Logistics is very broad, and there are different terms associated with it. There is no excuse for not knowing what a term in your logistics contract mean. Knowing your logistics terms help you make the right decisions when making freight choices, negotiations and eventual awarding.
The purpose of this post is to enlighten you on the most commonly used terms and their meanings.
1. Shipper:
Shipper is the person or company who is usually the supplier or owner of commodities shipped. When shipping is outsourced, the shipper can also be the logistics company handling the goods from Origin. Shipper can also be referred to as Consignor.
2. Consignee:
Consignee is the receiver of the goods, and they are financially responsible for this receipt. The consignee can also be a logistics company if the contract is outsourced
3. Port of Departure(POD):
The port from which an airplane of ship originates.
4. Port of Arrival(POA):
Port of arrival means the water, air, or land port at which a plane, ship or vehicle arrives a country.
5. Forwarder:
A freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common carrier (NVOCC), is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.
6. Full Container Load (FCL):
is an ocean shipment in which the cargo occupies a full container (of any size). Sometimes the container may not be fully filled, but the rate is charged on the basis of a full container. FCL is the standard form of shipping for a large cargo. The goods in the container are owned by one shipper, which comes with one Bill of Lading (BOL).
7. Less Container Load(LCL):
Less Than Container Load is a term used to describe a shipment in small quantity that cannot occupy the whole of a container. In other words, a carrier or a shipping company puts together multiple shipments to be transported as a single shipment in a container.
8. Airway Bill (AWB):
An Air Waybill is a transportation document issued by an international air carrier, stating the detailed information about the shipment of goods and how it can be tracked. Among other things, the document contains the terms and conditions of the shipment, carrier’s limit of liability, description of goods and the procedure to make claims. AWB can also be referred to as an air consignment note. There is an adopted standard for issuing AWB document and it is used across the world in both international and domestic traffic.
9. Bill Of Lading (BOL):
A Bill of Lading is a required document provided by a carrier to a shipper detailing a type of shipment, quantity and the destination of the shipment. The document serves three main functions. It serves as a contract, a shipment receipt and specifies the title of ownership of the cargo. One of the key importance of BOL is to ensure the delivery of goods to the importer and the receipt of payment by the exporter.
10. Booking number:
A booking number is a numerical value assigned to the reservation of a place or service. The number is used to identify (in some cases, trace) the status of goods, storage or services provided by suppliers. For shipping, it is the reservation number issued by a carrier or freight forwarder to shippers. Mostly, the booking number is found on the receipt, invoice, tickets, etc received by customers after making a reservation. The term booking number is also known as PNR Code, reference number, or confirmation number.
11. Bonded Terminal:
A bonded terminal is a warehouse or a storage area approved by the customs authority for a temporary storage of imported goods. The goods are kept in the terminal until the customs duty is paid or the goods are cleared by the authority.
12. Commercial Invoice:
Commercial invoice is a legal document provided by a seller to a buyer in an international transaction. The document serves as a contract and proof of sales between the two parties. It details the number of goods sold, the prices and their value. Commercial invoice is an essential document when exporting or importing goods. For the clearance of imported goods, commercial invoice must be presented to the customs authority who uses the document to assess the amount due on taxes.
13. Customs Duty:
Customs duty is a tax or fee imposed on imports and exports of goods by the customs authority at the directives of the government of a country. Economically, the duty is charged to generate revenue for the government. The customs duty is also impose to restrict foreign products from flooding the local market. As a result, it protects local goods against the dominance of foreign products. Moreover, taxes and fees are charged to penalize a country by means of a sanction mechanism.
15. Door to Door:
Door-to-door is a shipping arrangement where goods are picked from the facility of the sender to the facility of the customer.
16. Demurrage:
Demurrage is a fee levied on a consignee by a consignor in case rented containers are not cleared at the port or terminal and returned to the consignor’s named place. Normally, laytime (a free allotted time) is given to the consignee. Within this free time, the consignee must clear and return the container. Otherwise, a fee is chargeable for overstaying his time at the port.
17. Intermodal transportation:
Intermodal transportation is a freight delivery method that involves two or more modes of transportation.
18. Cartage:
Cartage refers to freight that you are shipping from one location to another within the same city or within the same area
19. HAWB:
HAWB stands for House Air Waybill, which is issued by a freight forwarder to a shipper after the receipt of a shipment. HAWB signifies a confirmation that the forwarder is to deliver the shipper’s goods to an agreed named place. In generally, the process of shipping goes from the shipper to the forwarder, who then passes the goods to a carrier. On receipt of the goods from the shipper, the forwarder issues the HAWN. On the other end of the process, the carrier issues MAWB – Master Air Waybill when the goods are received from the forwarder.
20. MAWB:
MAWB stands for Master Air Waybill. The document is issued by a carrier to a freight forwarder upon receiving a shipment to be delivered to a named location as agreed in the shipping terms. Generally, shipping process starts from a shipper who delivers goods to the forwarder. The forwarding company then passes the goods to the carrier company. On receipt of the goods from the shipper, the forwarder issues the HAWB – House Air Waybill. On the other side of the process, MAWB is issued by the carrier.
21. HAZMAT:
Hazmat is an abbreviation for “hazardous materials”. It means the substances which are flammable or poisonous, and would be a threat to life, property or environment if released carelessly. Hazmat can be gases, liquids or solids. It includes toxic chemicals, fuels, nuclear waste products, biological, chemical and radiological materials with strong potential to cause harm.
