A Comprehensive Glossary of Shipping Terms
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The A to Z of Shipping Terms
SHIPPING TERMS
We have compiled a comprehensive glossary of ocean and air freight shipping terms.
This glossary is your guide to navigating the essential terms and concepts that keep goods moving around the world.
Whether you’re a seasoned shipper or just starting out, this resource will help you understand the processes and jargon involved in getting products from point A to point B.
A Complete Glossary of Shipping Terms
A
- Air Waybill (AWB): A contract of carriage for air freight by an airline. Similar to a bill of lading for ocean freight.
- AQIS: It stands for the Australian Quarantine and Inspection Service.
- Arrival Notice: A notification from a carrier (shipping line or airline) informing the consignee (receiver) of the impending arrival of their shipment.
B
- Bill of Lading (B/L): A document issued by a carrier (shipping line) that serves as a receipt for cargo, a contract of carriage for ocean freight, and a document of title. There are different types of B/Ls with varying functionalities, such as:
- Original Bill of Lading (OBL): The negotiable copy of the B/L required to release the goods at the destination port.
- Surrendered Bill of Lading: An OBL that has been endorsed by the consignee and surrendered to the carrier to claim the goods.
- House Bill of Lading: A non-negotiable B/L issued by a freight forwarder, acting as an intermediary between the shipper and the carrier.
- Bonded Warehouse: A secure storage facility where imported goods can be stored duty-free until they are released into circulation or re-exported. Goods in bonded warehouses remain under customs control until duties and taxes are paid.
- Broker: An intermediary who facilitates import and export transactions. There are different types of brokers, including:
- Customs Broker: A licensed professional who assists companies with clearing goods through customs by ensuring compliance with regulations and paperwork.
- Freight Broker: An intermediary who arranges transportation for shippers, negotiates rates, and books cargo space with carriers.
- Bulk Cargo: Unpackaged goods transported loose in a ship’s hold or container, typically commodities like grain, coal, or ore.
C
- Carrier: The company responsible for transporting goods, such as an airline or shipping line. Carriers can be common carriers (obligated to transport any lawful cargo offered) or contract carriers (transport cargo based on specific agreements).
- CFR (Cost and Freight): An incoterm (international commerce term) where the seller pays for the cost of transporting the goods by sea to the destination port, but the buyer is responsible for unloading costs, customs clearance, and onward transportation.
- CIF (Cost, Insurance, and Freight): An incoterm where the seller pays for the cost, insurance, and freight to deliver the goods to the destination port. The minimum insurance coverage required under CIF is specified by the Institute Cargo Clauses.
- Container: A standardized metal box used for transporting goods by sea or land. Containers come in various sizes, with the most common being 20ft (TEU) and 40ft (FEU). They can be dry vans (general cargo), reefer containers (temperature-controlled), or tank containers (liquids).
- Consolidation: Combining smaller shipments from multiple exporters into a single container for cost-efficiency. Consolidation can take place at origin (shipper’s location) or destination warehouses.
- Consolidation Point: The location where consolidation of multiple shipments into a single container takes place. This is often a warehouse or freight forwarding facility.
- Consolidator: An agent or company that groups the cargo of several customers for container transportation, offering economies of scale for smaller shipments.
- Consolidator’s Bill of Lading (CBL): A bill of lading issued by a consolidating freight forwarder to a shipper. It serves as a receipt for the shipper’s goods within the consolidated container and references the master bill of lading issued by the carrier for the entire container.
- Customs: The government agency responsible for overseeing the import and export of goods, collecting duties and taxes, and enforcing trade regulations.
- Customs Broker: A licensed professional who assists companies with clearing goods through customs by ensuring compliance with regulations and paperwork. They can handle tasks like duty calculations, import/export documentation, and liaising with customs authorities.
- Customs Clearance: The process of getting imported goods officially authorized for entry into a country. This typically involves presenting required documentation (e.g., invoice, packing list, bill of lading) to customs for inspection and duty payment.
D
- Delivery Duty Paid (DDP): An incoterm (international commerce term) where the seller delivers the goods to the buyer’s designated place (named place), with all duties, taxes, and customs clearance costs paid by the seller. This is the most comprehensive level of service for the buyer, but also the most expensive option for the seller.
