Freight Terminology

Freight Terms

3PL: Third Party Logistics Company

BOL: Bill of Lading

BILL THIRD PARTY: When shipper request the “bill to” as person other than shipper and/or recipient.

BLIND SHIPMENT: When shipper and receiver are not aware of one another.

BROKER: The person who makes freight shipment arrangements on behalf of a person or company.

BULK FREIGHT: Freight that is not contained within packages or containers.

CARRIER: Person or company who transports freight for a fee is known as a carrier.

CARTAGE: A trucking term that refers to shipping freight within the same city or area.

CLASSIFICATION: An LTL term referred to list of articles and classes to which they are assigned.

COMMON CARRIER: A carrier that can be hired by anyone to transport goods.

CONCEALED DAMAGE: When the recipient of the package is not able to see the damage until it is opened.

CONSIGNEE: The person receiving the shipment.

CONTAINER: A container looks like a truck trailer with no wheels and is among the most common freight shipping methods in the US and abroad.  Containers are used for intermodal transportation and come in standard sizes to ensure they fit on standard trucks, rail cars and ships.

CUSTOMS BROKER: Person or company who is licensed by the U.S. Treasury Dept. to act on behalf of freight importers and exporters with respect to U.S. Customs transactions.

EXPEDITED: Urgent, time definite need for freight or any transportation solution

FREIGHT CLASS: Number assigned to a commodity, i.e., engine would be a class 85

GVW: Gross Vehicle Weight – Total weight of transport and its cargo

INBOUND: Shipment coming from vendors to a storage facility.

INTERMODAL: A rail term for weigh freight is shipped using two or more modes of transportation.

INTERNATIONAL: Origin or destination outside the U.S.

LTL: Less than Truckload

NESTED: Term used in “Less-than-truckload” which materials are stacked and one item goes inside another.  Nested freight reduces the amount of space taken up by the combined freight and makes LTL shipping more efficient as a result.

NMFC: National Motor Freight Classification (gives further definition of the commodity)

PARTIAL LOAD: Freight that takes up more than 6 standard skid spots or 10,000 lbs., but takes up less than half a trailers capacity or 23,000 lbs.

SHIPPER: The person shipping the product.

TARIFF: A tariff establishes the cost and contract of the freight shipment.

TIME CRITICAL: Freight shipment is termed time critical when the guaranteed delivery is set to the earliest possible time.

TIME DEFINITE: Delivery is guaranteed that the delivery will occur on a specific day and/or time of day.

TRANSIT TIME: Total time from pick-up to delivery.

TL: Truckload

TRUCKLOAD: Defined as freight weighing 23,000 lbs. or more or that occupies half or more than the trailer’s capacity.

WAREHOUSING: Refers to storage of goods for a specific period of time.

International Freight Terms

AIRWAY BILL: A bill of lading which covers both domestic and international flights transporting goods to a specified destination.

ALL RISK: All risks coverage, a type of marine insurance, includes the broadest kind of standard coverage but excludes damage caused by war, strikes and riots.

BAF: Bunker Adjustment Factor, An adjustment in shipping charges to offset price fluctuations in the cost of bunker fuel.

BONDED WAREHOUSE: The Customs Service authorizes bonded warehouses for storage or manufacture of goods on which payment of duties is deferred until the goods enter the Customs Territory. The goods are not subject to duties if re-shipped to foreign points.

BREAK BULK: For consolidated air freight, it is moved under one AWB and each consignment designated to specific consignee or recipient is under one AWB. When freight forwarder receives the consolidated cargo from carrier, they will break the consolidation apart per AWB then proceed customs clearance along with associated shipping and import documents. Such Break-Bulk is normally handled by airlines or their contracted ground handling agent.

CARNET: A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries for display, demonstration or other purposes without paying import duties or posting bonds.

CIF: Cost, Insurance and Freight, under this term, the seller quotes a price for the goods (including insurance), all transportation, and miscellaneous charges to the point of debarkation for the vessel. (Typically used for ocean shipments only. CIP, or carriage and insurance paid to, is a term used for shipment by modes other than water.)

COMMERCIAL INVOICE: A bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods for the assessment of customs duties and are also used to prepare consular documentation. Governments using the commercial invoice to control imports often specify its form, content, number of copies, language to be used, and other characteristics.

CONTAINER: Standard-sized rectangular box used to transport freight by ship.

CUSTOMS BROKER: Person or company who is licensed by the U.S. Treasury Dept. to act on behalf of freight importers and exporters with respect to U.S. Customs transactions.

DEMURRAGE: Excess time taken for loading or unloading a vessel, thus causing delay of scheduled departure. Demurrage refers only to situations in which the charter or shipper, rather than the vessel’s operator, is at fault.

DIMENSIONAL WEIGHT: Also called measurement weight. This is the size of consignment calculated by total square feet by 6000. Carrier charge for freight based on the dimensional weight or actual gross weight whichever is higher.

DDU: Deliver Duty Unpaid, The seller delivers goods to the buyer to the named place but the goods are not cleared for import and buyer is responsible for the costs and risks of the import clearance, duties and taxes.

DDP: Delivery Duty Paid, Seller is responsible for the delivery of goods to the named place and pays all costs in bringing the goods to the destination including import duties and taxes.

DRAYAGE: A motor carrier that operates locally, providing pickup and delivery service.

DUTY:  A tax imposed on imports by the customs authority of a country. Duties are generally based on the value of the goods, some other factors such as weight or quantity (specific duties), or a combination of value and other factors (compound duties).

HARMONIZED SYSTEM: The Harmonized Commodity Description and Coding System (or Harmonized System, HS) is a system for classifying goods in international trade, developed under the auspices of the Customs Cooperation Council. Beginning on January 1, 1989, the new HS numbers replaced previously adhered-to schedules in over 50 countries, including the United States.

LCL: Less than Container Load, consolidated container load.

TEU: Twenty-Foot Equivalent Unit, Twenty-Foot Equivalent Unit (TEU)

TEU is a measure of a ship’s cargo-carrying capacity. One TEU measures twenty feet by eight feet by eight feet — the dimensions of a standard twenty-foot container. An FEU equals two TEUs.