Are you new to the shipping and freight industry? Not sure about the terminology that you hear from those in the sector? This article can help.
Here we have gathered the most popular abbreviations and terms used in freight and logistics all over the world. On this page, we have alphabetically listed each term and given an explanation so you will be speaking the industry language in no time.
3rd Party Logistics (3PL)
3PL service is where a business outsources the management of it's transportation and logistics, but still has eyes over its whole supply chain. As part of 3PL, extra services are included where necessary, such as warehousing, terminal operations and customs brokerage.
4th Party Logistics (4PL)
4PL is one step up from 3PL. It includes everything involved in 3PL, but in this example the business is outsourcing the organisation, planning and management of the entire supply chain as well.
Actual Time of Arrival (ATA)
This is the confirmed arrival date at the destination shipping port. It's essential to be aware this usually is referring to the Port of Discharge rather than the final delivery point.
Actual Time of Departure (ATD)
The confirmed departure date from the original shipping point. This information becomes available after receiving the Bill of Lading from the carrier.
AEO Accreditation
Organisations accredited by the Authorised Economic Operator scheme have demonstrated that their role in the international supply chain is highly compliant with regulation and secure, particularly in regards to their customs processes.
All Risks Insurance
All Risks insurance is the most comprehensive form of insurance for the transportation of goods. It protects against cargo losses for a range of external factors, but not all. Shippers should read the wording of any contract thoroughly to ensure they're happy with the factors covered by their policy.
ATA Carnet
The ATA Carnet is a document used for the duty and tax-free import of goods for up to a year. It acts as a passport for your goods, meaning shippers can temporarily admit goods into a country, without having to go through the complex customs procedures of each country. It exists to help businesses when shipping products for a trade show, exhibit or other temporary purpose.
Bill of Lading (B/L or BOL)
The Bill of Lading is released by the carrier or airline once they have received the goods they are transporting on behalf of the consignor. It's the official shipping document, which containing details about the cargo, including shipper and consignee contact information. The carrier may refuse to release the BOL until the transportation has been paid for.
Bonded Goods (B/G)
Bonded goods are dutiable goods, but where the duty has not been paid. They are typically stored under the supervision of customs authorities in bonded warehouses. Bonded goods are usually released for export or to the consignee upon assessment and payment of elements such as import duties, taxes, and other charges.
Bonded Warehouses
A bonded warehouse is a secure location where goods with duty to be paid may be stored before that payment has been made.
Bunker Adjustment Factor (BAF)
The shipping company calculates this factor, also known as the bunker surcharge, based on fluctuating oil prices so that the possible financial losses in fuel costs can be offset. It exists to protect ship operators from short term fluctuations in oil price which impact their margins.
Buyers Consolidation (BCN)
Buyers Consolidation is when several suppliers loads are being consolidated for a single customer. This is usually done to fill a container when a single supplier doesn't have sufficient stock.
Carrier
A company which transports goods across sea, air or land. In sea freight, these are also known as shipping lines or ship operators. In air freight these are typically referred to as airlines. For road they are usually known as hauliers.
Carrier Owned Container (COC)
This is a term used when a carrier owns their own shipping container compared with a Shipper Owned Container (SOC).
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.
Commercial Invoice
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.
Consignee
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.
Consignor
The consignor is the person or company sending the shipment. They are responsible for packing and labelling the goods. Then their responsibilities vary depending on the incoterms involved in the transaction.
Consolidator
In logistics, a consolidator is a company which focuses on combining shipping loads which aren't big enough to fill a single container. This means that the shippers get reduced costs because they aren't having to pay for an entire container by themselves.
Container
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.
Container Freight Station (CFS)
A Container Freight Station is a place for packing and unpacking Less than Container Load (LCL) consignments (normally at or by a port).
Container Freight Station Charge
The Container Freight Station (CFS) charge is levied against LCL shipments. At origin and destination, the Container Freight Station will charge a fee for the packing and deconsolidating goods. The size of the fee is dependant on the size of the container.
