One of our favorite things to do is to educate our customers on what logistics is and how it works. Sometimes the jargon we use can keep shippers from understanding what they need and how the logistics industry meets those needs.
The following are some of the terms you may encounter when talking to a logistics company when they discuss your shipping requirements.
ConsigneeA consignee is a contracted party who is financially responsible for receiving shipments. In contrast to the shipper who is responsible to prepare goods for transport, the consignee is usually the owner of the goods shipped and must be present to take possession of the freight.
CarrierA carrier is a firm that provides transportation services and usually they own and operate equipment needed for transportation. This equipment can be such as railroad, airline, and the parcel company.
Freight bill-of-ladingThis is a document that creates a binding contract between a shipper and a carrier for transportation of freight. It specifies each party’s obligation. It also serves as a freight receipt by the carrier of the shipper.
Free on board point (FOB)This is the point where freight ownership is transferred from the shipper to the consignee. FOB origin indicates that goods in transit are now owned by the consignee, whereas FOB destination indicates that goods in transit are kept by the shipper.
Loss and DamageShippers/consignee always take insurance against loss and damage of freight shipments while on transit with premiums. Insurance, in this case, can include the function of the shipped goods value and the likelihood of loss and damage.
Private CarrierThis is owned and operated by the shipper. A private carrier may include the vehicle fleet, maintenance equipment, and drivers. The advantage of these private carriers is the fact that they are fast, offer special handling, readily available, and are reliable.
Freight ForwarderThis is an agency that receives freight from a shipper and then makes arrangements for its transportation through one or more carriers for transport straight to the consignee. A freight forwarder is often used for international shipping purposes.
Transportation BrokerThis is an agency that resells negotiated transportation rates from carriers to the shipper.
TerminalThis is a transportation facility with system access in terms of entry point and exit point. It usually provides storage and warehousing services and fleet maintenance.
Cross DockingThis is the process whereby a freight or warehouse complex receives materials from a supplier or manufacturer and transfers them directly to the transportation system that reaches customers or retail outlets. The process takes place in a special terminal with both an inbound and an outbound side that can quickly handle the transfer of freight between the two with minimal storage space. Products are received on the inbound side and distributed across the dock to the outbound side where waiting trucks or railcars are ready to move the product to its final destination.
DiversionDiversion is a tactic used by shippers to change freight destination while in transit. Electronic data systems make it possible to divert freight easily while keeping all parties informed.
Axle LoadAxle load refers to the weight limit a shipping company has available. Every freight shipping transport asset like a railcar or truck has a legal weight limit that can’t be exceeded.
Electronic Data Interchange (EDI)EDI is used to describe various business documents that are communicated electronically. They typically include purchase orders, bills of lading and invoices— all stored and sent in standard formats between computers.
Non-vessel Operating Common CarriersThis is a type of ocean freight forwarder whose job is to book space in large quantities for a cheaper rate, and then distribute that space to shippers at discounts.
UN NumberSet and maintained by the United Nations (UN), these are four-digit internationally accepted numbers that identify types of hazardous materials, for example, gasoline is 1203, Propane is 1978.
ConsolidationConsolidation is a service provided by a shipper whereby smaller shipments are grouped and shipped together to ensure the security of cargo and lower cost.
Less-than-truckload (LTL)It's a term used to describe a situation where a shipper contracts for the freight transportation that doesn’t require an entire truck, and the load can be combined with other LTL units.
Full Container Load (FCL)This term is used when a shipper contracts transportation of an entire container.
PostponementThis happens when the shipper deliberately delays committing inventory to shipment. The reason behind this tactic is to consolidate freight into much larger shipment with a lower transportation cost.
DunnageThese are woods and packaging materials used to keep cargo in place inside a vehicle.
There are hundreds of terms we use that have specific definitions, and shorthand acronyms that can make logistics people sound like an alien species. Let us explain the process to you in plain English, and along the way, see how we can serve your company with a long term relationship as partners in commerce.