22. HS Code: HS code is the short form of Harmonized Commodity Description and Coding System. Basically, it is a standardized format of classifying or describing type of shipments worldwide. When goods are transported internationally, HS code is issued based on the classification of the shipment. This code is always required at the border-crossing by the customs authority for checks. And the code makes it easier for the authorities to verify shipments according to the description on the HS code. The maintenance and development of HS code is managed by World Customs Organization (WCO).
23. Inbound Logistics:
Inbound logistics refers to the transportation, the storage and the receiving of goods into a business. It relates to goods procurement for office use or for the production unit. In a manufacturing company, the production unit purchases raw materials or components from its suppliers for the production of other goods.
24. Outbound Logistics:
Outbound logistics refers to the transportation, the storage and the delivery of goods to customers or other businesses. It relates to the sales of goods (out of the company) i.e. the outflow of goods from the production line to the end user.
25. Incoterms:
Incoterms are international terms developed and issued by the International Chamber of Commerce. Incoterms are formed of three-letter trade terms defining costs, tasks, and risks associated with the delivery and transportation of freight. Also known as International Commercial Terms, Incoterms are widely accepted and adopted by governments, service providers, industry practitioners, and legal authorities.
26. Inventory:
Inventory refers to finished goods or raw materials stored on site or in a company’s warehouse. Usually, finished goods are readily available for sale while raw materials are available to be processed for further development of another product. Inventory is an important part of a company’s assets which is shown in the balance sheet at the end of each fiscal year.
27. Outsourcing:
Outsourcing is the transfer of entrepreneurial tasks and structures to external service providers. Basically, the term is used to describe an agreement between two companies, where one company hires another to carry out specific tasks on behalf of the hirer. It also refers to the outsourcing of jobs to lower-cost subsidiaries. Primarily, outsourcing is used by companies to save costs, be efficient and improve the quality of goods or services. Further, outsourcing can improve the strategic positioning of a company in the market.
28. Less Truck Load(LCL):
Less Than Truckload means a shipping service for small quantities of freight. Principally, the freight loaded into a truck will not take up the entire space of the truck, and thereby provides room to accommodate more smaller shipments. LTL service meets the needs of small businesses that need to move goods in smaller batches. For this, shipping companies combine different shipments from various customers with multiple stops. Essentially, each customer only pays for the capacity their freight occupies.
29. Full Truck Load(FTL):
FTL stands for full truckload shipping. Normally a shipper will choose this method of shipping if the goods he needs to transport will take the entire space of a truck. Full truckload services are especially recommended if the shipper has more than ten pallets to ship. FTL shipments stay in the same truck from pick-up to drop-off. The transit time for FTL is less, compared to LTL or PTL shipping. This makes it a perfect option for companies that need to transport freight in large quantities.
30. Reverse Logistics:
Reverse Logistics is a method used to recover and reuse discarded items and used packaging from the customer. In other words, the concept of reverse logistics refers to the fact that reusable packaging and/or damaged products can be recycled and reused by the original manufacturer.
31. Roll On/Roll Off(RORO):
Roll On / Roll Off are uniquely designed vessels for transporting cargoes (e.g. cars, trucks, trailers, etc.) with wheels. The unique design of these kind of vessels make it much easier for the cars and trucks to drive in and drive out (loading and unloading) without using cranes.
32. Routing:
Routing is the process of scheduling the time and direction for traffic in public networks. On the same note, rerouting is the act of changing the route through a tunnel or in similar circumstances, such as roadblocks or changes on the road ahead.
33. Transit time:
Transit time is the interval needed for a shipment to be delivered once it has been picked up from the point of departure. Basically, it is the amount of time spent when moving goods from one point to another. The transit time vary according to route and the mode of transportation used. The exact time is mostly measured in hours and days.
34. 3rd Party Logistics:
Third-party logistics, also known as 3PL, is a system where an organization (a third party) provides logistics services to companies in need of inventory management and distribution.
35. Tare Weight:
Tare weight is the acceptable or officially known weight of an empty vehicle or container. When the tare weight is subtracted from the gross weight, it gives the net weight of a cargo. Based on this calculation, the charges for the cargo is determined.
36. Warehouse Receipt:
A warehouse receipt is a document showing the list of goods deposited in the warehouse. When the warehouse keeper confirms that the inbound goods have been accepted/delivered for storage, the warehouse receipt is then issued. Generally, the warehouse keeper handles the warehousing and storage of goods on a commercial basis.
37. Waybill:
A Waybill is a document, commonly used in consolidated consignment transport. A Waybill lists the individual items but also informs the person receiving the document what type of charges he needs to collect from the recipients. Waybills are often forwarded using remote data transmission.
38. Waste Management Logistics:
Waste management logistics is applying the logistics concept to residues (secondary raw materials, waste). Waste management logistics is guided by both economic and ecological objectives. By handling waste management tasks, waste management logistics actively contributes to solving ecological problems and demonstrates the role that logistics plays in the area of environmental protection.
39. Terminal:
A terminal is an area or location which serves as a pathway for handling transport process (loading and/or unloading cargo) or it can also act as a transfer point for passengers.
40. Reefer Containers:
Reefer Containers are uniquely designed containers for transporting perishable goods such as fruits, vegetables, seafood, meat, etc and pharmaceutical products. These type of products are chilled or frozen for preservation during shipment.
Do you have more terms you would want to add, please add on the comment section. And if you need further clarification on any of the logistics, we will be more please to shed more light. Email us via info@edasglobalsupplychain.com