20 May Global Logistics Management: Glossary of Terms
The transportation and freight industry has a unique and expanding vocabulary. For even the seasoned and global logistics management team member the lexicon can be a little overwhelming. The below list of freight terms can be a useful guide and resource.
A
Accessorial (Assessorial) Charges
Extra fees attached to transportation services for duties beyond shipping a good from point A to point B. Examples of services on which a company may attach accessorial charges include waiting time, storage, packing, extra fuel, and so forth. Accessorial charges are also called assessorial charges.
Air Freight Forwarder
An air freight forwarder provides pickup and delivery service under its own tariff, consolidates shipments into larger units, prepares shipping documentation and tenders shipments to the airlines. Air freight forwarders do not generally operate their own aircraft and may therefore be called “indirect air carriers.” Because the air freight forwarder tenders the shipment, the airlines consider the forwarder to be the shipper. A global logistics management solution will typically employ at least on air freight forwarder for expedited shipments from foreign soil.
Air Waybill
Type of bill of lading that serves as a (1) receipt of goods by an airline (carrier) and (2) as a contract of carriage between the shipper and the carrier. It includes (a) conditions of carriage that define (among other terms and conditions) the carrier’s limits of liability and claims procedures, (b) a description of the goods, and (c) applicable charges. The airline industry has adopted a standard format for AWB which is used throughout the world for both domestic and international traffic. Unlike a bill of lading, an AWB is a non-negotiable instrument, does not specify on which flight the shipment will be sent, or when it will reach its destination. See also forwarder’s air waybill. Also called airbill or air consignment note.
Articles of Extraordinary Value
Carriers are not liable for “documents, coin money, or articles of extraordinary value” unless the items are specifically rated in published classifications or tariffs. Exceptions may be made by special agreement. If an agreement is made, the stipulated value of the articles must be endorsed on the bill of lading. Articles may include precious stones, jewels and currency. Many tariffs include restrictions on goods with values in excess of a specified amount.
B
Bill of Lading (BOL or B/L)
A legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver.
Bonded Carrier
A transportation provider U.S. Customs allows to carry customs-controlled merchandise between customs points. A transportation broker bond is a surety bond that helps protect shippers and motor carriers. If the broker, forwarder, or carrier does not follow FMCSA rules, claims can be filed against the bond.
Break Bulk
Break bulk cargo is non containerized and is usually transported as individual pieces due to cargo often being oversized and overweight meaning freight containers cannot accommodate the cargo. Cargo can include include goods such as construction equipment, ore, oil and gas equipment, windmills, yachts and steel etc.
Breakbulk Terminal
Consolidation and distribution center. A terminal, used by large common carriers, designed to act as an intermediate sorting point for interregional freight. Freight from various end-of-line terminals is sent to a regional break bulk terminal to be combined into full trailers that the carrier then routes to a subsequent end-of-line terminals.
Broker
Broker means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. The global logistics management initiative for most shippers is to partner with at least one trusted freight broker.
C
Carmack
An industry term regarding loss or damage of goods. Carmack is governed by 49 U.S.C 14706, which states that a motor carrier must issue the bill of lading and pay the actual loss or injury to the property.
Cartage
Cartage consists of hauling freight between locations in the same town, city, or continuous municipalities.
Cartage Agent
A carrier who performs pickup or delivery in areas that carrier or forwarder does not serve. Cartage agents use their own paperwork while transporting the shipment. The shipment is typically not tracked while it is in the cartage agent’s possession. When contracted carrier gives a shipment to a cartage agent for delivery, the shipment is usually considered to be “delivered”.
Claim
A freight claim is a legal demand by a shipper or consignee to a carrier for financial reimbursement for a loss or damage of a shipment. Freight claims are also known as shipping claims, cargo claims, transportation claims, or loss and damage claims.
Classification
Classification is used to assign rates to shipments. They are based on density, size, and value of the freight. The NMFC board has created a guide that is universally accepted by all major LTL freight carriers. Correct classification is crucial to receiving accurate freight quotes. Global logistics management requires a working knowledge of how freight classification effects the supply chain budget.
COD (Cash on Delivery)
A type of transaction in which payment for a good is made at the time of delivery. If the purchaser does not make payment when the good is delivered, then the good will be returned to the seller. Payment can be made by cash, certified check or money order, depending on what is stipulated in the shipping contract.
Commodity
Any article of commerce or good shipped.
Common Carrier
An individual or business that advertises to the public that it is available for hire to transport people or property in exchange for a fee.