Container Yard (CY)
A container yard is a collection and distribution point for Full Container Load (FCL) consignments.
Cost & Freight (C&F or CFR) and Cost, Insurance Freight (CIF)
Cost and freight or cost, insurance and freight are incoterms. It means the buyer of the goods pays an amount that covers the cost of the goods plus the cost of transporting the goods to the port of discharge. CIF also includes marine insurance.
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.
Currency Adjustment Factor (CAF)
The Currency Adjustment Factor is a percentage surcharge for liner shipping. This surcharge is designed to offset possible financial losses for the carrier due to the fluctuating exchange rate between currencies.
Customs Clearance
Customs Clearance refers to the process of shipments passing through the customs authorities on entry or exit into a country or customs union. It's requires the correct documentation to be submitted and possibly an inspection from authorities.
Delivered At Place (DAP)
Delivered Duty Unpaid is an incoterm meaning the seller is responsible for ensuring the goods arrive at the destination, but the responsibility of paying import duties is with the consignee.
Deferment
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.
Delivered Duty Paid (DDP)
Delivered Duty Paid is an incoterm which means the seller is not only responsible for getting the goods to the agreed delivery point, but also paying all costs, such as duties and taxes.
Delivered Duty Unpaid (DDU)
Delivered Duty Unpaid is the old Delivered At Place (DAP) incoterm and is no longer widely used.
Delivery Order (D/O)
A delivery order is a document from a consignee or an owner of a freight carrier that orders the release of cargo transportation to another party.
Demurrage
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. Often in times of congestion or other supply chain shocks, these charges can be picked up through no fault of the shipper.
Drop Shipping
Drop shipping is a retail fulfilment method that allows the online seller/retailer to sell products without ever producing or storing them in a warehouse. The drop shipper takes the order, pays the manufacturer, and then provides them with shipping information. Finally, the manufacturer ships the item directly to the customer. Thus, the drop shipper is the middle man or the salesperson. This has become a ubiquitous method of online retail over the past several years.
For example, Amazon is still somewhat of a drop shipper in that they don't produce most of the products they sell. Although profit margins are lower, it is still an attractive and popular business model because retailers don't have to worry about storing any inventory, allowing the business to focus on gaining new customers.
Economic Operator Registration and Identification (EORI)
An EORI number is a requirement of trading in or with the EU. It's used to identify businesses trading, allowing customs keep a record of what each business is importing and exporting. You can view the UK government pages on how to get an EORI number here.
Entry Summary Declaration (ENS)
An Entry Summary Declaration must be submitted by the shipper or importer before goods arrive at customs, to ensure they pass through customs clearance without delays. The UK and EU both have their own requirements for an ENS.
It's a document which contains vital safety and security information related to the shipment, including the EORI number, a description, the weight, contact details and more. How early you have to submit this information depends on the arrival port and method of transportation.
Estimated Time of Arrival (ETA)
Generally used for the date that the ship or plane is due to arrive at its destination port.
Estimated Time of Departure (ETD)
Generally used for the date that the ship or plane is due to leave its port of origin and begin its journey.
Ex Works (EXW)
An incoterm 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.
Freight All Kinds (FAK)
Freight all kinds is used when talking about all types of freight. For example, shipping lines may impose general rate increases on FAK, meaning all different types of freight being transported will be subject to the GRI.
Forwarder's Cargo Receipt (FCR)
An FRC is a document issued by the freight forwarder or their agent to the shipper of the cargo. This document is issued when the shipment has been handed over to the freight forwarder.
It serves exclusively as confirmation that the cargo has been received and the consignee now takes full responsibility for the shipment.
Free on Board (FOB)
Free on Board is an incoterm 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.
Freight Forwarders
Freight Forwarders are a key part of the shipping process. They are the companies who can manage the movement of freight across the world from point A to point B. Freight forwarders operate by combining the volumes of many shippers, giving them access to preferential rates than if the shippers went directly to the carriers themselves.
