Learn to communicate effectively with shipping companies, speak the language, and avoid the headaches that come from misunderstandings.
Have you looked at your shipping processes in order to save money and control overhead? As a small business owner, there’s a chance you may be spending too much and not getting nearly enough in return.
Smart shipping management requires a basic understanding of industry terminology. The small investment in the time it takes to familiarize yourself with industry-specific jargon will pay dividends by reducing miscommunication.
If your company doesn’t have its own shipping department, you should be aware of shipping terms and conditions, especially before conducting direct imports. No one expects you to learn all the intricacies, but knowing the basics will keep you out of the dark, and out of trouble.
Therefor, here’s a quick reference sheet you can refer to to acquaint yourself with what may be some unfamiliar shipping terminology.
Shipping, Freight, and Logistics Terms
Accessorial Charge
Additional fees charged for add-on services or equipment required for the delivery of your cargo.
Backhaul
When a driver transports cargo during the return trip of a commercial vehicle, is known as a backhaul. This helps the cargo vehicle maximize their trips.
Bill of Lading
A document issued by a carrier to a shipper, signed by the captain, agent, or owner of a vessel. Furnishing written evidence of receipt of the goods (cargo), the conditions on which transportation is made (contract of carriage), and the engagement to deliver goods at the prescribed port of destination to the lawful holder of the bill of lading.
Customs Broker
An individual or firm licensed by, in this case by U.S. Customs & Border Protection, to act for importers in handling the sequence of custom formalities and other details essential to the legal and speedy exporting and importing of goods.
Carrier
A legal entity or entitled individual in the business of transporting passengers or goods for hire. Shipping lines, airlines, trucking companies, and railroad companies are all carriers.
Container
A single rigid, sealed, reusable metal box in which merchandise is shipped by vessel, truck or rail. Ocean shipping containers are generally 20, 40, 45 feet long. Ocean freight container types include: standard, high cube, hardtop, open top, flat, platform, insulated, refrigerated, etc.
Detention
The process of holding a carrier’s driver and/or truck trailer beyond a certain stated period of “free time”, often resulting in the assessment of detention charges. The delay in clearing goods through customs resulting in storage and other charges. The prevention, by government authority, of a vessel and/or cargo leaving port.
Cartage and Drayage
Cartage is the movement of goods for short distances, usually by truck. It is also referred to the charge to pick up, move and deliver good short distances.
Drayage is the charge made for hauling freight or carts, drays or trucks.Freight Forwarder
A person engaged in the business of assembling, collection, consolidating, shipping and distributing less-than-carload or less-than-truckload freight. Additionally, a person acting as agent in the trans-shipping of freight to or from foreign countries and the clearing of freight through customs. Often including full preparation of documents, arranging for shipping, warehousing, delivery and export clearance.
Hazmat
Short for “hazardous materials”, which essentially is any material that could cause potential harm to anything or anyone it comes into contact with. Special endorsements are needed from all parties involved to legally transport hazardous materials.
Incoterms
Short for International Commercial Terms, which are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC). Incoterm define basic shipping terms.
Intermodal
Cargo that is shipped using multiple forms of transportation, such as rail transport and cargo trucks.
Lane
A regular route of transportation taken most often by commercial transporters.
LTL (Less Than Truckload)
A shipment weighing less than the weight required for the application of the truckload rate. These smaller shipments are often combined to create full truckloads.
Lift gate
A mechanism on the back of cargo trucks that allows the driver to load and unload goods more easily. A lift gate is usually required for shipments picked up or delivered to a destination with no shipping dock.
Parcel Service Failure
When you order an item from a retailer, you’re effectively creating a contract between the two of you, even if it’s not written down. If your parcel is late you may opt to contact the courier first, even though it’s the retailer you will need to deal with in order to get compensation. Alternatively, there is a parcel failure refund service, which identifies late or lost deliveries and guarantees your shipment will arrive or be refunded to you no matter what happens.
Reefer
A temperature controlled container that keeps cargo such as food at the proper temperature throughout the transportation process.
Shipper’s Agent
A shipper’s agent is not a carrier, freight forwarder or broker. Shipper’s agents generally arrange for truckload or container load shipment transportation. Shipper’s agents commonly provide services related to warehousing or loading and unloading.
Tariff
A Tariff is a document setting forth applicable rules, rates and charges (often in the form of additional taxation) to move goods. A tariff sets forth a contract for the shipper, the consignee, and the carrier
Tender
A fixed price offered to move cargo.
Third-Party Logistics (3PL)
A term used when distribution services are outsourced through a third-party. Brimich Logistics may be considered a third-party global logistics company.
Transportation Management System
Often abbreviated to TMS, this is specific software that allows freight forwarders to easily analyze and automate transportation operations. It’s especially beneficial for companies handling large amounts of commercial cargo.
Truckload (TL)
Large-volume shipment from a single customer that weighs more than 10,000 pounds or takes up a complete trailer space so no other shipment can be loaded.
The Benefits of Working With a Freight Broker
For a small business, a freight broker can eliminate a lot of the anxiety surrounding freight shipping. Therefor it’s helpful to have a good handle on basic terminology.
Speaking the same language will ensure clear communication and hopefully as mentioned, prevent misunderstandings.