A - Z of Shipping Terms
Are you new to the shipping and freight game? Not sure about the terminology that you hear from those in the industry. Well, never fear - we have gathered some of the most popular abbreviations and terms we could think of. We have given each of them an explanation that will have you speaking the language in no time.
Bill of Lading (B/L or BOL)
The Bill of Lading is the official shipping document containing details about the shipment. This document shows ownership of the goods. It’s ‘release’ to the recipient of the products. It can be held until final payment for the goods has been made. Without an original paper B/L or an electronic release, the goods cannot be delivered.
Currency Adjustment Factor (CAF)
A charge added to ocean freight to compensate for exchange rate fluctuations.
Cubic Metre - CBM (M3)
Volume is usually calculated in cubic metres (although cubic feet is sometimes used). 100cm x 100cm x 100cm equals one cubic metre.
C&F (or CFR) and CIF
Cost and freight or cost, insurance and freight. This is a term of trading where the buyer of the goods pays an amount which covers the cost of the goods plus the cost of transporting the goods to the port of discharge. CIF also includes marine insurance.
Certificate of Origin
The Certificate of Origin certifies the country where the goods originated. It’s usually issued by the relevant Government Department, Chamber of Commerce or Embassy of the exporting country. These are not always needed but can be used to lower import duties from certain countries.
Container Freight Station. A carrier facility where LCL shipments are loaded or unloaded (normally at or by a port).
The commercial invoice contains the buyer and seller’s details in addition to the type of goods, quantity, price of each product and terms of sale. The commercial invoice is used to declare the goods to customs, therefore, dictating the number of Duties and Taxes to be paid.
The person or company who is receiving the shipment. To whom it is consigned. If you’re importing goods, it’s you or your company. The shipper sends the goods to the consignee.
A standardised metal box usually 20ft or 40ft in length that can be relatively easily interchanged between trucks, ships and trains. Containers are the most common way your goods will be shipped.
Delivered Duty Unpaid. The shipper is responsible for getting the goods to the agreed delivery point. However, the goods are not cleared for import so the consignee must pay the local duties and taxes.
Delivered Duty Paid. The shipper is responsible for getting the goods to the agreed delivery point and paying all costs, including duties and taxes.
Deferment is when a bank account is held with Customs to pay Duty and VAT. If you don’t have your own Deferment account (often the case), then you can use your Import Agent/Customs Broker’s account although they often charge for this.
Charges raised by the carrier for detaining a freight vehicle or container beyond the stipulated time. This arises when shipping full containers and they are held too long at the port or at the delivery point when longer than the 3 hours allotted time is taken to unload the container.
An EORI (Economic Operator Registration and Identification) number lets customs keep a record of what’s being imported and exported. This is required in order to import goods into the UK. Once you have an EORI number, you can use it on your future imports too.
Estimated Time of Arrival. Generally used for the date that the ship or plane is due to arrive at its destination port.
Estimated Time of Departure. Generally used for the date that the ship or plane is due to leave its port of origin and begin its journey.
A term of sale where the buyer is responsible for collecting the goods at the premises of the seller and accepts all costs and liabilities from that point onwards
If you have enough goods to fill either a 20ft, 40ft or 40ftHC container, then your goods would be shipped as a Full Container Load.
Free on Board is a term of sale where the seller is responsible for all charges and liabilities of transporting the goods all the way up to their arrival onboard the ship. It includes all charges at the port of loading.
High Cube (HC or HQ)
Any container which exceeds 8ft 6in (102 inches) in height and usually totals 9ft 6in.
Incoterms are a standardised set of rules that define the rights and liabilities of both buyer and seller in an international transaction. Incoterms are prepared by the International Chamber of Commerce and include FOB, EXW, CIF, DDU etc.
Standard delivery for shipments is kerbside unless otherwise requested. In this case, the driver will park the truck outside your premises; then it is your responsibility to unload your goods. If you don’t have a forklift and delivery is kerbside, you may need a few extra hands to help you out.
Less than Container Load. If you don’t have enough goods to fill a 20ft container, then your goods would be shipped as a part load or LCL. In this instance, your goods will be loaded into a shared container with goods from other companies.
Minimum Order Quantity is the smallest amount of a product that the company will supply. If a buyer cannot meet the MOQ Requirement, their supplier won’t enter production. This is quite commonly used on Alibaba.
The person or company that needs to be notified about the progress of the shipment. This is stipulated on the Bill of Lading.
A list provided by the shipper detailing what goods are within the shipment and information on how they are packed. Number of items, weight and dimensions of the shipment are included.
Port of Discharge. The port at which the goods are unloaded from the vessel.
Port of Loading - POL
The port where the goods are loaded onto the vessel.
The shipper is the sender of the goods. If you are importing goods from an overseas supplier, then your supplier is the shipper. The shipper sends the goods to the consignee.
Shipping Marks and Numbers
Shipping marks are placed on packages for identification purposes. They can be the size and weight of the carton, the recipient, the number of the carton (e.g. 1 of 6 etc.) and sometimes shape. These marks are essential to differentiate the boxes belonging to each set of goods within a shared container.
If your goods are heavy and you don’t have a forklift, then a tail lift might be needed.
Every product has a corresponding code that’s used when goods are cleared through UK customs. This code shows the percentage of duty that’s paid on that product and can be found at www.gov.uk/trade-tariff.
Twenty-Foot (20′) Equivalent Unit. Commonly used when talking about FCL rate increases or representing the number of containers in a particular situation. A 20ft container is one TEU, and a 40ft container is two TEUs (the equivalent size of 2 x 20ft containers).
Telex release and Express release are terms that refer to the electronic handover of the Bill of Lading. Traditionally the original B/L is posted by the shipper to the consignee, and in turn, it must be forwarded on before the goods can be released. Telex release is instant, so it has become the favoured option.
Terminal Handling Charge. The cost for the handling of the goods/container at a port. The THC for FCL shipments is for moving the container itself and for LCL it’s for the packing or unpacking of the goods so is billed in w/m.
Transit time is the amount of time that either the ship or plane is travelling for between the Port of Loading and the Port of Discharge. Not to be misconstrued as the total amount of time it takes to move the goods from door to door.
Weight per measure. This means that the cost will depend on whether the volume or the weight of the shipment is greater when calculating which will be the deciding factor 1.0cbm = 1000kg.
Verified Gross Mass - VGM
Verified Gross Mass, this is required by shippers to confirm the weight of containers before they are loaded. This was started by SOLAS to avoid damages to vessels and health concerns to ship crew.
Still feeling miffed by all these terms? Our team of experts is more than happy to help you with any queries you might have. Many of these topics are covered in our other blogs - we have detailed some links below that might be of interest.