Understanding Transportation and Logistics Terminology Part 1

Whether you are a freight shipping pro or new to the process, knowing key logistics terminology will help you communicate with those in the industry and understand which services are best for your needs.  This guide will be part of a two-part series as we are going to give you everything you will need to know.  We are grouping it into three categories so that you can understand the freight shipping and logistics process from start to finish.  They are paperwork and billing, types of shipping and transportation modes, and additional logistics.  Part 1 will focus on paperwork and billing and types of shipping and transportation modes.  Part 2 will be on additional logistics terms.

Paperwork and Billing

Getting your shipment ready and understanding the documentation can be confusing as well as the billing that comes along with it.

• Accessorial Charge – Amount billed for additional, supplemental, or special services provided, usually a flat fee.
• Adjustments – Adjustments are a change in the cost of shipping after the delivery of a shipment. Discrepancies in the weight, size, or class will incur a cost adjustment.  Other adjustments that can change the final charge are extra services, such as a lift gate when not originally requested or an inside delivery versus curbside.
• Airway Bill – A bill of lading, which covers both domestic and international flights transporting goods to a specified destination.
• All Risk – All risk coverage, a type of marine insurance, includes the broadest kind of standard coverage but excludes damage caused by war, strikes, and riots.
• Arrival Notification – When the carrier notifies the receiver of scheduled delivery date and time. Arrival notification is an accessorial service provided for an additional fee.
• Bill of Lading (BOL) – The bill of lading is the written contract between the shipper and the carrier, broker or agent. It is a document that contains all the information about freight transport.  It is a legally binding document, so you want to make sure that it is correct.
• Bill Third Party – When shipper requests the “bill to” a person other than the shipper and/or recipient.
• Bunker Adjustment Factor (BAF) – An adjustment in shipping charges to offset price fluctuations in the cost of bunker fuel.
• Carried Paid To (CPT) – The seller delivers the goods to the carrier at an agreed place and that the seller must contract for and pay the costs of carriage necessary to bring goods to the named place of destination.
• 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.
• Delivery Duty Paid (DDP) – 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.
• Delivery Duty Unpaid (DDU) – The seller delivers goods to the buyer to the named place but the goods are not cleared for import and the buyer is responsible for costs and risks of the import clearance, duties, and taxes.
• Detention – Penalty charges assessed by a carrier to a shipper or consignee for holding transportation equipment i.e. trailers, containers, longer than a stipulated time for loading and unloading.
• Freight Class – Number assigned to a commodity.
• Fuel Surcharge – An extra surcharge imposed by the carriers due to excessive fuel costs for diesel gas. The charge is a % based on the U.S. National Average Diesel Fuel Index.
• Pro Number – A number assigned by the carrier to reference your shipment. It is also used for tracking your shipment.
• Redelivery or Re-consignment Fee – After a failed delivery attempt, the carrier will assess a fee for having to deliver the freight again. This fee is usually based on weight with a minimum charge.
• Reweigh and Inspection Fee – If the carrier suspects that the weight or class of your shipment is inaccurate, they will charge a fee to reweigh and re-class your shipment.
• Tariff – A tariff establishes the cost and contract of the logistics shipment.

Types of Logistics and Transportation Modes

There are several different types of shipping and transportation options to choose from.  These are the most commonly used terms.

• Cross-Dock – Transportation terminal in which received items transferred directly from inbound to the outbound shipping dock. With storage only occurring temporarily during unloading and loading. No long-term storage is provided.  Usually used only for vehicle transfers.
• Direct Shipments – When a carrier moves the freight from A to B using solely their own assets and terminals.
• Drayage – A motor carrier that operates locally, providing pickup and delivery service.
• Expedited – The process of shipping at a faster rate than normal. This can include overnight, air freight and driver team for non-stop trucking, among others.
• Flatbed – A semi-trailer with no sides and with the floor of the unit a standard height from the ground.
• Full Truckload (FTL or TL) – When a single shipment takes up the entire truck then it is a truckload shipment. A truckload is ideal for anyone shipping six or more pallets of freight going to the same destination.
• Intermodal – When freight shipping uses two or more modes of transportation. Intermodal typically refers to truck-rail-truck shipments but may also include truck to air shipping or truck to ship if freight is being shipped overseas.
• Less than Container Load (LCL) – consolidated container load.
• Less than Truckload (LTL) – Used for the transportation of small freight that is generally between one and six pallets (or 200 to 5,000 pounds) going to the same destination.
• Liftgate – When the shipping or receiving address does not have a loading dock, manual loading or unloading is necessary. A lift-gate is a platform at the back of certain trucks that can raise and lower a shipment from the ground to the truck.  Additional fees apply for this service.
• Partial Truckload – If there are between 8 and 18 pallets going to the same destination, this could be considered a partial truckload (PTL). They could fill the rest of the truck with other shippers’ LTL loads.  A PTL load can be longer than dedicated truckloads due to multiple stops.
• Reefer – A refrigerated trailer with insulated walls and a self-powered refrigeration unit, most commonly used for transporting food.
• Truckload – Defined as freight weighing 23,000 lbs. or more that occupies half or more of the trailer’s capacity.
• Warehousing – Refers to the storage of goods for a specific time period.