Concealed Loss
Shortage or damage not evident at delivery by the receiving dock worker (or delivering driver) at the time of delivery which later results in a “concealed damage” claim
Consignee
In a contract of carriage, the consignee is the entity who is financially responsible (the buyer) for the receipt of a shipment. Generally, but not always, the consignee is the same as the receiver.
Consignor
The consignor is the person or business that originates the shipment. Also, known as the shipper.
Czarlite or Czar Lite
Czarlite or Czar lite is a universal benchmark tariff rate base that most all the LTL carriers use.
D
Deck Trailers
Trailers with rows of tracking on each sidewall and deck load bars. The load bars fit into the tracks to form temporary “decks” on which goods can be loaded. Decks allow more goods to be loaded in the trailer, reduce damage and speed loading and unloading.
Delivery Receipt
A delivery receipt (DR) is a document that is used when a shipment is delivered. The consignee signs this document to confirm delivery, and is also known as a Proof of Delivery.
Demurrage
Demurrage is the detention of a container or freight vehicle beyond the estimated timeframe.
Dispatch
The act of sending a driver on his/her assigned route with instructions and required shipping papers. Carriers typically maintain contact with drivers throughout the day by phone, pager, radio, satellite communication or cellular phone.
Dock
A platform, generally the same height as the trailer floor, where trucks are loaded and unloaded.
Dolly
Converter that provides an extra axle and fifth wheel and is used to connect multiple trailers. See also jifflox.
Doubles
Doubles are tractors with a set of two trailers connected to them.
Drayage
Drayage is a charge that occurs when freight is hauled on carts, drays, or trucks.
E
Electronic Data Interchange (EDI)
The electronic transmission of routine business documents, such as purchase orders, invoices and bills of lading, between computers in a standard format. The data formats, or transaction sets, are usually sent between mainframe computers. The active employment of EDI technology for freight bill processes is a global logistics management best practice.
Exceptions
Exceptions are discrepancies taken note of at the time of interchange or delivery and are related to the physical characteristics or number of pieces of the freight.
Exclusive Use
A shipper pays a premium rate for the sole use of a trailer. The trailer will be sealed at loading, and the seal number is recorded on the manifest. The seal number is verified before the trailer is unloaded at destination. When a shipper requests an exclusive-use trailer, no other freight may be added to the unit even if space permits.
Exempt Product
Products that are exempt from federal regulation, such as agricultural and forestry products.
F
Flatbead
A flatbed is a semi-trailer that has no sides.
FOB (Free on Board) Destination
Under this arrangement, title and risk remain with the seller until it has delivered the goods to the location specified in the contract.
FOB Origin
Title and risk pass to the buyer at the moment the seller delivers the goods to the carrier. The parties may agree to have title and risk pass at a different time or to allocate shipping charges by a written agreement.
Free Alongside (FAS)
A basis of pricing meaning the price of goods alongside a transport vessel at a specified location. The buyer is responsible for loading the goods onto the transport vessel and paying all the cost of shipping beyond that location.
Free on Board (FOB)
An acronym for free on board when used in a sales contract. The seller agrees to deliver merchandise, free of all transportation expense, to the place specified by the contract. After delivery is complete, the title to all the goods and the risk of damage become the buyer’s.
Freight
Any product being transported.
Freight All Kind (FAK)
Shipping industry term for a carrier’s tariff classification for various kinds of goods that are pooled and shipped together at one freight rate. Consolidated shipments are generally classified as FAK.
Freight Bill
A freight bill is a common carrier shipment document. The freight bill describes the freight, amount of charges, the rates, and the terms of the shipment. See also Bill of Lading.
Freight Charge
The freight charge is the amount that is due for freight transportation.
Freight Forwarder
A freight forwarder is a company that consolidates freight for shippers, manages shipments through LTL carriers, and forwards on lower rates to customers due to a higher volume of shipments than individual shippers obtain. A global logistics management team will include a trust freight forwarder to handle the complex nature of exports and imports.
Freight Payment Company
A 3rd party payment company is a partner that audits and pays freight bills for shipper companies.
G
General Rate Increase (GRI)
GRI (General Rates Increase) is the average amount by which a carrier’s tariff rates increase applied to base rates. This practice is common upon commencement of a new calendar. Monitoring GRI announcements is a critical element to global logistics management.
Guaranteed Service Refund (GSR)
Guaranteed Service Refund (GSR) is the refund or credit applied to a shipper’s account, equivalent to the shipping charges, for delivery later than the carrier’s commitment time.
Gross Vehicle Weight (GVW)
The combined weight of the vehicle (tractor and trailers) and its goods.
H
Haustler
A haustler is equipment used to move trailers around a terminal facility. Also know as a Yard Dog.
