Mastering Shipping and Logistics: Your Essential Guide to Industry Terminology!
Dive into the world of shipping and logistics with our easy-to-understand guide that unlocks the meaning behind essential industry terms. From freight forwarding to warehousing, customs clearance to supply chain management, we break down complex concepts into simple definitions. No more confusion or uncertainty – gain the confidence to navigate the logistics landscape like a pro. Whether you're a seasoned professional or new to the field, our guide is your go-to resource for unraveling the language of shipping and logistics. Empower yourself with knowledge and elevate your understanding today!
#
3PL (Third-Party Logistics) :
3PL refers to a company that provides outsourced logistics services to businesses. These services can include transportation, warehousing, freight forwarding, inventory management, and other logistics activities. 3PL providers act as intermediaries between businesses and various logistics service providers, coordinating and managing the logistics operations on behalf of their clients.
4PL (Fourth-Party Logistics) :
4PL is an advanced level of logistics service that goes beyond the offerings of a traditional 3PL provider. A 4PL provider typically serves as a strategic partner, managing and overseeing the entire supply chain for a client. They coordinate and integrate various logistics service providers, technology systems, and processes to optimize supply chain efficiency and performance. 4PL providers often take a holistic approach, offering supply chain design, optimization, and continuous improvement strategies.
A
Actual Time of Arrival (ATA) :
The confirmed arrival date at the destination shipping point, typically referring to the Port of Discharge. It indicates when the shipment is expected to reach the destination port, not the final delivery point.
Actual Time of Departure (ATD) :
The confirmed departure date from the original shipping point. This information is obtained upon receiving the Bill of Lading from the carrier, indicating when the shipment left the origin port.
AEO Accreditation :
Organizations accredited by the Authorised Economic Operator (AEO) scheme have demonstrated their high compliance with regulations and security standards in the international supply chain. AEO accreditation signifies that these organizations are trusted and have a lower risk profile, benefiting from certain customs simplifications and trade facilitations.
All Risks Insurance :
All Risks insurance is a comprehensive form of insurance that covers damage or loss of goods during transportation. While it does not cover every possible risk, it provides coverage for accidental damage or loss, offering greater protection compared to other types of insurance.
ATA Carnet :
The ATA Carnet is a document used for the temporary, duty-free importation of goods. It serves as a passport for goods, allowing them to move between countries without the need for customs duties and taxes. The ATA Carnet is recognized in numerous countries that are signatories to the International Convention, facilitating international trade and exhibitions.
B
Bill of Lading (B/L or BOL) :
The Bill of Lading is an official shipping document that contains detailed information about a shipment. It serves as evidence of ownership of the goods and acts as a receipt for the goods received by the carrier. It is typically required for the release and delivery of goods and can be in the form of a physical paper document or an electronic release.
Bonded Goods (B/G) :
Bonded goods are imported goods held in bonded warehouses under the supervision of customs authorities. These goods are subject to duties and taxes and are usually released for re-export or to the importer upon assessment and payment of the necessary charges.
Bonded Warehouses :
Bonded warehouses are secure facilities where imported goods can be stored before the payment of duties and taxes. These warehouses are under the supervision and control of customs authorities and provide a controlled environment for the storage of goods.
Bunker Adjustment Factor (BAF) :
The Bunker Adjustment Factor, also known as the bunker surcharge, is calculated by shipping companies to offset potential financial losses resulting from fluctuations in oil prices. It is added to the freight rates to account for the fluctuating costs of fuel.
Buyers Consolidation (BCN) :
Buyers Consolidation is a process where multiple suppliers' loads are consolidated into a single shipment for a customer. This is typically done to fill a container when a single supplier does not have sufficient stock. It helps optimize shipping costs and streamline logistics for the buyer.
C
Carrier :
A company that transports goods by sea, air, or land from one location to another.
Carrier Owned Container (COC) :
Refers to a shipping container that is owned by the carrier rather than the shipper.
Certificate of Origin :
A document that certifies the country in which the goods originated. It is often issued by the relevant government department, chamber of commerce, or embassy of the exporting country, and can be used to lower import duties from certain countries.
