Glossary of International Shipping Terms

Understanding shipping and freight terminology is crucial for anyone involved in international trade. These are the backbone of communication in the logistics sector, ensuring clarity and efficiency in global commerce. Use this comprehensive glossary to learn must-know industry terms.

Common Shipping Terms

Here are the fundamental freight shipping terms definitions for anyone in the commercial shipping industry.

Bill of lading: A critical document that acts as a receipt of cargo for the shipper, a carriage contract between the shipper and the carrier and a title document to the goods.
Carrier: The company responsible for transporting the goods.
Consignee: The person or company who will receive the shipment.
Freight charges: The costs associated with transporting goods, including base shipping rates and additional fees.
Packing list: A detailed catalog of items included in a package or shipment.
Proforma invoice: A preliminary invoice provided by a seller to a buyer in advance of a shipment or delivery of goods.
Shipper: The person or business sending the goods.

Freight Forwarding Terms

Freight forwarding is a critical aspect of international shipping. Here are some freight terms definitions.

Consolidation: Combining smaller shipments from multiple shippers into a single larger package to save money or time.
Customs broker: A licensed professional who helps importers and exporters meet government requirements for moving goods across international borders.
Freight forwarder: A specialized logistics professional or company that orchestrates the movement of goods across international borders and coordinates various aspects of shipping.

International Commercial Terms

Incoterms are standardized terms used in international trade to define buyers' and sellers' duties.

Free on board: The seller is responsible for goods until the crew loads them onto the ship.
Cost, insurance and freight: The seller pays for shipping and insurance to the destination port.
Delivered duty paid: The seller is under obligation for delivering goods to the buyer, including all transportation costs and duties.
Ex works: The buyer is responsible for the entire shipping process from the seller's location.
Free carrier: The seller delivers goods cleared for export to the buyer's nominated carrier at a specified location.

Air Freight Terms

Many people rely on air freight for time-sensitive or high-value shipments. Here are some essential terms to know.

Air waybill: A document that accompanies goods shipped by an international air courier, serving as a receipt and a contract of carriage.
Chargeable weight: The weight used to calculate shipping costs, which is either the actual weight or the dimensional weight, whichever is greater.
Dimensional weight: A pricing technique used in the freight industry to account for package density in shipping costs. It reflects the amount of space a package occupies compared to its actual weight.
International Air Transport Association: An international organization that regulates air freight, deciding which cargo is appropriate, ideal weights and managing airlines.

Ocean Freight Terms

Ocean freight is often the most cost-effective option for large shipments and long-distance transport.

Containerization: A system of intermodal freight transport using standard shipping containers.
Full container load: A shipment that fills an entire container.
Less-than-container load: A shipment that does not fill an entire container and travels with other shipments.

Freight Delivery Terms

Understanding delivery terms is vital for managing expectations and responsibilities.

Distribution center: A warehouse or specialized facility for temporary storage and distribution of goods.
Cross-docking: A logistics technique that directly transfers products from a supplier or manufacturing plant to a customer or retail chain from incoming to outgoing transportation with minimal or no storage in between.
Inventory management system: A method for tracking inventory levels, orders, sales and deliveries.
Pick-and-pack service: A service that retrieves items from inventory and packs them for shipment.

Customs and Compliance Terms

Customs regulations are an essential part of international shipping.

Duty drawback: A refund of customs duties paid on imported materials due for later export.
Harmonized System code: A global product classification scheme developed by the World Customs Organization to standardize the categorization of traded goods, assigning unique six-digit codes to different product categories.
Import/export license: A document issued by a government authorizing the import or export of specific goods. It's illegal to import or export items without one.

Documentation and Compliance Terms

Proper documentation ensures smooth international shipments.

Certificate of origin: An official document that verifies the country or region that manufactured, produced or processed goods. Customs authorities require it to determine applicable tariffs, restrictions or preferential treatment based on trade agreements between countries.
Commercial invoice: A document containing relevant information about the shipment, used to determine duties and taxes.
Import/export declaration: An official document declaring the nature of imported or exported goods.
Letter of credit: A secure contract issued by a bank that guarantees payment once the exporter ships the goods and presents the required documentation as proof.

Road and Rail Freight Terms

Inland transportation is a crucial part of most international shipments.

Cartage: The act of transporting goods locally by road.
Drayage: The transport of goods over a short distance, often as part of a longer overall move.
Full truckload: A shipment that requires the full space of a truck.
Intermodal transportation: The use of two or more modes of transportation in a single shipment.
Less than truckload: A shipping service for relatively small loads or quantities of freight.

Miscellaneous Terms

These additional terms are vital for a comprehensive understanding of shipping.

Bonded warehouse storage: A secure storage facility operating under customs supervision, where it is safe to store, manipulate or manufacture imported goods without immediately paying duties or taxes.
Demurrage charges: The fees applied when the responsible person does not move cargo out of a port or terminal within the allotted free time.
Detention charges: The fees applied when the responsible person does not return cargo or equipment within the agreed-upon time.
Free trade zone: A designated economic area within a country's borders where it is safe to store, handle, manufacture or reconfigure imported goods without being subject to standard customs duties.

Specialized Freight Shipping Terms Definitions

Some terns are unique to specific aspects of shipping.

OTW meaning: “On the way," indicating that a shipment is in transit
Limits of service area: The geographical boundaries within which a carrier provides service

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Understanding shipping and freight delivery terms is essential for efficient international trade. Whether you're new to shipping products or an experienced trader, familiarity with these terms can help you make informed decisions and communicate effectively with logistics partners, especially if you outsource.

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