Have you ever been on the phone to your freight forwarder and found yourself completely lost in the complexity of freight talk?
Given the sheer amount of acronyms and lingo that exists within the industry, you would be forgiven for thinking your service provider is speaking another language. Well, that’s because they kind of do. As the international freight industry transcends countries, cultures and languages, logisticians had to invent a common tongue. They did this to ensure your freight requirements are satisfied regardless of where the goods are moving from, what is being shipped or how it’s going to get there. Below we have identified and given layman explanations to some of the focal international freight terms that should be a mainstay of your logistics vocabulary.
TEU – Twenty foot equivalent unit. The official way of referring to a 20’ container
Fact: The ISO standards for container measurements only came into existence between 1968-1970. Prior to that, container dimensions were either country or transport operator specific.
FEU– Forty-foot equivalent unit. The official way of referring to a 40’ container.
FCL– Full container load. The acronym for a shipment moving in a container that is controlled by a single importer or exporter.
LCL– Less (than) container load. The acronym for a shipment that is moving in a container alongside cargo from external shippers. Typically arranged by a freight consolidator.
Enterprise shipper – An enterprise shipper (sometimes referred to as a Beneficial Cargo Owner or BCO) negotiates rates directly with a shipping line. Traditionally reserved for larger volume, smart supply chains (generally +50 TEU per annum). Not an enterprise shipper? Find out how to be!
BoL – Bill of Lading (aka the godfather of shipping documentation). A document of title that controls ownership of goods in transit and acknowledges receipt of the goods by the carrier. Commonly used as a payment assurance instrument, usually the exporter does not release the original Bill of Lading to the importer until payment for the goods has been received. Without the original Bill of Lading, the importer’s cargo will not be released to them at the destination port.
Sea Waybill – Very similar to a Bill of Lading however does not require the importer to produce an original document to take receival of the goods. A Sea Waybill is usually based on the premise of trust (particularly with payment) between long term trading partners.
GRI– General Rate Increase. a planned increase in the base ocean freight rate from a certain date in time.
PSS– Peak Season Surcharge. When ocean carriers impose a surcharge, during the high demand periods (primarily in the lead up to the Christmas or Chinese New Year).
BAF– Bunker adjustment factor. Additional to the freight rate, BAF is a financial instrument used by shipping lines to compensate for fluctuations in the cost of fuel oil (bunkers) for their ships.
CAF– Currency adjustment factor. Additional to the freight rate, CAF is a financial instrument used by shipping lines to compensate for fluctuations in currency exchange rates.
Consignor– Usually the seller or exporter.
Consignee– Usually the buyer or importer.
Reefer– The term used for a refrigerated container with a nickname even Australians would be proud of!
Fact: Reefer containers can maintain temperatures as low as -60°C (-76°F)!
Container Demurrage – Container demurrage is charged when an importer (or their service provider) did not collect a container from the arrival port in the free days allocated to them by the shipping line. Standard free day allotment is 3 days from first day of availability.
Container Detention – Container detention is charged when the consignee hasn’t delivered the empty container back within the free days allocated to them. Standard free days is 7 days post container collection.
Demurrage/Detention – Note: While demurrage and detention can be applied to the exporter, it is more commonly a charge associated with import operations.
Dunnage – The container equivalent of bubble wrap to hold internal cargo in position within a container.
CMR Fee – Customs Management Re-engineering Fee: was a cost recovery initiative by Australian Customs for their integrated cargo system (ICS). It can also refer to a European consignment note surcharge.
Lo-Lo – Lift-on/Lift-off vessels are cargo ships with on-board cranes used to load an unload cargo. When you think of a typical container ship, you’re thinking of a Lo-Lo vessel.
Ro-Ro – Roll-on/Roll-off vessels are ships purpose built to carry wheeled cargo, such as cars, trucks and heavy machinery that are driven on and off the ship on their own wheels.
Fact: The first Ro-Ro vessel was a train ferry and was built back in 1849 in Scotland.
– Break-bulk is cargo that must be loaded individually, and not in a shipping container or in a bulk hold (e.g. oil or grain).
And that concludes the first installment of the Explorate logistics language forum. Please join in the conversation and comment below with any other logistics related terms!
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