All You Need To Know About Logistics

Agreement – A memorandum of understanding between the parties to establish the conditions clearly and beforehand for supply services.

Agent – A logistics agent, also known as a freight forwarder, is an individual or company specializing in organizing transport for individuals or corporations.

Air Freight – A service that provides for the air transportation of shipments. Air transportation allows for decreased shipping time, low damage ratios, and for certain commodities, lower shipping costs.

Air Freight Forwarder – An Air Freight forwarder provides pickup and delivery service to and from the shippers’ dock. Responsibilities of Air Freight Forwarder:

  • Consolidating shipments from various shippers into larger shipments.
  • Preparing import and export shipping documentation.
  • Tendering freight to the airlines.

forwarders usually don’t operate their own aircraft and may be classified as an “indirect air carrier.”

All-Cargo Aircraft – A type of aircraft specifically designed for shipping cargoes. It is also known as freight aircraft, freighter airlifter, cargo jet, or cargo aircraft. Freight is loaded in the bulk or container on the primary or lower deck of the plane.

Air Waybill (AWB) –A non-negotiable waybill between the sender and the airway transportation.

All-Risk Insurance –The broadest form of coverage available, protecting against all risk of physical loss or damage from any external cause: fire collision, pilferage, etc. It doesn’t cover loss or damage due to delay, acts of war, labor strikes, per-shipment conditions, inadequate packaging, or market failure. All risk insurance of air shipments generally excludes loss due to cold or changes in atmospheric pressure.

Back-to-Back Shipment – This service is normally offered by Freight Forwarders and is also known as a direct service. This single shipment will be transported in the hold of a scheduled plane – the space is entirely booked out for this purpose. Back-to-back Air Freight allows you to minimize the risk of damage, benefit from direct flight paths, and ship larger cargo quantities together without risking a loss.

Barcode – Used to label, scan, and trace the origin of a product, a barcode is a machine-readable code that is stuck or printed around products and packages, which gives more information about such products and packages.

Bulk Cargo – Cargo is stowed loosely in a ship’s hold and is not enclosed in a shipper container or box. Examples include oil, ore, grain, and coal.

Bill of Lading – A document issued by a freight carrier to a shipper, signed by the captain, agent, or owner of a vessel, details the type, quantity, and destination of the goods being carried.

Billed Weight – The designated weight shown on an invoice and waybill is used to calculate freight charges.

Bonded Terminal – An airline terminal that the U.S. Treasury Department approves for storage of goods until Customs duties are paid, or the goods have been released.

Breakbulk – Break-bulk, or break bulk cargo, also called general cargo. Unpacking or disassembling a portion or all contents of a consolidated shipment for reconsignment or delivery.

Broker – A freight broker is an intermediary between a shipper and a freight service provider.

Carrier – A company or a person who, through a contract of carriage, undertakes to perform or procure the performance of carriage by air, sea, rail, road, inland waterway, or by a combination of modes.

Cartage Agent – A ground transportation service that provides freight pickup and delivery in locations not served directly by air or sea carriers.

Certificate of Origin – A document containing an affidavit to prove the origin of imported goods. Commonly certified by an official organization in origin country, such as a consular office or a chamber of commerce. The customs often require it as part of the entry process.

Chargeable Weight – A shipment’s weight or volume is used to determine air, sea, or road freight charges. The chargeable weight could be the dimensional weight or, on container shipments, the gross weight of consignment minus the container’s tare weight.

Charter Service – Air charter service is used all over the globe to transport essential items from place to place and meet time-critical deadlines.

Classification – A freight classification is assigned to a shipment to apply transportation charges. Freight classifications are used for less than truckload (LTL) shipments.

Customs – The designated government authority regulates the flow of goods to/from a country and collects duties levied by a country on imports and exports.

Clearance – The completion of customs entry requirements resulting in the release of goods from the customs authority to the importer.

Customs Clearance – Procedures involved in getting cargo released by customs through designated formalities: presenting import license/permit, payment of import duties, and other required documentation: FCC or FDA approval.

Contract Logistics – Logistics operations are based on contracts between logistics service providers and customers using outside resources.

Contract Warehouse – A warehouse at which warehousing operations are conducted on behalf of the customers according to a contract.