- Delivery Duty Unpaid (DDU): An incoterm where the seller delivers the goods to the buyer’s designated place (named port), but the buyer is responsible for paying import duties, taxes, and customs clearance costs.
- Demurrage: A charge assessed by a carrier (shipping line or airline) for exceeding the allotted time for loading or unloading a container at the port or terminal. Demurrage charges can accumulate quickly and become a significant cost factor.
- Destination Charges: Fees levied by the carrier or terminal at the destination port, which may include unloading costs, customs clearance fees, storage charges, and others. These are typically the responsibility of the buyer unless otherwise specified in the sales agreement.
- Diplomatic Clearance: A special clearance process for goods destined for embassies, consulates, or other diplomatic missions. This process may involve exemptions from customs duties and taxes.
- Dock Receipt: A document issued by a terminal operator acknowledging receipt of cargo for loading onto a vessel.
- Door-to-Door Service: A comprehensive logistics service that encompasses the entire transportation process, from picking up the goods at the origin shipper’s door to delivering them to the final destination consignee’s door. This may include inland transportation, customs clearance, and other ancillary services.
- Drawback: A partial or full refund of duties and taxes paid on imported goods that are subsequently exported. This can incentivize companies to engage in manufacturing or processing activities using imported materials for re-export.
- Dry Van: The most common type of container, a sealed, weatherproof metal box used for transporting general cargo that does not require temperature control.
E
- Embargo: A government order restricting trade with a particular country. Embargoes can be imposed for various reasons, such as political pressure, human rights violations, or national security concerns. They can be comprehensive, restricting all trade, or limited to specific goods or services.
- Entry (Customs Entry): A legal document filed with customs authorities declaring the importation of goods. It details information about the shipment, such as the importer, consignee, goods description, value, and origin.
- Export Declaration: A document required by a government to record the export of goods. It typically includes details like the exporter, consignee, goods description, value, and destination country.
- Export Declaration Form (EDF): A standardized form used for filing export declarations with customs authorities. The specific format may vary depending on the country.
- Export Finance: Financing solutions designed to support exporters, such as pre-shipment finance to cover production costs before goods are shipped, or letters of credit to guarantee payment from the importer.
- Export Genera License (EGL): A general license issued by a government that authorizes the export of certain categories of goods without requiring an individual export license for each shipment.
- Export License: A government authorization required to export specific goods or technologies that may be subject to restrictions due to national security concerns, dual-use potential (civilian and military applications), or other reasons.
- Export Packing: Special packaging designed to withstand the rigors of international shipping, protecting goods from damage during handling, storage, and transportation. Export packing may involve techniques like palletization, strapping, crating, and the use of moisture-resistant materials.
- EXW (Ex Works): An incoterm (international commerce term) where the seller makes the goods available at their own premises (factory, warehouse), and the buyer is responsible for all transportation costs and risks from that point onward.
F
- FCL (Full Container Load): A shipment that fills an entire container. FCL shipments are typically more cost-effective per unit of cargo compared to LCL (Less Than Container Load) shipments, as they avoid the need to share container space and associated costs with other shippers.
- Feeder Service: A short-sea shipping service that connects ports within a region, often transporting containers between smaller ports and major hub ports. Feeder services play a crucial role in moving cargo to and from main shipping lanes.
- Free on Board (FOB): An incoterm (international commerce term) where the seller’s responsibility ends once the goods have been loaded onto the buyer’s chosen vessel at the designated origin port. The seller covers the cost of loading the goods onto the vessel, but the buyer assumes responsibility for all transportation costs and risks from that point onwards, including insurance, freight charges, and customs clearance at the destination port.
- Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate tariffs and other trade barriers on goods and services traded between them. FTAs can promote increased trade flows and economic integration between member countries.
- Freight: Goods transported by air, sea, or land.
- Freight Forwarder: A company that acts as an intermediary between shippers and carriers, arranging transportation, documentation, and other logistics services for import and export shipments. Freight forwarders can offer a variety of services, including cargo consolidation, customs clearance assistance, cargo insurance, and shipment tracking.