CFS Charge :
A charge incurred at the delivery or receiving point of the ship's cargo at the destination port. The fee is typically based on the size of the container.
Commercial Invoice :
A document that contains details about the buyer and seller, the type and quantity of goods, prices, and terms of sale. It is used to declare the goods to customs and determine the applicable duties and taxes.
Consignee :
The person or company who is the intended recipient of the shipment. In the case of imports, it refers to the buyer or the buyer's company to whom the goods are consigned.
Consolidator :
A company that specializes in combining shipments that are not large enough to fill a container on their own, providing cost savings to shippers.
Container :
A standardized metal box, usually 20ft or 40ft in length, used for the transportation of goods. Containers can be easily transferred between trucks, ships, and trains and are the most common method of shipping goods.
Container Freight Station (CFS) :
A facility where Less than Container Load (LCL) shipments are packed and unpacked, typically located near a port.
Container Yard (CY) :
A location where Full Container Load (FCL) shipments are collected and distributed.
Cost & Freight (C&F or CFR) and Cost, Insurance Freight (CIF) :
Terms of trading where the buyer pays for the cost of goods and transportation to the port of discharge. CIF also includes marine insurance.
Cubic Metre - CBM (M3):
A unit of volume used in shipping, typically measured in cubic meters (or cubic feet), to calculate the space occupied by goods.
Currency Adjustment Factor (CAF) :
A surcharge applied to liner shipping to offset possible financial losses for the carrier due to fluctuating exchange rates between currencies.
Customs Clearance :
The process of clearing shipments through customs, usually performed by a freight forwarder or customs agent, involving the submission of necessary documentation and compliance with customs regulations.
D
Delivered At Place (DAP):
Delivered At Place (DAP) in logistics refers to an Incoterm where the seller is responsible for delivering the goods to a specified location chosen by the buyer, taking care of transportation and export clearance. The buyer assumes responsibility for unloading, import clearance, and any further transportation or costs upon delivery.
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, you can use your import agent or customs broker's account, though they may charge for this service.
Delivered Duty Paid (DDP):
Delivered Duty Paid is an agreement where the seller is responsible for delivering the goods to the agreed-upon location and paying all associated costs, including duties and taxes.
Delivered Duty Unpaid (DDU):
Delivered Duty Unpaid was the old acronym for Delivered At Place (DAP) but is no longer widely used.
Delivery Authorisation Document (DAD):
The Delivery Authorization Document is a document that authorizes the delivery of goods to be picked up by designated parties. It must be presented before collection.
Delivery Order (D/O):
A delivery order is a document issued by the consignee or owner of a freight carrier, instructing the release of cargo for transportation to another party.
Demurrage:
Demurrage refers to charges raised by the carrier for detaining a freight vehicle or container beyond the stipulated time. It typically occurs when full containers are held for too long at the port or delivery point, exceeding the allotted time for unloading.
Drop Shipping:
Drop shipping is a retail fulfillment method where the online seller/retailer sells products without producing or storing them in a warehouse. The drop shipper takes the order, pays the manufacturer, and provides shipping information. The manufacturer then ships the item directly to the customer, making the drop shipper the intermediary or salesperson in the transaction.
E
Economic Operator Registration and Identification (EORI):
An EORI number is a unique identifier used by customs authorities to track imports and exports. It is necessary to have an EORI number to import goods into the UK, and it can be used for future imports as well.
Entry Summary Declaration (ENS):
A document provided by the shipper or importer that contains information about the cargo being transported. It is electronically submitted to the customs office before the arrival of the goods, providing details such as the nature of the goods and the transportation vehicle.
Estimated Time of Arrival (ETA):
Refers to the anticipated date and time when a ship or plane is expected to reach its destination port. It helps in planning logistics and coordinating activities related to the arrival of goods.
Estimated Time of Departure (ETD):
Indicates the projected date and time when a ship or plane is scheduled to depart from its port of origin and commence its journey. It assists in scheduling and organizing the transportation process.
Ex Works (EXW):
A trade term where the buyer is responsible for collecting the goods directly from the seller's premises. The buyer assumes all costs, risks, and responsibilities associated with the goods from the point of collection onward, including transportation and customs clearance.