Freight forwarders are service suppliers for businesses with international supply chains, and the customers for airlines and shipping lines.
Full Container Load (FCL)
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.
Garment on Hanger (GOH)
Garment on Hanger is carried on standard or dry containers on hangers. The container is converted to safely and conveniently carry GOHs.
GOH is most commonly done with strings or bars, depending on the type of garment or material.
General Rate Increase (GRI)
This is when shipping lines impose a base freight rate increase across certain shipping routes. It is a common practice in the ocean freight industry as carriers adjust to new market conditions or boost their profitability. Shipping lines will typically provide a few weeks' notice for a GRI.
Gross Weight
Gross Weight is the weight of the delivery, including packaging.
High Cube (HC or HQ)
Any container which exceeds 8ft 6in (102 inches) in height. Usually, these containers are 9ft 6in.
House Airway Bill (HAWB)
The House Airway Bill is similar to a Bill of Lading, however it's issued by a freight forwarder to a shipper, acknowledging that the forwarder has received the goods for transport. It contains all the details about your package.
House Bill of Lading (HBL)
A freight forwarder or consolidator issues a House Bill of Lading (HBL). A HBL covers a single shipment containing the names, addresses and specific descriptions of the goods shipped.
Import Entry Acceptance Advice (E2 Form)
Import Entry Acceptance Advice form is issued by customs officials, stating that an import has been accepted for processing. It's a confirmation that work has begun on clearing the goods for entry into the country. It includes critical information such as:
- Customs entry number
- Clearance date and time
- Consignee
- Summary of freight
- Insurance and VAT charges
- Breakdown of each item
- Customs value
- Item price
Incoterms
Incoterms are a standardised set of rules that define the rights and liabilities of both buyer and seller in an international transaction. There are 11 incoterms in total, prepared by the International Chamber of Commerce, including FOB, EXW, CIF, DDU and more.
These are a vital part of international trade, governing the responsibilities and risk of the buyer and seller when trading across borders. The incoterms in use can have a dramatic impact on the costs involved in a trade, therefore they must be carefully considered and factored into any pricing structure.
International Operating Procedure (IOP)
The International Operating Procedure is a set of step by step instructions adopted by shipping companies or freight forwarders to assist workers when conducting complex operations. It helps workers ensure that their process is consistent and efficient.
International Organization for Standardization (ISO)
The ISO is an independent, international standard-setting body composed of representatives from various national standards organisations. They set standards which ensure safety, reliability and quality of certain products or services. For example, the WTA Platform CO2 emissions tracker is compliant with ISO 14083.
Kerbside Delivery
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.
Letter of Authorisation
A Letter of Authorisation or a Letter of Authority in shipping is issued by the consignee or consignor which allows another party to act on their behalf for certain tasks.
Letter of Credit (L/C)
A letter of credit is a contract in which the terms of documentary credit transactions are established.
Letter of Indemnity (LOI)
A letter of Indemnity, or LOI, is a contractual document between two parties. This contract guarantees specific provisions will be met depending on the contract.
Lift On/Lift Off (LO/LO)
Lift On/Lift Off refers to a charge for lifting a container on and off a train or other vessel.
Less than Container Load (LCL)
Less than Container Load is for when you are not shipping enough goods to fill a 20ft container. In this scenario, your goods can be shipped as LCL. It means, your goods will be loaded into a shared container with goods from other companies. While this allows shippers to send goods for a lower overall price, cost per item is generally higher and customs are generally more complex.
Marine Insurance
Marine Insurance is the name for insurance which covers for loss or damage of goods whilst they are being transported by carriers via sea, air or land. Despite the slightly misleading title, insurance for goods during road or air transit can still be called marine insurance. It's less about the mode of transport and more about covering the risks involved in transportation.
Minimum Order Quantity (MOQ)
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.
Notice of Arrival (NOA)
The carrier or agent sends a notice of arrival to inform the consignee of the following:
- Arrival of a shipment
- Number of packages
- Description of goods
- Shipment weight
- Collection charges
A notice of arrival is also sometimes known as an arrival notice.