- Fumigation: The process of treating cargo with a pesticide to eliminate pests and prevent their spread during international transportation. Fumigation certificates may be required by some countries for certain imported goods.
G
- General Average (GA): A maritime principle where all cargo owners contribute financially to cover losses arising from sacrifices made to save the ship or cargo during a voyage. This could involve situations like jettisoning cargo overboard to lighten the ship in a storm, or incurring expenses for emergency repairs at sea. The general average principle ensures that the burden of such sacrifices is shared fairly among all parties with a stake in the voyage (ship owner, cargo owners).
- Gross Domestic Product (GDP): The total market value of all final goods and services produced within a country in a given year. Although not directly related to import/export, GDP is a key indicator of a country’s economic health and trade potential.
- Gross Weight: The total weight of a shipment, including the weight of the goods themselves and their packaging. This is used to calculate certain transportation costs, such as some air freight rates.
H
- Harmonized System (HS Code): An internationally standardized system of codes used to classify traded goods. The HS code system is administered by the World Customs Organization (WCO) and provides a common language for identifying and classifying goods for customs purposes.
- House Bill of Lading (HBL): A non-negotiable bill of lading issued by a freight forwarder to a shipper for a shipment consolidated with other cargo in a container. It serves as a receipt for the shipper’s goods within the container and references the master bill of lading issued by the carrier for the entire container. The HBL outlines the terms and conditions between the shipper and the freight forwarder
I
- Import Declaration: A document required by a government to record the import of goods. It typically includes details like the importer, consignee, goods description, value, and origin country.
- Import Duty: A tax levied by a government on goods entering a country. The rate of import duty can vary depending on the type of good, its country of origin, and trade agreements in place.
- Incoterms 20 (latest version): A set of internationally recognized terms of sale developed by the International Chamber of Commerce (ICC) that define responsibilities of buyers and sellers in international trade transactions. Incoterms clarify which party (seller or buyer) is responsible for costs and risks associated with transportation, insurance, customs clearance, and other aspects of the shipment journey. Some common Incoterms include:
- CIP (Carriage and Insurance Paid To): Seller pays for transportation costs and insurance to the destination port.
- DAP (Delivered at Place): Seller delivers the goods to the named place at the buyer’s premises, but the buyer is responsible for customs clearance.
- EXW (Ex Works): Seller makes the goods available at their own premises, and the buyer is responsible for all transportation costs and risks from that point onward.
- Inland Clearance Depot (ICD): A designated inland location where customs clearance formalities can be completed for imported or exported cargo, away from the main seaport or airport. This can expedite the process and reduce congestion at ports.
- Inspection Certificate: A document issued by an independent inspector verifying the condition, quantity, or other specifications of goods before shipment. This can be required by some countries for certain imported goods or as part of a letter of credit transaction.
- Insurance Certificate: A document issued by an insurance company providing details of coverage for a shipment against loss or damage during transportation. Marine insurance is a common type of insurance for ocean freight, while air cargo insurance is used for air shipments.
- Inland Transportation: The movement of goods between the shipper’s or consignee’s premises and the port or airport. This can involve transportation by truck, rail, or barge, depending on the location and mode of international transport (ocean or air).
J
- Just-in-Time (JIT) Inventory: A management philosophy that aims to minimize the amount of inventory held by a company. In the context of import/export, JIT can involve coordinating import schedules with production needs to reduce storage costs and holding times.
- Jetty: A pier or wharf that projects out into a body of water for loading and unloading cargo from ships.
K
- Knock Down (KD): Products that are disassembled into parts for easier and more compact shipping. These parts are then assembled at the destination. This is a common practice for furniture and other bulky items.
- Knock Down, Completely Knocked Down (CKD): A further distinction within KD. Completely knocked down refers to products that are disassembled into their most basic components for maximum space efficiency during transportation. This is often used for complex machinery or electronics that require final assembly at the destination.
L
- Less Than Container Load (LCL): A shipment that does not fill an entire container. LCL shipments are consolidated with cargo from other shippers in a single container to optimize space utilization. This can be a cost-effective option for smaller shipments, but may involve longer transit times due to the need for consolidation and deconsolidation at origin and destination ports.