F
Freight All Kinds (FAK):
Freight All Kinds typically refers to a full container loaded with mixed cargo.
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 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.
Freight Forwarders:
Freight Forwarders are companies that take care of the shipping. An important note is that in England, a distinction is made between freight forwarders (carriers), carriers and shippers (transport companies). Shippers include goods; carriers include transport. Freight forwarders conclude contracts with the shippers and ensure that the goods are moved from one place to another – from the first step to the last.
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.
G
Garment on Hanger (GOH) :
It is a method of transporting garments in which they are hung on hangers inside standard or dry containers. The container is specially modified with strings or bars to securely hold the garments during transit, ensuring they arrive in good condition and can be easily unpacked at the destination.
Gross Weight:
Gross Weight refers to the total weight of a shipment, encompassing not only the weight of the goods themselves but also the weight of the packaging materials. It is an important consideration for logistics, as carriers calculate shipping costs based on the gross weight. Accurately determining the gross weight is essential for proper documentation, freight calculations, and complying with weight restrictions and regulations.
H
High Cube (HC or HQ):
High Cube (HC or HQ) refers to a shipping container that has a height exceeding the standard 8 feet 6 inches (102 inches). These containers are typically 9 feet 6 inches in height, providing additional vertical space for accommodating oversized or taller cargo.
House Airway Bill :
House Airway Bill (HAWB) is a document similar to a Bill of Lading in air freight. However, unlike a Bill of Lading, the HAWB does not confer title to the goods. It is issued by a freight forwarder or consolidator and contains information about the shipment, but it doesn't have the same legal standing as a Bill of Lading.
House Bill Of Lading :
House Bill of Lading (HBL) is a document issued by a freight forwarder or consolidator to cover a single shipment. It includes details such as the names and addresses of the parties involved, as well as specific descriptions of the goods being shipped. The HBL serves as a contract of carriage and provides evidence of the terms and conditions of the shipment.
I
Import Entry Acceptance Advice (E2 Form):
The Import Entry Acceptance Advice (E2 Form) is a crucial document that confirms the successful commitment of an import entry. It provides essential information such as the customs entry number, clearance date and time, consignee details, a summary of the freight, insurance and VAT charges, a breakdown of each item, customs value, and item price. This form plays a vital role in tracking and managing import processes efficiently.
Incoterms:
Incoterms are a standardized set of rules that define the rights and liabilities of both the buyer and seller in international transactions. Developed by the International Chamber of Commerce (ICC), Incoterms include terms such as FOB (Free On Board), EXW (Ex Works), CIF (Cost, Insurance, and Freight), DDU (Delivered Duty Unpaid), and more. Selecting the most suitable Incoterm for your business is crucial to ensure smooth and transparent international trade operations.
International Operating Procedure (IOP):
The International Operating Procedure (IOP) is a comprehensive set of step-by-step instructions adopted by organizations to guide workers in conducting complex routine operations. These procedures are designed to ensure efficiency, consistency, and compliance in international operations. By following the IOP, employees can navigate through intricate tasks with clarity and precision, minimizing errors and optimizing productivity.
International Standard Organizations (ISO):
The International Standard Organizations (ISO) is an esteemed international standard-setting body composed of representatives from various national standards organizations. Its primary objective is to develop and promote globally recognized standards across diverse industries. These standards encompass various aspects such as quality management, environmental practices, information security, and more. The ISO plays a crucial role in fostering uniformity, interoperability, and quality assurance in international trade and commerce.
K
Kerbside Delivery:
Kerbside delivery is the standard method for shipments unless alternative arrangements are requested. With this delivery option, the driver will park the truck outside your premises, ensuring easy access for unloading. However, it becomes your responsibility to unload the goods once they are brought to the kerbside. In instances where forklift assistance is unavailable, it may be necessary to arrange additional manpower to facilitate the unloading process effectively. This approach ensures efficient and convenient handling of your shipments while allowing flexibility based on your specific requirements.
L
Letter of Credit (L/C):
A Letter of Credit (L/C) serves as a contractual agreement that establishes the terms and conditions for documentary credit transactions. It provides a secure mechanism for ensuring that payment will be made to the seller upon meeting the specified conditions outlined in the letter.
