Some restrictions will apply
Ray Bohman -- Logistics Management, 5/1/2002
From time to time, many shippers find it necessary to forward shipments to customers on a c.o.d. (collect on delivery) basis. This occurs when the shipper is flat out unwilling to extend any credit on the payment of its invoice to the customer—perhaps because the customer has a poor credit rating or no established credit rating at all.
If you do make c.o.d. shipments, it is absolutely essential to thoroughly familiarize yourself with the c.o.d. rules of each individual carrier you use. These requirements, usually titled "Collect on Delivery (COD) Shipments," can be found in carrier rules tariffs.
One typical c.o.d. rule is the version published in Southern Motor Carriers, Agent, Rules Tariff SMC-190-K, in which 66 LTL carriers currently participate. That rule—Item 430—has a full 15 sections setting forth all types of provisions and charges that apply on such shipments.
The rule starts off by stating that all c.o.d. shipments must be tendered on one of the following forms as shown in the National Motor Freight Classification (NMFC): the Uniform Straight Bill of Lading, the Straight Bill of Lading-Short Form, or the Straight Bill of Lading. Customized bills of lading meeting the requirement of Section 1(h), Note 2, of the NMFC are also acceptable.
When it comes to the preparation of the bill of lading itself, shippers have two choices. They must either stamp, type or write the letters "COD" on all bills of lading and shipping orders immediately before the name of the consignee, or they must stamp or print "COD" in red letters at least one inch in height with a stroke of 1/4 inch or greater across the face of all bills of lading and shipping orders.
The rule also sets forth what type of information must be shown on the Straight Bill of Lading-Short Form. For example, each package in a c.o.d. shipment must be "plainly marked, labeled, or tagged" showing the letters "COD" and the name and address of consignor and consignee in accordance with NMFC Item 580.
Shippers should also be aware that some restrictions apply as far as the paperwork is concerned: c.o.d. packages will not be accepted on the same bill of lading with non-c.o.d. packages and only packages covered by one c.o.d. bill may be tendered on one bill of lading.
The rule goes on to specify the only forms of payment that will be accepted in payment of c.o.d. shipments by the carrier, namely: 1) cash, up to a maximum of $250, although larger amounts of cash will be acceptable if the consignee or his agent picks up the shipment at the carrier's terminal; 2) bank cashier's check; 3) bank certified check; 4) money order; or 5) personal check of the consignee when so authorized in writing or by endorsement on the bill of lading and shipping order by the consignor. Another provision bars c.o.d. shipments if billed to one company or person with instructions to collect charges from another company or person.
Each carrier's c.o.d. rule may be slightly different, so make sure you check out each one carefully.
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