Hazardous Material
Hazardous materials are defined by the U.S. Department of Transportation in accordance with the Federal Hazardous Material Law. A substance or material may be designated as hazardous if the transportation of the material in a particular amount and form poses an unreasonable risk to health and safety or property. Hazardous material may include: an explosive, radioactive material; etiologic agent; flammable or combustible liquid or solid; poison; oxidizing or corrosive material; and compressed gas. Learn more.
I
Imaging
Imaging is a system that is used to store digital images of documents.
In Bond
Goods on which a duty or tax is due are “in bond” when placed in the custody of a government or bonded warehouse or are moving by bonded carrier. Bonding guarantees that the duty will be paid.
Inland Carrier
An inland carrier is a transportation line that carries import or export traffic between ports and inland areas.
Interchange Points
Interchange points are where freight is interchanged between two transportation lines. The interchange point zip code typically determines the split of the revenue.
Intermodal
Shipment moves by more than one mode of transportation (ground, air, rail or ocean). Intermodal transportation partners are important piece of any global logistics management initiative. See also multimodal.
J
Jifflox
Converter that provides an extra axle and fifth wheel and is used to connect multiple trailers. See also dolly.
L
Less-than-truckload (LTL)
Less than truckload (LTL) is an amount of freight that is less than what is required for the application of truckload rates. LTL freight shipping is the easiest and most economical way to move large and bulky items.
Lift Gate
A lift gate attaches to the back of a trailer that can be raised and lowered between the ground and the trailer deck. There is typically an accessorial charge for lift gate service.
Linehaul
Movement of goods between cities or between terminals, particularly between origin terminal and destination terminal, excluding pickup and delivery service.
M
Manifest
The manifest is a document that describes the shipment or the contents of a vehicle, container, or ship.
Master Bill
The master bill consolidates multiple BOLs that are going to the same consignee at the same time. This is done to receive a lower rate because of a higher total weight.
Maximum Charge
The maximum rate is the highest contracted rate that might be charged.
Minimum Charge
The lowest charge for which a shipment will be handled after discount and/or adjustment.
Multimodal Transportation
Shipment moves by more than one mode of transportation (ground, air, rail or ocean). See also intermodal.
N
National Motor Freight Classification (NMFC)
Industry standard tariffs published by motor carriers containing rules, descriptions and rating on all products moving in commerce; used to classify goods to rate the freight bill.
Non-Vessel Operating Common Carriers (NVOCC)
A type of ocean freight forwarder. NVOCCs book space in large quantities for a reduced rate, then sell space to shippers in lesser amounts. NVOCCs consolidate smaller shipments into a container load that ships under one bill of lading.
O
Overage, Short, and Damaged (OS&D)
Overage, short, and damaged (OS&D) are discrepancies between the bill of lading and the freight on hand. Most of these discrepancies are noted at delivery, pickup, or interchange. Overage is when freight on hand is not shown on the BOL. Short is when freight shown on the BOL is not on hand. Damaged means that there is damage to the freight.
Order Notify
Also called negotiable bill of lading, this is a shipment requiring the consignee to surrender the original endorsed bill of lading at delivery. A shipper may use this method to guarantee payment for goods shipped. It’s most commonly used with truckload shipments.
Origin
Site where the shipment is picked up or first enters the transportation network.
Overage
Number of units received is in excess of the quantity shown on shipping documents. Overages should not be delivered to a customer. They’re returned to the terminal unless the terminal receives more information while the driver is making pickups and deliveries.
Overcharge Claims
The payor of the shipping charges files an overcharge claim to dispute a discrepancy in charges that can stem from overpayment, weight or description corrections, etc.
P
Packing List
A packing list is a detailed list of packed materials.
Pallet (or Skid)
A pallet is a platform that is portable and holds materials for storage or transportation.
Payment Terms
Generally, the shipper is responsible for payment for prepaid shipments, and the consignee is responsible for payment for collect shipments unless a third party is indicated as payor on the shipping papers.
Perishable Freight
Perishable freight is freight subject to decay or deterioration.
Pickup and Delivery (P&D)
Local movement of goods between the shipper (or pickup point) and the origin terminal or between the destination terminal and the consignee (or delivery point).
Pup Rate
A rate to move a full 28 foot trailer. The rate can be determined by a spot rate.
Port of Entry
The port of entry can be one of two scenarios, including:
(a) A port of entry is a government designated port where foreign goods are evaluated before being admitted into a country.
(b) Ports of entry are border stations managed by some states in order to check truck compliance.
Pre-paid Terms
Prepaid terms mean that the shipper or a Third Party is responsible for the freight charges.
PRO or Pro Number
Pro number (PRO) is a sequential numbering system that is used to identify freight bills. A Pro number is like your shipments social security number and is unique to each particular shipment.