Letter of Indemnity (LOI):
A Letter of Indemnity (LOI) is a legally binding document between two parties that guarantees the fulfillment of specific provisions outlined in a contract. This document serves as a form of assurance, ensuring that the agreed-upon obligations and responsibilities will be met by the parties involved.
Lift On/Lift Off (LO/LO):
Lift On/Lift Off (LO/LO) refers to a charge incurred for the process of lifting a container onto and off of a train or another vessel. This handling service ensures the efficient loading and unloading of containers during transportation, maintaining the integrity and safety of the cargo.
Less than Container Load (LCL):
Less than Container Load (LCL) is an option available when the volume of goods does not fill an entire 20ft container. In this scenario, the goods are shipped as a part load, and they are consolidated with shipments from other companies into a shared container. LCL provides a cost-effective solution for shipping smaller quantities of goods, allowing businesses to leverage shared container space while ensuring efficient transportation.
M
Marine Insurance:
Marine Insurance provides coverage for the loss or damage of goods while they are being transported by sea or land carriers. This insurance serves as a protective measure, ensuring that shipments are financially safeguarded in the event of unforeseen circumstances or accidents during transit.
Minimum Order Quantity (MOQ):
Minimum Order Quantity (MOQ) represents the smallest quantity of a product that a company is willing to supply. If a buyer cannot meet the MOQ requirement set by the supplier, production may not commence. This practice, commonly observed on platforms like Alibaba, helps ensure efficient production and supply chain management.
N
Notice of Arrival (NOA):
A Notice of Arrival (NOA) is a communication sent by the carrier or agent to inform the consignee about the arrival of a shipment. It includes details such as the number of packages, a description of goods, shipment weight, and collection charges. This notice serves as a formal notification to facilitate smooth customs clearance and collection procedures.
Notify Party:
The Notify Party refers to the person or company designated to receive updates and notifications regarding the progress of a shipment. This information is typically stipulated on the Bill of Lading, ensuring effective communication and coordination between parties involved in the transportation process.
O
Origin Terminal Handling (OTHC):
Origin Terminal Handling Charges (OTHC) are fees levied by terminal operators for container movements. These charges cover various stages, including activities before departure, movement from the seller's vehicle to the storage area, departing conveyance handling, destination handling, movement from the arriving conveyance to the storage area, and transfer to the buyer's vehicle. OTHC ensures the smooth handling and management of containers during the shipping process.
Overweight Surcharge (OWS):
An Overweight Surcharge (OWS) is an additional fee imposed by shipping lines when a container exceeds the designated weight limits for its size. This surcharge compensates for the extra strain and costs associated with handling overweight containers during transportation.
P
Packing List:
A Packing List is a document provided by the shipper, listing the goods included in a shipment and providing information on how they are packed. It includes details such as the number of items, weight, and dimensions of the shipment. This comprehensive inventory assists in verifying the contents of the shipment and facilitates efficient handling and customs clearance procedures.
Pallet Exchange:
During delivery, a truck driver may require pallets to exchange goods, enabling them to be securely strapped to the carrier pallet. If the required pallets are not provided, there may be a fee associated with the pallet exchange service. This process ensures the smooth transfer of goods and facilitates efficient logistics operations.
Peak Season Surcharge (PSS):
A Peak Season Surcharge (PSS) is an extra temporary fee imposed during high-demand periods. These charges are implemented due to limited space availability on ships during peak seasons, which typically occur between August and October. PSS helps manage capacity constraints and ensures timely and reliable transportation services.
Port of Discharge (POD):
The Port of Discharge (POD) refers to the port where goods are unloaded from the vessel or carrier. This is the designated destination port for the shipment, where the consignee takes custody of the goods.
Port of Loading (POL):
The Port of Loading (POL) is the port from which goods are loaded onto the vessel or carrier for transportation. This is the initial departure point where the shipment begins its journey.
Purchase Order (PO):
A Purchase Order (PO) is a commercial document that serves as the first official offer issued by a buyer to a seller. It outlines the types of products, quantities, and agreed prices or services. The PO is widely used to control the purchasing process and manage the acquisition of products and services from external suppliers.
