Shipping Terminology for Manufacturers & Distributors
Many manufacturing and wholesale distribution businesses find themselves in the position of having to ship large quantities of freight internationally or domestically, but may find that the processes and terminology used in the world of B2B shipping can be unfamiliar. We’ve compiled this shipping terminology guide to help you make sense of the complex world of international and domestic shipping.
Adjustments: Any differences between the actual shipment and the Bill of Lading. Adjustments may result in additional charges from the carrier to carry a particular shipment. Agent or Freight Agent: An individual or organization who arranges to ship freight on behalf of their clients. Two basic types of freight agents are freight brokers and freight forwarders. Axle Load: The weight limit permitted for each axle of a specific vehicle. The axle load limit is multiplied by the number of axles to make up the weight limit for the vehicle. Back Haul: Carriers often charge less to ship items on the return portion of a round trip. Items being “hauled back” are typically charged at the Back Haul rate. Bill of Lading (BOL): A bill of lading, or BOL, is a contract between shippers, carriers, brokers and agents that defines what is being shipped, how, and to whom. Broker or Freight Broker: A person who arranges to ship freight on behalf of another person or company. Freight brokers negotiate rates and can make decisions on behalf of their clients, and may consolidate shipments from multiple shippers. Bulk Freight: Freight that is stored and shipped in large amounts, stowed loose (not in packages or containers), and handled by conveyors, pumps or shovels. Commodities are often handled as bulk freight––for instance, oil, grain or coal. Carrier: Any company or individual that transports freight for a fee. Chassis: A vehicle, similar to a flatbed trailer, onto which an ocean-going container can be mounted so that it can be hauled with a tractor-trailer. Classification: Items being shipped are classified into 18 freight classes depending on density, stowability, ease of handling and liability. These classifications aid in standardizing shipping rates. Common Carrier: A carrier that can be hired by anyone to transport goods. Common carriers include parcel carriers such as FedEx, most rail and air carriers, and many LTL and FTL carriers. Consignee: The recipient, i.e. the individual or organization receiving the shipment. Consignor: The shipper, i.e. the individual or organization sending the shipment. Consolidation: The act of combining small shipments from multiple shippers into one large shipment. Usually this is done to leverage economies of scale and reduce the rate paid by each shipper. Consolidation can happen “in vehicle” or out of vehicle at a terminal facility. Container: A rectangular metal box that can be used to ship goods by oceangoing vessel, truck, or rail. There are many different types and sizes of container; the most common is the long rectangular container that can be loaded directly onto a tractor-trailer or rail car. COFC (Container on Flatcar): A container that has been mounted onto a railcar for intermodal transportation. Cross-dock: Transferring a shipment from an inbound to an outbound shipping dock. Items being cross-docked are only stored long enough to effect the transfer, which typically takes place in a specialized cross-docking facility. Customs Broker: A person or company licensed by the U.S. Treasury to act on behalf of freight importers and exporters to ensure compliance with U.S. Customs regulations for cross-border transactions. Dead-head: A trip in which no freight is conveyed. i.e., containers are moved full in one direction, and empty in the other. In other words, the inbound trip would contain freight, and the outbound trip would be empty or “dead-head.” Dock: The location in a transportation terminal or warehouse where shipments are loaded and sent, or unloaded and received. Door-to-door: When freight can be shipped on one carrier from point of origin to its destination at one rate. Drayage: Local, short-haul trucking. Drayage is often used to move shipments from rail yards or trucking terminals to port facilities, from port to an intermodal facility, or from either of those to a warehouse or local delivery point. Embargo: Events that delay or prevent shipments from being handled or accepted, such as weather or traffic. Exceptions: When part of a shipment is damaged or items are missing, it is noted as an exception on a delivery sheet. This is done before the delivery can be accepted to indicate a problem exists with the shipment. Freight Forwarding: Freight forwarding is a type of freight agency arrangement that is often used in international shipping. A freight forwarder receives freight and then arranges for transportation to the final destination. A freight forwarder may pick up freight and deliver it to a consolidation facility, arrange transport with third party carriers, or provide