Proof of Delivery
Proof of Delivery (POD) is a document that is used when a shipment is delivered. The consignee signs this document to confirm delivery. An absence of a POD often qualifies for a legitimate service failure claim with the carrier.
R
Rate
The rate is the cost of transporting freight.
Rate Base
Rate base is a published set of rates. See also Tariff.
Release Rate
A release rate is a special, low rate that occurs when the carrier’s liability is limited to an agreed amount for the shipment.
Release Value
The release value is the value of the goods that is set by the shipper as the carrier’s limit of liability. The release value relates to classification and freight rates.
Return Authorization (RA)
A return authorization (RA) is the document sent out by the original shipper that authorizes the freight to be returned.
Route
(a) A route is the course or direction of the shipment.
(b) A route is the delivery plan laid out for a P&D driver by dispatch.
S
SCAC
SCAC stands for Standard Carrier Alpha Code. The Department of Transportation gives this code to each freight carrier to uniquely identify them.
Section 7
Section 7 is the area on the BOL that allows the shipper to assign a shipment as collect without recourse if signed. If the carrier delivers the freight on terms, without receiving payment first, it is at the carrier’s own risk and the carrier has no recourse to the shipper if payment is not received from the consignee or third party assigned on the bill of lading.
Service Failure
A carrier’s failure to comply or deliver on contracted services. Common service failures include no proof of delivery (POD) or on-time delivery. Service failure claims are a legitimate source of audit savings for many shippers.
Service Rating
The service rating measures the amount of on time deliveries.
Shipper
The shipper is the person or business who originates the shipment. See also Consignor.
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. (See also freight forwarder and broker)
Shipping Documents
Papers accompanying a shipment as it moves through the supply chain, including bills of lading, packing slips, customs paperwork, manifests and shipment bills.
Shipping Order
The shipping order consists of instructions to a carrier regarding the transportation of a shipment. The shipping order is typically a copy of the bill of lading.
Shortage
Shortage is when the amount of freight delivered is less than the amount of freight received at pickup.
Split
Split pickup or delivery is an accessorial service where portions of volume shipments are picked up or delivered at more than one place.
T
Tare Weight
(a) Tare weight is the weight of the packaging materials.
(b) Tare weight is the weight of the tractor and trailer without its contents.
Tariff
A Tariff is a document setting forth applicable rules, rates and charges to move goods. A tariff sets forth a contract for the shipper, the consignee and the carrier. Since Jan. 1, 1996, motor carriers are not required to publish tariffs. However, in accordance with federal law, tariffs must be provided to a shipper on request. Best practices in global logistics management suggest all contracts and tariffs be organized and accessible through singular source, accessible online.
Terminal
A terminal is a building that handles and stores freight temporarily as it is transferred between trucks.
Terms
Terms state who is responsible for paying the freight charges.
Third Party
Third party billing is a scenario where neither the shipper nor the consignee is responsible for paying the freight charges – instead there is a third party who is responsible for the charges.
Tractor
A tractor is the power unit that pulls trailers. There are single axle tractors and double axel tractors. Single axle tractors are typically used for pickup and delivery while double axel tractors are typically used for line haul moves.
Trailer
A trailer is the equipment that is used to house goods during transit.
Truckload (TL)
(a) Truckload (TL) is the amount of weight that will fill a trailer
(b) Truckload (TL) is the legal maximum weight for a particular type of trailer.
(c) Truckload (TL) is the amount of weight that will qualify for a truckload rate.
U
UN Number
An internationally accepted four-digit number used to identify hazardous material.
W
Warehousing
Warehousing is the storage of goods.
Waybill
A “Waybill” is a non-negotiable document prepared by or on behalf of the carrier at origin. The document shows origin point, destination, route, consignor, consignee, shipment description and amount charged for the transportation service. See also air waybill.
Summary:
Glossaries are useful for readers to understand the meaning of new or specialized vocabulary. This couldn’t me more true for the logistics professional. Global logistics management practices require a core glossary to provide a definition and baseline for concepts, especially for newcomers to a language or field of study. The terminology listed above will help both transportation and finance better manage the freight payment process.
Having been in business since 1989, SSI understands the complexity, idioms, and terminology frequently encountered on a freight invoice. Don’t settle for anything other than a partner who can boost your understanding and knowledge. Contact us today!
This comprehensive resource is made possible by contributing companies and websites. The following sources are acknowledged:
http://innovativeworldwide.com
http://shipnorthamerica.com
http://wikipedia.com
http://www.investopedia.com
http://thefreedictionary.com
http://pnglc.com
http://businessdirectory.com