Commercial Invoice – The commercial invoice is a demand by the seller to the buyer for payment in accordance with the shipments specified in the sales contract.

Custom requires a commercial invoice that includes:

  • The port of entry.
  • Name of shipper and receiver.
  • Description of items.
  • Quantity in weight and measures.
  • Country of origin.

Customs Duty – Refers to the tax imposed on goods transported across international borders.

Cargo Manifest – A list of cargo transported or warehoused without listing the applicable charges.

Consignee – The person or company named on the freight contract to whom goods are to be delivered.

Consolidation – Several separate shipments are assembled into one shipment for movement on one waybill from one location to another—consolidation of freight cargo results in reduced shipping rates.

Consolidated Shipping – Consolidated shipping combines multiple LTL shipments from various shippers into one full container.

Container – A reusable, rigid exterior shipping box that is used to ship goods by ocean, rail, or truck. Air Freight containers ULD or unit lead devices are available in various shapes and sizes.

Container Yard – A designated storage area for FCL (full container load) and empty containers in a terminal or dry port before loading or offloading from a ship.

DDP Shipping Delivered Duty Paid Shipping is a delivery agreement in which the seller assumes the responsibility for all the potential risks and costs associated with transporting goods until the buyer receives the shipments at the destination.

DDU Shipping Delivered Duty Unpaid Shipping means it’s the customer’s responsibility to pay for any of the destination country’s customs charges, duties, or taxes. These must all be paid for customs to release the shipment after it arrives.

DAP Shipping – Delivered At Place means that the seller is responsible for arranging carriage and delivering the goods, ready for unloading from the arriving means of transport, at the named place.

Deferred Air Freight – Air Freight shipments that are not time sensitive can be delivered at a lower cost on later flights. Delivery service is, as a rule, between three to five business days.

Dangerous Goods – Can be categorized as flammable, explosive, radioactive, bio-hazardous, or allergenic. They usually require special authorization to store, use, and transport.

Demurrage – A penalty for exceeding free time allowed for loading or unloading at a pier or freight terminal.

Density – The weight per cubic foot is determined by multiplying a container’s length, width, and height and dividing the total by 1728.

Entry – Documentation of the kinds, quantities, and values of goods imported together with duties due and declared before a customs officer.

ETA – Acronym for the estimated time of arrival of a carrier.

Export – To transport cargo away from a country for sale to another country.

Embargo – A prohibition upon exports or imports, either with specific products or countries. A ban is often due to international conflict or sanctions imposed on a particular country or group of people. However, embargo events may also include floods, tornadoes, or congested highways.

Exceptions – A delivery exception is a notice sent to the receiver informing them that their shipment has experienced a problem while in transit and may cause issues in order fulfillment.

EXW – Stands for Ex Works. The seller shall deliver shipments as soon as they are made available to the buyer at the seller’s premises or other designated premises (e.g. factory, plant, warehouse, etc.). Under this rule, the seller does not need to load goods or clear them for export.

FOBFree On Board, a shipment term used to indicate whether the seller or the buyer is liable for damaged or destroyed goods during shipping. The seller takes care of all shipping documentation and delivers the cargo to the ship. Once aboard, the transportation risk passes from the seller to the buyer. The buyer then pays for the freight to the destination, but the seller pays for the export customs clearance.

FCA Short for free carrier. The seller arranges goods with an invoice, packaging, export license, customs formalities when exporting, and costs up to the delivery of the goods to the carrier (logistics company), as stipulated by the buyer and following the mode of transport. The seller delivers the cleared goods and transfers them to the carrier appointed by the buyer in the location or place.

FAKFreight All Kinds. Consolidated cargo that is shipped at one rate. FAK cargo is usually shipped in a container with various merchandise or commodities.

Freight Forwarder – Or forwarding agent, is a person or company that organizes shipments. Usually, it handles all the services connected with an import and export shipment, including complete preparation of documents arranging for shipping, warehousing, customs clearance, and delivery. Transportation can include shipping by air, sea, land, or other methods.

Full Container LoadFCL is delivery of cargo that fills a given container either by bulk or maximum weight.