- Letter of Credit (L/C): A document issued by a bank guaranteeing payment to a seller upon presentation of certain documents, such as a bill of lading and commercial invoice. This provides a layer of security for both the seller (ensuring payment) and the buyer (ensuring goods are shipped as per the agreement).
- Lighter: A smaller boat used to transfer cargo between a larger vessel and the shore, or between vessels at sea, in situations where the larger vessel cannot dock at a port due to draft limitations (depth of water).
- Lighterage: The process of using lighters to transfer cargo between vessels or between a vessel and the shore.
- Local Charges: Fees levied at the destination port or airport for services like terminal handling, customs clearance, or security inspections. These charges are typically the responsibility of the buyer unless otherwise specified in the sales agreement.
- Logistics: The overall planning, coordination, and implementation of the movement and storage of goods. In import/export, this encompasses activities like transportation, warehousing, customs clearance, and freight forwarding.
- Loose Cargo: Unpackaged goods transported in bulk, typically in the hold of a ship, such as grain, coal, or ore.
M
- Manifest: A document listing the contents of a cargo shipment, including details like quantity, weight, and description of each item. Manifests are required for both import and export shipments and are used by customs authorities to track and control goods. There are different types of manifests, such as:
- Cargo Manifest: Lists all cargo loaded onto a vessel or aircraft.
- House Manifest: A freight forwarder’s document listing all individual shipments consolidated within a single container.
- Marine Cargo Insurance: An insurance policy that protects cargo against loss or damage during ocean transportation. It can cover risks like piracy, shipwreck, fire, and collision. The specific coverage can vary depending on the type of policy and the terms negotiated.
- Marine Surveyor: A qualified professional who inspects cargo, ships, and terminals to assess their condition and identify potential risks. They may be involved in activities like:
- Pre-shipment surveys to ensure cargo is properly packed and secured for transport.
- Damage surveys to assess the extent of damage to cargo during transport.
- Master Bill of Lading (MBL): The main bill of lading issued by a carrier for an entire container. It serves as a contract of carriage between the carrier and the shipper (or the freight forwarder in case of a house bill of lading) and details the entire shipment within the container.
- Multimodal Transport: The transportation of goods using multiple modes of transport (e.g., truck, ship, rail) under a single transport contract. This can be a more efficient and cost-effective option for long-distance shipments compared to using a single mode of transport.
N
- Non-Vessel Operating Common Carrier (NVOCC): An intermediary company that acts as a common carrier in international freight forwarding, but does not own or operate its own vessels. NVOCCs consolidate cargo from multiple shippers into larger shipments to negotiate better rates with ocean carriers and offer door-to-door logistics services.
- Notice of Arrival (NOA): A notification from a carrier (shipping line or airline) informing the consignee (receiver) of the impending arrival of their shipment at the destination port or airport. This allows the consignee to prepare for customs clearance and arrange for inland transportation.
- Non-Hazardous Material (NHM): Goods that are not classified as dangerous goods according to international regulations. The vast majority of cargo transported by sea or air falls under this category.
- Non-Protective Packing: Packaging that is not specifically designed to withstand the rigors of international transportation. This type of packaging is typically used for goods that are not fragile or susceptible to damage.
- Neutral Flag: The flag (nationality) of a vessel that is not involved in a conflict between two or more countries. Neutral flag vessels may be preferred for certain shipments to avoid potential delays or disruptions due to political tensions.
O
- Ocean Bill of Lading (OBL): The original negotiable copy of a bill of lading issued by a carrier (shipping line) for ocean freight. It serves as a contract of carriage, a receipt for the cargo, and a document of title. The holder of the OBL has legal ownership of the goods and can transfer ownership by endorsing the document.
- On-Board Courier (OBC): A service where a courier physically accompanies high-value or time-sensitive cargo on an airplane to ensure its security and expedite customs clearance at the destination.
- Open Top Container: A container with a removable tarpaulin roof, allowing for easier loading of oversized or tall cargo that cannot fit into a standard container.
