Shipping Terms

These charges are for services outside of the normal pickup and delivery of goods. A few examples of additional charges you might find on your bill include wait time, bunkers, storage, and packing.

Anti-Dumping Duty

Anti-dumping is an additional duty applied to foreign goods that are imported and priced below fair market value.

Bill of Lading

This is a document that a carrier issues to whoever is shipping the goods. It simultaneously serves as a receipt, a contract, and a title of ownership. Read the beginner’s guide to Bills of Lading for more information.

Blind Shipment

During a blind shipment, one or more of the parties involved are unaware of the others identity.

Bonded Warehouse

These warehouses are controlled by customs and allow imported goods to be stored until any duties owed are paid. Read this guide on bonded warehouses for more information.

Break Bulk

Break bulk goods are typically too large to fit inside of a container and are instead loaded onto a vessel individually. A few examples of items that fit this description include construction equipment, loose cement, and yachts.

Bunker Adjustment Factor

This term refers to the portion of sea freight charges that are adjustable based on the fluctuating cost of oil. Previously, Carrier Conferences determined BAF charges for certain periods of time and on certain trade routes, but individual shipping lines now set their own rates.

Cartage

Cartage refers to the movement of goods within a small geographic area. These services are commonly used to move or combine goods from multiple warehouses.

Cash On Delivery (COD)

Cash On Delivery is a term that refers to a specific type of transaction. In such a transaction, payment for goods is made at the time of delivery. If the person receiving the goods does not pay the necessary costs, the goods must be sent back to the seller.

Chassis

A chassis is simply a frame with wheels and container locking devices used to pickup and transport containers. Read the chassis business model for more information.

Consolidation

Consolidation refers to the combining of shipments from multiple suppliers to be packaged and shipped in the same container.

Container Freight Station (CFS)

A Container Freight Station is a location where freight shipments can be consolidated, de-consolidated, or repackaged at various points along the path of transport. Typically, these locations are proximal to seaports or airports.

Container Yard (C/Y)

A facility located at the port where containers wait to be loaded onto ships, or where containers are taken after being off-loaded.

Cost Insurance and Freight (CIF)

This is a term that refers to the need of a seller to arrange for goods to be transported to the destination port, as well as to provide the buyer with whatever documents he or she needs to obtain the goods. CIF is an example of an “incoterm,” which is a set of common trade terms established by the International Chamber of Commerce. Read incoterms demystified for more information on shipping CIF and other international terms.

Cubic Feet (CBF/CF/CFT)

This term essentially serves the same function as a cubic meter, the primary difference is that in a cubic foot, the “cube” is characterized by foot-long edges as opposed to meter-long ones.

Cubic Meter (CBM/CM)

This is a unit of volume that describes a cube where each edge is one meter long. It is often used to describe what size shipment can fit on a carrier vessel.

Delivery Order (D/O)

Delivery Order is a term that refers to the document from a shipper or freight owner that permits cargo to be transported to another party, such as a warehouseman or carrier.

Demurrage (DEM)

A Demurrage occurs when a ship is detained by a freight forwarder at the port beyond the time it takes to load or unload the ship. This term can also refer to the resulting charge that occurs when a vessel is detained. The what, when, and why of demurrage has more information on this topic.

Destination Delivery Charge (DDC)

This is a fee that is charged based on container size and is applied to cargo. This charge is “accessorial” and is added to whatever the base price is for freight. This charge covers the costs to lift the cargo off the vessel, the cost of drayage within the terminal, and the cost of gate fees.

Detention

Detention fees apply when a container is held outside of a port longer than the agreed upon “free time” and are typically charged by the hour. Read understanding detention charges for more information.

Documentation Fee (DOC)

One of the fees that a shipper must pay to have goods transported either domestically or internationally.

Drawback

A refund of certain fees that were paid during the import process. Once goods are reexported these duties and taxes are able to be returned.

Drayage

Similar to cartage, drayage refers to the local pickup or delivery from a port.

Emergency Bunker Surcharge (EBS)

An Emergency Bunker Surcharge is similar to a BAF and is a charge added to shipping costs in order to cover the price of fuel.