other shipping services such as temporary storage, customs services, packaging, consolidation, or splitting shipments into smaller shipments. Freight Brokerage: Freight brokerage is a type of freight agency arrangement where a broker acts as an intermediary between a shipper and a carrier. Freight brokers typically work with multiple carriers across a high volume of shipments. They determine the needs of a shipper and connect them with the carrier best able to meet their needs for the best price. Unlike a freight forwarder, a freight broker never takes possession of the shipment. FTL (Full Truckload) Freight: One of two general types of freight carriage, FTL is when a freight shipment fills the entire truck by volume or weight. Gross Vehicle Weight: The combined weight of vehicle and freight are called the gross vehicle weight or GVW. Handling: Handling, or materials handling, refers to the processes around moving and storing goods and parts during manufacturing, warehousing, and distribution. Inbound Freight: A shipment traveling en route toward or arriving at a receiving facility. Integrators: Air freight haulers that can also handle short and long haul trucking for door-to-door shipment of goods, especially in international shipment. Interchange: Transfer of freight from one carrier or line to another. Interline Shipment: A shipment being moved by two or more carriers, e.g. two different rail or truck carriers. This often happens when using carriers that mainly serve a particular region. Intermodal Freight: Freight that is carried by more than one mode of transportation, such as a combination of rail and truck. Just-in-Time (JIT): Just-in-time (JIT) is a supply chain strategy where companies only receive shipments of goods as they are needed in the manufacturing or distribution process, rather than receiving them and warehousing them. The method reduces storage costs but requires accurate forecasting to prevent shortages. Liner: A vessel that sails to specific ports of call on a set schedule. L&D (Loss and Damage): Loss or damage of shipments in transit or while in the carrier or freight forwarder’s warehouse. Shippers are usually insured against L&D, with terms for handling claims spelled out in the Bill of Lading. LTL (Less than Truckload) Freight: LTL freight is when a freight shipment does not fill the entire truck. LOLO (Lift On / Lift Off): Container or cargo ships where dockside cranes are used to lift containers and cargo on and off the ship. Nested: An LTL shipment where materials are stacked or nested, one inside another, so that they take up less space. Outbound Freight: Freight moving away from a plant, facility, port or terminal, i.e. freight going out. Private Carrier: A private trucking fleet owned and operated by a shipper. Companies that move large amounts of freight, such as grocery store chains or big box stores may operate their own private carrier. Reefer: A refrigerated container. RORO (Roll On / Roll Off): Container or cargo ships where ramps allow wheeled vehicles to roll directly on and off the ship, without requiring the use of cranes. Size or Freight Size: Freight is usually measured by weight or cubic volume. Freight cannot exceed a particular Gross Vehicle Weight limit, even if it is below volume limits (i.e., an item that fits in a truck, but is too heavy.) Tariff: The published fare schedule for freight shipment determined by the carrier. Terminal: A transportation facility where freight enters or leaves the system, or where freight can be consolidated, distributed, transferred between carriers, modes or vehicles, stored or warehoused, or where transportation fleets can be maintained. 3PL (Third Party Logistics): A logistics outsourcing firm that can handle a variety of logistics-related requirements, such as purchasing, inventory management/warehousing, and transportation management. Through Rate: The rate to move a freight shipment from the point of origin to its destination. Time Critical: When a shipment must be delivered as quickly as possible. Time Definite: When a shipment must be delivered at a specific time or on a specific day. TOFC (Trailer on Flatcar): When a truck trailer is mounted onto a rail flatcar for intermodal shipment. Tramp: A vessel that can sail to any port of call without an established schedule. Transit Time: Total time elapsed from pickup to delivery. TL (Truckload): Truckloads are measured by weight or volume. A Truckload is a freight shipment that weighs 23,000 or more pounds, or that occupies half or more than the trailer's capacity. TL or FTL shipments are usually priced per mile, regardless of the size of the shipment. Volume Rate: In LTL shipping, a volume rate is a lower rate offered for shipments over a certain size or weight––typically in excess of 7,000 pounds, or 750 cubic feet. Warehouse: Facility where goods are stored. Warehousing: Storing goods for a period of time. Is there any other shipping terminology that has you confused? Let us know in the comments and we’ll be sure to add it!