is a legal document between the shipper and the logistics company describing what’s being shipped, how much of it there is, and where it’s going. The BoL proves you own or control and possess the goods described. A BoL is necessary to process and invoice a shipment properly.
This legal status illustrates the major difference between the BoL and freight bill. Another difference is the absence of any cost information on the BoL. That information will be found in detail on the freight bill.
But the freight bill and BoL are similar in one way: they both identify the cargo through product description, dimensions, quantities and weight.
Freight bill vs. bill of lading
|Freight bill||Bill of lading|
|Description of goods||Identifies goods, quantities, cubic volume and weight of goods shipped.||Same as the freight bill|
Details all of the carrier’s charges and services for both the individual and consolidated cost of shipments.Provides essential information on terms and modes of payment.
|Legal status||None||Acts as a legal document conferring title to the goods.|
How do I create a freight bill?
Just as each company has its own format for invoices, each logistics company has its own design for freight bills. Like invoices, freight bills have standard elements. The section below lists them.
Standard elements of a freight bill
Freight bills include the following:
Invoice or freight bill number
This is a unique number issued by the logistics company to identify the document.
The progressive rotating order (PRO) or progressive number enables you to track where your shipment is on its route. The PRO number is equivalent to the tracking number used for small-package deliveries, but it applies to the truckload and less-than-truckload industries. Assigned by the shipping company, the PRO number identifies the shipment, order and carrier involved in the shipping contract.
Bill of lading number
The BoL that accompanies your shipment has a unique number. Your freight bill will cite this BoL number so you can match the BoL with the freight bill to confirm that the shipment received corresponds to what is being billed.
What mode of transport moved your cargo? This form box answers the question with options such as: ocean, air, TL (truckload) and LTL (less than truckload).
Shipper and consignee information
The contact details of both the shipper and consignee (i.e., the party receiving a freight shipment) identify the who, what and where of the respective parties as well as provide any registration numbers required by law.
The goods shipped are identified by their descriptions, product codes, dimensions, quantities and weight.
The freight bill may cover the costs of one or multiple shipments. In the case of the latter, each shipment is identified in a line item, with a grand total defining what you owe the logistics company.
Terms and conditions
As with any invoice, the logistics company states how and when both parties have agreed it will be paid.
This form covers the itinerary of your cargo and the details of all the carriers involved.
Learn how to create a market entry plan, identify new customers, and assess risks, costs and logistics for your global expansion by downloading our free guide for entrepreneurs: Growing in International Markets.