Essential Freight Terms and Their Meanings

You need to know essential freight terms to work confidently in shipping and logistics. These words help you understand instructions, share clear information, and avoid confusion. A freight terminology guide creates a common language for everyone. This guide can help you reduce costly errors and keep shipping operations smooth. Each term in this glossary comes with a simple definition and a practical example. If you see an unfamiliar word, check this guide for quick help.

Key Takeaways

• Understanding freight terms helps you communicate clearly and avoid costly mistakes in shipping.

• Always check for accessorial charges before shipping to manage your budget effectively.

• Use the air waybill and bill of lading correctly to ensure smooth tracking and delivery of your goods.

• Plan your pickup and delivery times carefully to avoid demurrage and detention fees.

• Consider hiring a freight forwarder for international shipments to simplify customs and paperwork.

Freight Terminology Guide: A–C

Accessorial Services

Accessorial services are extra tasks or charges that go beyond basic shipping. You might need these services if your shipment requires special handling, storage, or equipment. For example, if a driver waits longer than expected to load or unload, you pay a waiting fee. If you need liftgate service or inside delivery, these also count as accessorial services.

Tip: Always check for accessorial charges before shipping. These fees can increase your total shipping cost and affect your budget.

• Accessorial services introduce additional charges that can significantly increase total shipping expenses.

• These charges cover extra services beyond standard freight transportation, such as special handling, waiting times, and the use of specialized equipment.

• Understanding these charges is crucial for shippers to avoid unexpected costs and optimize logistics operations.

Air Waybill (AWB)

An air waybill is a document used in air freight. It acts as a receipt for the shipper and provides details about the shipment. You use it to track your cargo and show proof of shipment. The air waybill lists the sender, receiver, weight, and contents.

Mistakes in the air waybill can result in significant delays or complications with customs processes. Common errors include inaccuracies in addresses, incorrect weight entries, or omissions of necessary information. To avoid problems, you should always check every detail before finalizing the air waybill.

Example: If you ship electronics by air, the AWB will show the sender’s name, the receiver’s address, and the weight of the boxes.

Bill of Lading (BOL)

A bill of lading is a legal document between you and the carrier. It lists what you are shipping, where it is going, and who will receive it. The BOL serves as a contract, a receipt, and sometimes a title to the goods.

Example: When you send furniture by truck, the bill of lading will show the type of furniture, the pickup location, and the delivery address.

Bottleneck

A bottleneck is a point in the shipping process where things slow down or get stuck. You might see bottlenecks at busy ports, crowded highways, or overloaded warehouses. Bottlenecks can delay shipments and increase costs.

• Delays in service create ripple effects in the overall supply chain.

• Higher costs of doing business are passed to consumers.

• Congestion increases logistics costs, affecting customer satisfaction.

With the anticipated increase in truck traffic, existing freight bottlenecks are expected to worsen unless addressed systematically, leading to further operational challenges in logistics.

Carrier

A carrier is the company or person who moves your goods from one place to another. Carriers can use trucks, ships, trains, or planes. You choose a carrier based on your shipping needs, cost, and delivery time.

Example: If you ship clothing from New York to Los Angeles, the trucking company you hire is the carrier.

Carrier Liability

Carrier liability means the carrier’s responsibility for your shipment. If your goods get lost or damaged, the carrier may have to pay you. The amount they pay depends on the type of shipment and the rules that apply.

• For international air shipments, the Montreal Convention limits liability to 22 SDR per kilo (about $12.90 per pound).

• Claims for damage must be filed within 14 days of delivery, and for delays, within 21 days.

• The statute of limitations for lawsuits is two years.

• Under COGSA, the liability for ocean carriers is limited to $500 per package or customary shipping unit.

• The notice of claim must be filed within three days of delivery, and lawsuits must be filed within one year.

• The Montreal Convention allows parties to contract for a higher recovery amount than the standard limit of 22 SDR.

Example: If your electronics arrive damaged, you must file a claim quickly to get compensation from the carrier.

Consignee

The consignee is the person or company who receives the shipment. You become the consignee when you accept delivery of goods. You have several responsibilities when you act as the consignee.

• Receiving Goods: Arrange to pick up or be present when the shipment arrives.