- Order Bill of Lading: A bill of lading issued to a specific consignee (receiver) named on the document. The goods can only be released to the named consignee or someone they authorize.
- Origin: The country from which goods are exported.
- Outer Harbor Charge (OHC): A fee levied by a port authority on vessels calling at the port.
- Out of Gauge (OOG) Cargo: Cargo that exceeds the standard dimensions or weight limitations for containerized shipping. OOG cargo may require special handling and permits for transportation.
- Over Stowage: When cargo is placed on top of other cargo in a container or ship’s hold, due to a lack of space. This can be risky for goods underneath if they are not properly secured.
P
- Packing List: A document that accompanies a shipment and provides a detailed description of the contents of the parcel or container. It includes information like:
- Quantity of each item
- Description of the goods
- Weight and dimensions of each item (or total weight/dimensions)
- Harmonized System (HS) code for the goods
Packing lists are crucial for several reasons:
* Help identify and verify shipment contents during customs clearance.
* Assist with calculating freight costs based on weight or volume.
* Facilitate efficient warehouse operations and inventory management.
- Packing Slip: A document inserted within a package that often includes a brief description of the contents and sometimes the order number or customer information. It differs from a packing list in its scope; a packing list is a comprehensive document for the entire shipment, while a packing slip is specific to an individual package.
- Part Load: A shipment that does not fill an entire container or aircraft but occupies a significant portion of the space (more than a Less Than Container Load (LCL) shipment).
- Payable on Acceptance (POA): A payment term where the buyer is obligated to pay for the goods upon acceptance of the shipment. This can be a risk-mitigating strategy for the seller.
- Phytosanitary Certificate: A document issued by a government agency certifying that plants or plant products meet the sanitary import requirements of the destination country. This helps prevent the spread of plant pests and diseases.
- Port: A harbor facility where ships can load and unload cargo. Ports play a crucial role in international trade as gateways for import and export activities.
- Port Authority: The government agency responsible for managing and operating a port. They oversee activities like infrastructure maintenance, cargo handling, and vessel traffic management.
- Port of Discharge (POD): The port where cargo is unloaded from a vessel at the destination country.
- Port of Loading (POL): The port where cargo is loaded onto a vessel in the origin country.
- Power of Attorney: A legal document authorizing another person or entity to act on behalf of the grantor (the person giving the power). In import/export, a power of attorney may be used to authorize a customs broker to handle clearance procedures on behalf of an importer or exporter.
Q
- Quarantine: A restriction imposed on the movement of people or goods to prevent the spread of disease or pests. In import/export, this can involve holding shipments at the border for inspection and treatment if necessary.
- Quota: A government-imposed restriction on the quantity of a particular good that can be imported or exported during a specific period. Quotas are often used to protect domestic industries or manage resource allocation.
R
- Reefer Container: A refrigerated container used for transporting temperature-controlled cargo, such as perishable goods (fruits, vegetables, meat) or pharmaceuticals. Reefer containers can maintain specific temperature ranges throughout the journey using built-in refrigeration units.
- Roll-on/Roll-off (RoRo): A type of ferry designed to allow vehicles to drive on and off the ship under their own power. RoRo vessels are efficient for transporting wheeled cargo like cars, trucks, and trailers.
- Royal Customs: A historical term sometimes used to refer to a country’s customs agency, although the specific name may vary depending on the country (e.g., U.S. Customs and Border Protection, Indonesia Customs and Excise).
S
- Sanitary and Phytosanitary (SPS) Measures: Measures implemented by a country to protect human, animal, or plant health from risks associated with imports. This can involve measures like quarantine procedures, inspections, and certification requirements.
- Seller’s Risk: Incoterms where the seller assumes responsibility for the cargo and associated risks until it reaches a designated point in the transportation journey. Examples include EXW (Ex Works) and FCA (Free Carrier).
- Shipper: The party who contracts for the transportation of goods. This can be the manufacturer, exporter, or another party acting on their behalf.
- Shipping Bill: A document required by some countries that details information about an export shipment, similar to an export declaration.
- Shipping Line: A company that operates vessels for the transport of cargo by sea.