Notify Party
The person or company that needs to be notified about the progress of the shipment. This is stipulated on the Bill of Lading.
Origin Terminal Handling (OTH)
Origin Terminal Handling refers to the services that the port of departure complete before the container departs on a vessel or plane. These can include documentation processing, movements, inspection and storage.
Charges associated with these services are called Terminal Handling Charges.
Overweight Surcharge (OWS)
An Overweight Surcharge is a fee charged by shipping lines when a given container exceeds the designated acceptable weight range for its size.
Packing List
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 all included.
Pallet Exchange
When a truck driver picks up a delivery of goods, they will often have to bring pallets to exchange the goods so that the pallets can be strapped to the carrier pallet. If no pallets are brought, there is usually a fee for the pallet exchange.
Peak Season Surcharge (PSS)
Peak Season Surcharge is an additional temporary fee required during a high season. This reflects how space on the ship can become scarce during these times. The shipping high season for sea freight between Asia and Europe/America is usually the period between August and October.
Port of Discharge (POD)
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.
Purchase Order (PO)
A purchase order is a commercial document and the first official offer issued to a seller. The PO indicates everything, such as types, quantities and agreed prices or services. It is also often used to control the purchasing of products and services from external suppliers.
Sea Waybill (SWB)
A Sea Waybill is a transport contract in the same as a Bill of Landing. However, a Sea Waybill is not needed for cargo delivery and is only issued as a cargo receipt. It can be provided in hard copy format or digital format.
Shipper
The shipper is the sender of the goods, a synonym for the consignor. If you are importing goods from an overseas supplier, then your supplier is the shipper. The shipper sends the goods to the consignee.
Shipper Owned Container (SOC)
This is a term used when a shipper owns their own shipping container compared with a Carrier Owned Container (COC).
Shipping Instructions (SI)
Shipping instructions are provided by the shipper/consignor to the freight forwarder or carrier. It contains all the information necessary to successfully get the items to their destination.
Shipping Line
A shipping line is a company that directly or indirectly transports cargo via ocean freight. It's used as a synonym for carrier, but only when referring to ship owners.
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.
Stock Keeping Unit (SKU)
A stock-keeping unit, or SKU, is a common form of inventory management. An SKU is a distinct type of item for sale. Within spreadsheets or PIM software, SKUs will be stored alongside all attributes associated with the item type that distinguish it from other item types.
Supply Chain Management (SCM)
Supply Chain Management, involves managing the flows of goods, data, and finances related to a product. The supply chain includes all business processes from procuring raw materials to delivering the product to its final destination and any returns policy. SCM is the management of this process to find optimisations and improvements.
Tail-lift
These are attached onto some vans, allowing you to lift items from the floor into the back of the van.
Tariff Code
Every product has a corresponding code that’s used to establish exactly what the goods are and the duty which needs to be applied when goods are cleared through customs. This code shows the percentage of duty that’s paid on that product and can be found at www.gov.uk/trade-tariff.
Telex Release
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 (THC)
Terminal Handling Charge is the cost that the port charges for completing the necessary services for your container to leave the port.
Transit Time
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.
Twenty-Foot Equivalent Unit (TEU)
A twenty-foot equivalent unit (teu) is one standard size 20ft container unit which sea freight goods are shipped in. The other typical size is a forty-foot equivalent unit. The size of modern shipping container vessels is typically measured in gross tonnage and the number of teu they can carry. The biggest ships can currently carry roughly 24,000 teu.
Weight Per Measure (W/M)
Weight per measure is the term given to the method of calculating the chargeable weight of a shipment. Shipping costs, particularly in LCL or air freight are calculated depending on either the overall weight of the goods, or the amount of space it requires.
It means that the cost will depend on the volume, or the weight of the shipment. Whichever is greater when calculating weight per measure.
Verified Gross Mass (VGM)
Verified Gross Mass, this is required by shippers to confirm the weight of containers before they are loaded.