• Inspection: Ensure the contents match the order and are undamaged.

• Payments: Cover any applicable duties, taxes, or fees.

Consignees play a vital role in logistics, which includes receiving shipments, inspecting for damage, signing for receipt, paying necessary duties and taxes, and possibly arranging further transportation.

Consignor

The consignor is the person or company who sends the shipment. You act as the consignor when you prepare goods for shipping, fill out documents, and hand the goods to the carrier.

Example: If you ship books to a store, you are the consignor. The store is the consignee.

Customs Broker

A customs broker helps you clear your goods through customs. You hire a customs broker to handle paperwork, pay duties, and make sure your shipment meets all rules. Customs brokers know the laws and help you avoid delays.

• Be a United States citizen at least 21 years old.

• Not be a current federal government employee.

• Possess good moral character.

• Pass the Customs Broker License Examination.

• Submit a broker license application with appropriate fees.

• Application must be approved by CBP.

Example: If you import shoes from another country, a customs broker helps you fill out forms and pay taxes so your shipment can enter the United States.

Note: Use this freight terminology guide to check the meaning of these terms whenever you need help. Understanding these words helps you avoid mistakes and keeps your shipping process smooth.

D–M: Freight Terms Explained

Deadhead

Deadhead means a truck travels without carrying any cargo. You see this when a driver returns to the starting point after making a delivery. Deadhead miles increase costs for trucking companies.

• Fuel use goes up, so expenses rise.

• Trucks wear out faster, even when empty.

• Drivers still need pay for their time.

• Every empty mile means lost income.

You can reduce deadhead by planning routes better and matching loads.

Demurrage

Demurrage is a fee you pay when your cargo stays too long at a port or terminal. Ports charge this fee if you do not pick up your container on time. In 2023, the average demurrage and detention charge was $2008 per container per day, down from $2692 in 2022. Some ports, like Antwerp and Singapore, still have higher fees than in 2020. In Europe, the average fee is $449 over 14 days.

Tip: Always check the free time allowed at each port to avoid high demurrage charges.

Detention

Detention is a fee for keeping a carrier’s equipment, like a container or trailer, longer than agreed. If you take too long to unload, you pay detention charges. These fees can add up quickly, so you should plan unloading times carefully.

Drayage

Drayage means moving freight over a short distance, often between a port and a warehouse. You use drayage to connect different parts of the shipping process, like moving a container from a ship to a truck.

Dunnage

Dunnage protects your cargo during shipping. You use materials like bubble wrap, packing peanuts, corrugated paper, air pillows, kraft paper, foam, solid plastics, wood, or steel. Dunnage keeps goods from shifting and getting damaged.

• Bubble wrap and foam work well for fragile items.

• Wood and steel dunnage support heavy cargo.

Dry Freight

Dry freight is cargo that does not need temperature control or special tanks. You ship dry freight in dry van trailers. These trailers protect goods from weather and theft. Dry freight includes non-perishable items, while refrigerated freight needs cooling and liquid freight needs special tanks.

Freight Forwarder

A freight forwarder helps you move goods across borders. They arrange transportation, negotiate costs, handle terminal fees, and manage customs paperwork. Freight forwarders also combine shipments, insure goods, and keep track of documents.

• They make shipping easier by handling many steps for you.

FTL (Full Truckload)

FTL means you use a whole truck for your shipment. This works best for large loads. FTL shipping is faster because the truck goes straight to the destination.

Incoterms

Incoterms are rules for international trade. They show who pays for shipping, insurance, and customs. For example:

• EXW: The seller’s job ends at their building. You pay all costs after that.

• DDP: The seller pays all costs until the goods reach you.

• FOB: You take the risk once goods are on the ship.

• CIF: The seller keeps risk until the goods reach your port.

You should check Incoterms before making a deal.

LTL (Less Than Truckload)

LTL means your shipment shares space with other cargo. You pay based on weight, distance, and freight class. LTL costs less for small loads but takes longer because the truck makes more stops.