- Shipper’s Export Declaration (SED): A form required by the U.S. Census Bureau for most exports from the United States. It provides statistical data on U.S. export trade.
- Shore Bill: A document issued by a terminal operator acknowledging receipt of cargo from a vessel for onward inland transportation.
- SKU (Stock Keeping Unit): A unique identifier assigned to a product or variation of a product for inventory management purposes. SKUs are used to track stock levels and identify specific items within a shipment.
- Society for Worldwide Interbank Financial Telecommunication (SWIFT): A secure messaging system used for international financial transactions, including payments for imports and exports.
T
- Target Price: The desired price at which a seller aims to sell goods in an international transaction.
- Terminal: A facility at a port or airport where cargo is loaded, unloaded, handled, and stored.
- Third-Party Logistics (3PL): A company that provides outsourced logistics services to businesses, such as warehousing, transportation management, and customs brokerage.
- Total Landed Cost (TLC): The total cost of an imported good delivered to the buyer’s designated location, including the purchase price, transportation costs, insurance, customs duties, and other related charges.
- Trade Bloc: A group of countries that have agreed to reduce or eliminate trade barriers between themselves, such as tariffs and quotas. Examples include the European Union (EU) and the North American Free Trade Agreement (NAFTA).
- Transhipment: The process of transferring cargo from one vessel to another at an intermediate port, typically to consolidate cargo or change routes.
- Transit Country: A country through which goods are transported on their way from the origin country to the destination country.
- Transportation Management System (TMS): A software application used to plan, execute, and optimize the transportation of goods. TMS can be used by shippers, freight forwarders, and carriers to manage logistics operations.
U
- Unclaimed Cargo: Goods that have arrived at the destination port or airport but remain unclaimed by the consignee (receiver) after a certain period. This can occur due to various reasons, such as issues with customs clearance, incorrect documentation, or the consignee no longer wanting the shipment. Unclaimed cargo may be subject to storage fees, auction, or even destruction by port authorities.
- Unit Load Device (ULD): A container specifically designed for air cargo transportation. Unlike standard shipping containers used for ocean freight, ULDs come in various sizes and configurations to accommodate different types of air cargo.
- Uruguay Round: A round of multilateral trade negotiations conducted under the General Agreement on Tariffs and Trade (GATT) from 1986 to 1994. The Uruguay Round led to the creation of the World Trade Organization (WTO) and further trade liberalization measures.
V
- Valuation: The process of determining the customs value of imported goods, which forms the basis for calculating import duties and taxes. There are internationally agreed upon valuation methods as outlined in the WTO Valuation Agreement.
- Vessel Operating Common Carrier (VOCC): A common carrier that owns and operates its own fleet of vessels for the transport of cargo by sea. This contrasts with Non-Vessel Operating Common Carriers (NVOCCs) who do not own vessels but act as intermediaries in freight forwarding.
W
- Warehouse: A commercial building for the storage of goods. Warehousing plays a crucial role in import/export as cargo may need to be stored temporarily before or after transportation, pending customs clearance, or for distribution purposes.
- Warehouse Receipt: A document issued by a warehouse operator acknowledging receipt of specific goods for storage. It serves as a record of ownership and can be used as collateral to secure financing.
- Waybill: A document issued by a carrier for the transportation of goods, typically used for air cargo. It serves as a receipt for the goods and a contract of carriage between the shipper and the carrier. (Air waybill is a more specific term).
- Weight and Measurement (W&M): The weight and dimensions of cargo used for freight rate calculations. Both gross weight (including packaging) and net weight (goods only) may be relevant depending on the specific pricing method used by the carrier.
Y
- Yard: An open area within a port or terminal used for the temporary storage and handling of cargo containers. Yards are equipped with cranes and other machinery for loading and unloading containers from trucks and vessels.
- Yard Management System (YMS): A software application used by port terminals and freight yards to manage the movement and storage of containers within the yard. YMS helps optimize yard operations, track container locations, and improve efficiency.
Z
- Zone of Economic Activity (ZEA): A designated geographical area within a country that benefits from relaxed trade regulations and tax incentives to attract foreign investment and promote economic activity. These zones can be useful for import/export businesses looking to streamline operations and reduce costs
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