Comprehensive Guide to Essential Freight Terminology

General Freight Terms

3PL (Third-Party Logistics): A company that provides outsourced logistics services, including warehousing, transportation, and fulfillment.

Bill of Lading (BOL): A legal document issued by a carrier to a shipper detailing the type, quantity, and destination of goods being transported. It serves as a shipment receipt and a contract of carriage.

Carrier: The company or individual responsible for transporting goods (e.g., trucking companies, shipping lines, airlines).

Consignee: The individual or business receiving the shipment.

Shipper: The individual or business sending the shipment.

Freight Forwarder: A company that organizes shipments for individuals or businesses, often acting as an intermediary between the shipper and carrier.

Incoterms (International Commercial Terms): Standardized terms defining the responsibilities of buyers and sellers in international trade, such as who pays for shipping, insurance, and customs.

Freight Costs and Charges

FOB (Free on Board): Indicates whether the seller or buyer is responsible for goods during transit. For example, "FOB Origin" means the buyer assumes responsibility once the goods leave the seller's location.

Freight Collect: The consignee is responsible for paying the freight charges.

Freight Prepaid: The shipper pays the freight charges before the shipment is delivered.

Accessorial Charges: Additional fees for extra services, such as inside delivery, liftgate service, or residential delivery.

Dimensional Weight (DIM Weight): A pricing method based on the shipment's volume rather than its actual weight, often used for lightweight but bulky shipments.

Shipping Methods and Modes

LTL (Less Than Truckload): A shipping method for smaller freight that doesn’t require a full truckload. Multiple shipments from different shippers are combined in one truck.

FTL (Full Truckload): A shipping method where a single shipment occupies the entire truck, typically used for large or high-volume shipments.

Intermodal Shipping: The use of multiple modes of transportation (e.g., truck, rail, ship) to move goods.

Drayage: The transportation of goods over short distances, often between ports, rail terminals, and warehouses.

Air Freight: Shipping goods via air transport, typically used for high-value or time-sensitive shipments.

Ocean Freight: Shipping goods via sea transport, often used for international trade.

Freight Documentation

Packing List: A document detailing the contents of a shipment, including item descriptions, quantities, and weights.

Commercial Invoice: A document used in international shipping that includes details about the goods, their value, and the terms of sale.

Certificate of Origin (COO): A document certifying the country in which the goods were manufactured, often required for customs clearance.

Manifest: A detailed summary of the shipment, including contents, weight, and destination, used by the carrier.

Freight Units and Measurements

Pallet: A flat platform used to stack goods for easy handling and transport.

TEU (Twenty-Foot Equivalent Unit): A standard measure for containerized cargo, based on a 20-foot-long container.

CBM (Cubic Meter): A measurement of volume used in freight to calculate space occupied by goods.

Gross Weight: The total weight of the shipment, including packaging and pallets.

Net Weight: The weight of the goods themselves, excluding packaging.

Customs and International Shipping

Customs Clearance: The process of submitting documentation and paying duties or taxes to allow goods to enter or leave a country.

Harmonized System (HS) Code: A standardized code used to classify goods for customs purposes.

Duty: A tax imposed on goods imported into a country.

Bonded Warehouse: A storage facility where imported goods can be stored without paying customs duties until they are sold or moved.

Freight Handling and Delivery

Liftgate Service: A service where a hydraulic lift is used to load or unload heavy goods from a truck.

Last Mile Delivery: The final step of the shipping process, where goods are delivered directly to the customer’s location.

Cross-Docking: A practice where goods are unloaded from one truck and immediately loaded onto another for delivery, minimizing storage time.

White Glove Service: A premium delivery service that includes unpacking, assembly, and placement of goods at the final destination.

Freight Risk and Insurance

Freight Insurance: Coverage that protects against loss or damage to goods during transit.

Freight Claim: A formal request for compensation filed by a shipper or consignee when goods are lost or damaged in transit.

Force Majeure: A clause in contracts that absolves parties from liability for unforeseen events like natural disasters or strikes that prevent fulfillment of obligations.