Full Truck Load (FTL) – A shipment of cargo that fills a given tractor-trailer either by bulk or maximum weight.

Igloo – A container designed to the dimensions of the full main deck width of carrying aircraft.

Importer – The individual firm or legal entity that brings goods from a foreign source into a customs territory during the trade.

In-Bond Shipment – Cargo temporarily stored in a bonded warehouse or transported by a bonded carrier. The in-bond cargo can be transported without paying duties, taxes, and tariffs provided all regulations are met and as long as they are not commercialized in any of the countries traversed along the way.

Indirect Air Carrier IAC is an organization or entity that does not possess an FAA air carrier operating certificate that initiates to engage indirectly in air transportation of property and uses for any part of such transportation of services to a passenger air carrier.

Inland Port Sites located away from traditional borders where international trade is processed, and value-added services are available.

Interline Shipping – A shipment routed via two or more successive carriers participating in this tariff.

Intermodal Shipping – Intermodal transportation is a freight delivery method that involves two or more modes of transportation. This typically refers to truck, ocean, rail, or air shipping. From pick up to delivery, if you need something to be shipped via train and then picked up by a truck, you would use intermodal shipping.

Less Than Container Load LCL is a freight combined with other freight from other shippers. A container can be loaded with LCL cargo at a container freight station for LCL delivery.

Less Than TruckloadLTL refers to freight from several shippers loaded onto an individual trailer. The shipment is based upon a different rate than the truckload rate.

Master Air Waybill – MAWB is the air waybill of lading that provides data on a consolidated shipment of goods. The consolidator is shown as the shipper.

Non-vessel Operating Common CarrierNVOCC is a carrier that issues bills of lading for the carriage of shipments on vessels that are not owned or operated by them.

Overnight – Expedited service on a transaction where assistance is required on the next business day. Delivery service is, as a rule, delivered on the next business day.

Outbound Freight – Outbound freight refers to any shipment leaving a warehouse, business, or facility and heading elsewhere. So, if you have freight that was inbound freight, dropped off at a warehouse, and now it is being picked up and moved elsewhere leaving the warehouse, it becomes outbound freight.

Packing List – A document prepared by the shipper lists the kinds and quantities of goods in a particular shipment. A copy is generally sent to the consignee to check the shipment when received.

Proof Of Delivery POD is a receipt with the recipient’s signature.

Port To Port Delivery – Port-to-port shipping involves the middle leg of the entire shipping process, which refers to the transportation of merchandise in shipping containers from the port of origin (also known as the port of loading) to the port of destination (or port of discharge)

Priority Air Freight – Reserved Air Freight or air express service where shipments have a priority after mail and small packages. The shipper pays a premium charge for this service.

Ro/Ro Shipping – A ship specifically designed to carry wheeled and tracked vehicles as all or most of its cargo. Some ships can accommodate wheeled, tracked, self-propelled, or towed cars and equipment. A series of external and internal ramps facilitate the loading and discharge of RO/RO cargo.

Shipper – The company or person who tenders goods to a carrier for transportation.

Shipper’s Letter of Instruction A form used by the shipper authorizing a carrier to issue an air waybill or (BOL) bill of lading on the shipper’s behalf. It contains all the shipment details and authorizes the carrier to transport the cargo on behalf of the shipper-specific instructions.

Second Day Air Freight – Air Freight shipments that are not overnight or time-sensitive and can be delivered at an economical cost. Delivery service is, as a rule, delivery on the second business day.

Tariff – A general term for any listing of rates or charges for the movement of goods.

Tare Weight – The weight of packing and containers without the goods to be shipped.

Terminal Handling ChargeTHC are fees incurred by ocean containers to move containers between terminals and ships (loading and unloading), inspect at terminal facilities, and pay by shippers.

Transit – A journey from one location to another.

Truck Load (TL) – A freight shipment loaded to a trailer’s maximum capacity either by bulk or maximum weight.

Unit Load Device (ULD) – Any container or pallet that consolidates freight packages for mechanical handling.

Value-Added Tax VAT is applied throughout the supply chain – on everything from the point of raw materials up to manufacturing and retail.

Volume Rate – The shipment that exceeds standard sizes and dimensions of less than truckload but is not enough to fill an entire truck trailer.

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