Equipment Position Surcharge (EPS)

The charge associated with the cost of positioning a container to accommodate exports.

Foreign to Foreign (F2F)

Foreign to Foreign is a term LILLY + Associates uses to refer to a shipping method where goods are transported between two foreign nations rather than first passing through a U.S. port. Read how to protect supplier information in foreign-to-foreign shipments for more information.

Forty Foot Equivalent Unit (FEU)

This ocean freight term refers to containerized cargo that is equivalent to either one forty foot container or two twenty foot containers. One FEU equals 25 metric tons or 72 cubic meters. Read the complete guide to ocean shipping containers for more information.

Free Trade Zone (FTZ)

A Free Trade Zone is a specific type of economic zone/geographic area where incoming and outgoing goods can be handled, manufactured, and/or reconfigured without customs authorities intervening. The shipments are not subject to customs duties until they are sent to customers within the country.

Freight on Board (FOB)

This acronym, along with the designation “origin” or “destination” determines who is responsible for covering freight costs. This is an example of an “incoterm,” or a trade term established by the International Chamber of Commerce. Read incoterms demystified for more information.

Freight Prepaid (FPP)

This is a term often used on a bill of lading to communicate that the shipment cost has already been paid. Although this is a nice way of allowing the receiver to avoid paying shipment costs, it also means the freight cost is nonrefundable.

Fuel Adjustment Factor (FAF)

This is an extra charge included to recover increased costs of fuel. It is often calculated based on the average price of fuel from the month prior to the shipping date.

Full Container Load (FCL)

This term refers to a container that a shipper has paid to use exclusively – it does not necessarily mean that the container is filled entirely. It is the standard form of freight shipping for those who need to transport a large amount of goods.

Full Truckload Shipping (FTL)

This term refers to a shipping method where an entire trailer-load is contracted out to a single customer. Cargo remains with a single, dedicated trailer over the course of the shipment and is not handled en route. It is a very time- and cost-efficient way of shipping goods for shippers who need to move large amounts of cargo.

General Order (GO)

This term refers to the status given to imported goods that are either missing the documentation they need or are not quickly cleared through customs. Goods could be held under a “GO” for a number of reasons, such as because there are taxes owed on them or because paperwork still needs to be filled out.

General Rate Increase (GRI)

A General Rate Increase is the average amount a carrier’s tariff rates increase annually. This increase is then applied to general shipping rates. Read how to calculate international shipping costs for more information.

HAZMAT

HAZMAT is an abbreviation for “Hazardous Materials.” These types of goods range from explosives to corrosives and must be communicated to the carrier before transport. Read shipping hazmat for more information.

High Cube (HC)

High Cube is a term that describes a specific type of shipping container. These containers are of similar structure to standard containers (often forty feet long) but are somewhat taller – usually 9’6” tall instead of 8’6” tall. Read the complete guide to ocean shipping containers for more information.

Incoterms

These are rules developed by the International Chamber of Commerce to specify which services the seller and buyer are responsible for. Read incoterms demystified for more information.

Intermodal

This term refers to shipments that involve two or more modes of transportation.

Landed Cost

This term refers to the total cost of a product, including transportation costs and any additional fees.

Less than Container Load (LCL)

This is a term for cargo that does not meet either certain weight or certain quantity requirements to qualify for freight rates applied to a standard shipping container of goods.

Less Than Truckload (LTL)

Less Than Truckload is a term that describes a method of shipment where multiple customers’ goods are mixed on a single trailer. Freight on these trailers are often handled at various points along the shipping route.

Letter of Credit (L/C)

This is a document that serves as a set of instructions from an importer’s bank to an overseas bank letting the latter know that it should pay the exporting company in advance. It serves as a guarantee of payment and can help facilitate trust between two business partners who don’t know each other very well.

Lift On, Lift Off (LO/LO)

Lift On, Lift Off is an acronym used to describe a specific type of carrier vessel. When these ships are used in transport, freight must be lifted on and off of the vessels using cranes. This is in contrast to RO/RO ships, defined later in the article.