S
Sea Waybill (SWB):
A Sea Waybill (SWB) is a transport contract similar to a Bill of Lading. However, unlike the Bill of Lading, a Sea Waybill is not required for cargo delivery and serves solely as a cargo receipt. It can be provided in either hard copy or digital format.
Shipper:
The shipper refers to the entity or individual responsible for sending the goods. In the case of importing goods from an overseas supplier, the supplier acts as the shipper. The shipper is responsible for initiating the shipment and dispatching the goods to the consignee.
Shipper Owned Container (SOC):
Shipper Owned Container (SOC) is a term used to describe a shipping container that is owned by the shipper, as opposed to a Carrier Owned Container (COC) that is owned by the carrier or shipping line.
Shipping Instructions (SI):
Shipping Instructions (SI) confirm that space has been allocated on a vessel for a particular shipment. These instructions communicate vital details about the shipment, ensuring that the cargo is properly accounted for and accommodated on the designated vessel.
Shipping Line:
A shipping line refers to a company that directly or indirectly transports cargo via ocean freight. These companies specialize in operating vessels or providing logistics services for the shipment of goods across various trade routes.
Shipping Marks and Numbers:
Shipping Marks and Numbers are labels or markings placed on packages for identification purposes. They typically include information such as the size and weight of the carton, recipient details, carton numbers (e.g., 1 of 6), and sometimes distinctive shapes. These markings are crucial for differentiating and identifying boxes belonging to specific sets of goods within a shared container.
Stock Keeping Unit (SKU):
A Stock Keeping Unit (SKU) is a unique identifier used for inventory management purposes. It represents a distinct type of item for sale, such as a product or service, and includes all associated attributes that distinguish it from other item types. SKUs help streamline inventory tracking and management processes.
Supply Chain Management (SCM):
Supply Chain Management (SCM) involves the management of goods, data, and finances related to a product or service throughout the supply chain.
T
Tail-lift:
When dealing with heavy goods and lacking a forklift, a tail-lift may be necessary. A tail-lift is a hydraulic platform installed at the rear of a vehicle, enabling the safe and efficient loading and unloading of heavy items.
Tariff Code:
Each product has a specific Tariff Code used for customs clearance purposes. This code determines the percentage of duty to be paid on the product. Tariff codes can be found on government websites such as www.gov.uk/trade-tariff.
Telex Release:
Telex Release and Express Release refer to the electronic transfer of the Bill of Lading. Instead of physically mailing the original document, a telex release enables instant transfer, facilitating faster cargo release. It has become a preferred option for its convenience and efficiency.
Terminal Handling Charge (THC):
Terminal Handling Charge (THC) is the fee imposed for handling goods or containers at a port. The THC for Full Container Load (FCL) shipments covers container movement, while for Less than Container Load (LCL) shipments, it includes packing or unpacking services and is billed per weight or measurement.
Transit Time:
Transit time refers to the duration it takes for a ship or plane to travel between the Port of Loading and the Port of Discharge. It should not be confused with the total time it takes to move goods from door to door, as it only accounts for the time spent in transit.
Twenty-Foot Equivalent Unit (TEU):
The Twenty-Foot Equivalent Unit (TEU) is a standard measurement used to represent the number of containers in a specific situation. A 20ft container is considered one TEU, while a 40ft container equals two TEUs. This measurement is commonly used when discussing Full Container Load (FCL) rates or estimating container capacity.
V
Verified Gross Mass (VGM):
Verified Gross Mass (VGM) is a requirement for shippers to confirm the weight of containers before loading them onto vessels. This regulation, initiated by the International Maritime Organization's Safety of Life at Sea (SOLAS) convention, aims to prevent vessel damage and protect the safety of the ship's crew.
W
Weight Per Measure (W/M):
Weight per measure refers to calculating freight charges based on whether the volume or weight of the shipment is greater. The deciding factor is determined by comparing the weight of the shipment (in kilograms) to its volume (in cubic meters). This method helps determine the cost based on the measurement that occupies more space.
