Shipping and Logistics Terminologies: An A-Z Guide for Beginners

Shipping and logistics terminologies

Shipping and logistics are essential components of global trade and commerce, and they involve a wide range of terminologies that are important to understand. From the moment a product is manufactured to the moment it reaches the end consumer, it goes through several stages of transportation, storage, and handling. Here is an A-Z list of shipping and logistics terminologies to help you better understand the industry.

A – Arrival Notice: A notification that is sent by a carrier or freight forwarder to the consignee to inform them that their cargo has arrived at the destination port.

B – Bill of Lading (B/L): A legal document that serves as a contract between the shipper and the carrier, which outlines the details of the cargo being shipped, the terms of transportation, and the responsibilities of all parties involved.

Example: A manufacturer in China would use a Bill of Lading to document their shipment of goods to a distributor in the United States.

C – Carrier: The company or individual responsible for transporting goods from one point to another.

Example: FedEx, DHL, and Maersk Line are all examples of carriers.

D – Demurrage: A fee that is charged to a shipper or consignee for exceeding the free time allowed for loading or unloading cargo at a port or terminal.

Example: A consignee who fails to collect their cargo within the specified free time may be charged demurrage by the port authority.

E – ETA: Estimated Time of Arrival, the expected date and time of arrival of a shipment at its destination.

Example: A shipping company may provide an ETA to a consignee to help them plan for the arrival of their cargo.

F – Freight Forwarder: A company that specializes in arranging the transportation of goods on behalf of shippers.

Example: A manufacturer in Germany may hire a freight forwarder to handle the logistics of shipping their products to customers in the United Kingdom.

G – Gross Weight: The total weight of a shipment, including the weight of the goods and any packaging or containers.

Example: If a shipment of goods weighs 500 kg, and the packaging and container weigh 100 kg, the gross weight of the shipment would be 600 kg.

H – Harbor: A sheltered body of water where ships can anchor and load or unload cargo.

Example: The Port of Los Angeles is one of the largest and busiest harbors in the world.

I – Incoterms: A set of internationally recognized terms that define the responsibilities and obligations of buyers and sellers in international trade.

Example: The Incoterms 2020 rules include terms such as FOB (Free on Board), CIF (Cost, Insurance and Freight), and DDP (Delivered Duty Paid).

J – Just-in-Time (JIT): A production strategy that involves manufacturing goods only when they are needed, rather than producing large quantities in advance.

Example: A car manufacturer may use a JIT strategy to produce cars based on customer orders, rather than producing a large number of cars that may not sell.

K – KPI: Key Performance Indicator, a measurable metric that is used to evaluate the performance of a business or operation.

Example: A logistics company may use KPIs such as on-time delivery, order accuracy, and customer satisfaction to measure their performance.

L – Logistics: The process of planning, coordinating, and executing the movement of goods from one point to another.

Example: A retailer may use logistics to manage the transportation and storage of their products from the manufacturer to their warehouse, and then to their stores.

M – Mode of Transport: The method used to transport goods from one point to another, such as by air, sea, road, or rail.

Example: A company may choose to transport their goods by air if they need to arrive quickly, or by sea if they are less time-sensitive and cost is a factor.

N – Non-Vessel Operating Common Carrier (NVOCC): A company that acts as a carrier but does not own or operate any vessels, and instead arranges the transportation of goods using the vessels of other carriers.

Example: An NVOCC may contract with a shipping line to transport a consignee’s goods from one port to another.

O – Origin: The point where a shipment begins its journey, usually the location of the manufacturer or supplier.

Example: The origin of a shipment of textiles from India may be the city of Mumbai, where the textiles were produced.

P – Port: A designated location where ships can dock to load or unload cargo.

Example: The Port of Rotterdam in the Netherlands is the largest port in Europe, handling millions of tons of cargo each year.

Q – Quotation: An estimate of the cost of shipping and logistics services provided by a carrier or freight forwarder.

Example: A manufacturer in Japan may request a quotation from a freight forwarder to determine the cost of shipping their products to a customer in Australia.

R – Routing: The path taken by a shipment from its origin to its destination, including the modes of transport and the ports or terminals used.

Example: A logistics company may choose a routing that involves shipping goods from China to the United States by sea, and then transporting them by truck to their final destination.

S – Storage: The act of keeping goods in a designated location for a period of time, usually in a warehouse or storage facility.

Example: A retailer may use storage facilities to hold excess inventory during slow periods, and release it when demand increases.

T – Terminal: A designated location where cargo is loaded, unloaded, and transferred between different modes of transport.

Example: The terminal at a seaport may include cranes, storage areas, and loading docks, where cargo is transferred between ships and trucks.

U – Unit Load Device (ULD): A standardized container used for transporting goods by air, which can be easily loaded and unloaded from aircraft.

Example: An airline may use ULDs to transport cargo on their planes, ensuring that the cargo is securely contained and easy to load and unload.

V – Value-added Services: Additional services offered by carriers or logistics providers, such as packaging, labeling, and assembly.

Example: A logistics provider may offer value-added services such as repackaging products for retail sale, or labeling products for regulatory compliance.

W – Warehouse: A storage facility used for holding goods for a period of time, usually before they are shipped to their final destination.

Example: A company may use a warehouse to store their products before they are distributed to their retail stores.

X – X-Ray: A security measure used to scan shipments for any potential security threats, such as explosives or weapons.

Example: Cargo shipments may be subject to X-ray scans at ports or airports to ensure that they do not contain any prohibited items.

Y – Yield Management: A pricing strategy used by airlines and other transport providers to optimize their revenue by varying prices based on demand.

Example: An airline may increase their ticket prices during peak travel season to maximize their revenue, while reducing prices during slower periods to attract more customers.

Z – Zone Routing: A transportation strategy that involves dividing a geographic area into zones and assigning specific carriers to each zone.

Example: A logistics company may use zone routing to ensure that shipments are handled by carriers with expertise in each specific region, improving efficiency and reducing costs.

In conclusion, the shipping and logistics industry is full of terminologies that can be overwhelming for those new to the industry. This A-Z list serves as a guide to some of the most commonly used terms and their meanings. By understanding these terms, you can better navigate the complex world of shipping and logistics and make informed decisions for your business.