Multimodal

A shipment using two or more modes of transportation. Same as intermodal.

Non-Vessel Operating Common Carrier (NVOCC)

A Non-Vessel Operating Common Carrier is a freight forwarder who doesn’t own a vessel. Instead, the freight forwarder acts as a carrier by taking certain responsibilities for shipments, including issuing bills of lading.

Ocean Freight (O/F)

This term refers to any goods or shipments that are transported via boat across body of water. Many carriers and freight forwarders provide a number of services specific to ocean freight.

Ocean Freight Forwarder (FF/OFF)

An Ocean Freight Forwarder is an individual or company that is responsible for organizing shipments on behalf of shippers. They book the transport and arrange space on the carriers, among other things. Read benefits of a freight forwarder for more information.

Packing List

This a detailed list that describes all items in a shipment, letting each party know how the goods should be handled.

Panama Canal Charge (PCC)

A Panama Canal Charge is the fee applied to shipments moving through the Panama Canal. This charge is set by the Panama Canal Authority and is set in terms of a price per TEU.

Peak Season Surcharge (PSS)

A Peak Season Surcharge is a fee that was proposed to account for the high volumes that carriers have to transport during peak shipping season. This is generally considered to last between the summer and November of each year. During this time carriers are able to negotiate rates because they are not desperate for freight.

Piracy Risk Surcharge (PRS)

This is a charge that carriers often add to their prices in order to mitigate the threat of piracy when shipping goods via ocean liner.

Port Congestion Surcharge Or Pieces (PCS)

This is a charge rendered to shippers in the instance that there is some sort of disturbance or other delay at the port when the shipment arrives. This could include a strike, lockout, work slowdown or stoppage, or another labor-related disruption.

Port Security Fee (PSF)

A Port Security Fee is a charge that port authorities in North America have the right to issue to carriers in order to recover the costs of any expense related to security in and around the port.

Roll On, Roll Off (RO/RO)

This term refers to a class of ships designated to carry wheeled cargo, such as automobiles, trucks, farm/construction equipment, and railroad cars. These ships have built-in ramps that allow wheeled cargo to be moved on and off of the vessel with ease.

Said to Contain (STC)

This is a term often used on a bill of lading where the carrier acknowledges receiving a certain quantity of packages but is unaware of the exact nature or value of the contents. This helps to limit the carrier’s liability in the instance of an insurance claim.

Shipper’s Export Declaration (SED)

This is a document that serves two main purposes. First, it serves as a census record of U.S. exports, and second, it is a regulatory document that is required for any shipment where the commodity’s value exceeds $2,500.

Terminal Handling Charge (THC)

This term refers to the charges collected by authorities at the ports to cover the costs of handling equipment and performing maintenance. The exact costs vary from port to port based on the amount of handling and maintenance done at each one.

Transshipment

During a transshipment goods are moved from one vessel to another before continuing their journey.

Twenty Foot Equivalent Unit (TEU)

A Twenty Foot Equivalent Unit is an inexact measure of cargo capacity that helps describe the size and capacity of container ships. A unit is based on the size of a 20-ft. intermodal container. Read the complete guide to ocean shipping containers for more information.

UN Number

These 4 didgit numbers are used to classify different hazardous materials when shipping goods internationally.

Value Added Tax (VAT)

A Value Added Tax is a tax placed on goods whenever there is value added to the product through a stage of production or at final sale. A manufacturer might pay a VAT on all the supplies he or she purchases to go toward the final product, and that tax is often passed onto the consumer.

Vehicle and Cargo Inspection System (VACIS)

Also known as a Customs Exam, this is the most common type of inspection performed at a port, usually on ocean freight. It is essentially an x-ray exam of an entire shipment or container and is generally done at the first port of entry.

Vessel Operating Common Carrier (VOCC)

This is basically the opposite of an NVOCC, or a freight forwarder who does own vessels used in the transport of goods.

Weight or Measure (W/M)

This is a term that refers to the weight or volume of cargo that is used to determine the freight rate on export goods.

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