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

1. Accessorial Charge

   Additional fees charged for add-on services or equipment required for the delivery of your cargo.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. Intermodal

    Cargo that is shipped using multiple forms of transportation, such as rail transport and cargo trucks.

13. Lane

    A regular route of transportation taken most often by commercial transporters.

14. 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.

15. 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.

16. 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.

17. Reefer

    A temperature controlled container that keeps cargo such as food at the proper temperature throughout the transportation process.

18. 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.

19. 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

20. Tender

    A fixed price offered to move cargo.

21. 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.

22. 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.

23. 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.

Using a freight broker as a specific service is not necessarily restrictive if it suits your company’s needs, but working with a 3PL provider will know your unique business supply chain needs intimately.

A 3PL can also offer other value-added services that a freight broker might lack.

At the top level, the core component of what a forwarder or broker does is manage the shipments between a shipper and a carrier.

When discussing the movement of goods, some assume the terms “freight forwarder” and “freight broker” can be used to refer to the same thing.

This couldn’t be further from the truth as, beyond their simple semantics, there are very practical differences between the two.

Freight Broker Definition

Freight brokers oversee the movement of freight by connecting the appropriate shippers and carriers.

Brokers must be registered with the Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) for brokerage authority.

But brokers don’t necessarily take possession of the freight. Freight brokers primarily handle shipments with U.S.-based originations and destinations.

While a freight broker can have the ability to handle international movements, those movements are usually in one specific area of expertise.

Freight Broker vs Customs Broker

According to the US’ Department of Homeland Security:

“Customs brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service.”

Further, customs brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service.

In short, a freight broker is an intermediary between a shipper and freight service provider within a country’s borders.

Whereas a customs broker is the intermediary between an importer, or exporter, and a government’s customs department in the country of destination.

Freight Forwarder Definition

Freight forwarders not only coordinate the shipping of freight for their customers, but can also serve the logistical needs for warehousing their products.

More importantly, freight forwarders can handle international shipments moving from country to country through their foreign commerce operating authority provided by the FMCSA.

To put a finer point on it, a freight forwarders clear the movement of freight from one country to another, navigating or “forwarding” shipments through the many legal requirements in each location. 

Freight forwarders will typically ship freight under their own bills of lading. Additionally, they also provide assembly and consolidation services.

They can book cargo space for customers, often directly with the ocean or air provider, and negotiate rates for transport.

The Difference Between A Freight Forwarder and Freight Broker

The main difference between freight brokerage and freight forwarding is that a freight forwarder can take possession of the freight, often to consolidate multiple types of freight, whereas a broker does not.

Therefor, forwarding offers a larger, more encompassing scope of services with specific terminologies and legal requirements.

A freight broker is a service that connects a shipper and freight service provider within the country – often specializing in a certain type of freight transportation such as equipment hauling.

In contrast, freight forwarder is a company that organizes shipments, often internationally, for companies and manufacturers to get their goods from initial production to final point of distribution.

Trust Brimich Logistics To Move Your Goods

Whether you need to move your freight across the country or around the world, Brimich Logistics has the expertise to handle all your freight brokerage, freight-forwarding, and logistical needs.