Manifest

A manifest lists all the details about your shipment. It includes:

• Shipper and consignee names and addresses

• Shipment reference number

• Description, weight, and size of goods

• Container or package details

• Shipping method and route

• Customs and insurance information

• Delivery instructions

You use a manifest to track and clear shipments through customs. This freight terminology guide helps you understand these key terms and avoid mistakes.

N–Z: Freight Terminology Guide

Notify Party

You see the notify party listed on shipping documents. This party receives updates about your cargo’s arrival. The notify party does not own the goods. You may ask them to help with customs clearance or coordinate delivery. Their main job is to stay informed and act quickly when your shipment reaches its destination.

• The notify party gets contacted when cargo arrives.

• They may help with customs clearance and logistics.

• They do not own the cargo but help move it forward.

Over, Short, and Damaged (OS&D)

You use OS&D reports when your shipment does not match what you expected. If items are missing, extra, or damaged, you file an OS&D claim. Carriers follow clear steps to resolve these issues.

Packing List

A packing list shows what you are shipping. Customs and freight forwarders use this list to check your cargo. You must include important details for international shipments.

Proof of Delivery (POD)

Proof of delivery shows that your shipment reached its destination. You use POD to protect your business from false claims. It gives you a record that the customer received the goods.

• POD proves the delivery happened as planned.

• It helps you avoid paying for lost or missing items.

• POD records reduce mistakes and disagreements.

Shipper

You act as the shipper when you send goods. You prepare the cargo, fill out documents, and arrange transport. The shipper starts the shipping process and works with carriers and consignees.

Tariff

A tariff is a tax on imported or exported goods. You pay tariffs based on the type and value of your shipment. Tariffs affect the total cost of moving goods across borders.

Third-Party Logistics (3PL)

Third-party logistics companies handle shipping and storage for you. You hire a 3PL to manage transport, warehousing, and sometimes customs. 3PLs help you save time and focus on your business.

Waybill

A waybill is a document that travels with your shipment. It lists the sender, receiver, and details about the cargo. You use the waybill to track and confirm delivery.

You can use this freight terminology guide to understand these terms and keep your shipping process smooth.

Key Freight Documents

Bill of Lading Types

You use a bill of lading (BOL) to prove what you ship and who owns it. You see different types of BOLs in freight. Each type serves a special purpose.

• Straight Bill of Lading: You use this when you ship goods to one specific receiver. The receiver cannot transfer ownership.

• Order Bill of Lading: You use this when you want the receiver to transfer ownership. Banks often use this type for international trade.

• Seaway Bill: You use this for fast shipments. The receiver does not need to show the original document to get the goods.

Tip: Always check which bill of lading your shipment needs. The wrong type can delay delivery or cause legal problems.

Commercial Invoice

You use a commercial invoice to show the value and details of your shipment. Customs officers check this document to decide how much duty you pay. You must include the seller’s and buyer’s names, item descriptions, prices, and shipping terms.

• Customs uses the invoice to check your cargo.

• You use it to prove the value of your goods.

• The invoice helps you avoid mistakes with taxes and fees.

Note: Always fill out the commercial invoice carefully. Missing or wrong details can delay your shipment.

Certificate of Origin

You use a certificate of origin to show where your goods come from. Many countries need this document for customs clearance. You get it from a chamber of commerce or a government office.

• The certificate helps you qualify for lower tariffs under trade agreements.

• Customs uses it to check if your goods meet import rules.

• You need it for many international shipments.

If you ship goods to another country, ask your freight forwarder about the certificate of origin. This step can save you money and time.

Types of Carriers & Services

Common Carrier

You use a common carrier when you need to ship goods and want open access to transportation. Common carriers offer services to the public. They must treat every customer fairly and follow government rules. Examples include large trucking companies, railroads, and shipping lines.

Tip: Choose a common carrier if you want reliable service and set rates. These carriers often have regular schedules and routes.

Contract Carrier

You work with a contract carrier when you need special shipping services. Contract carriers sign agreements with you or your company. These carriers do not serve the general public. They focus on meeting your unique needs, such as special routes or delivery times.

• You can negotiate prices and service terms.

• You get more control over how your goods move.

• You build a long-term relationship with the carrier.

Example: If you ship electronics every week, you might sign a contract with a carrier for dedicated trucks and drivers.

Private Carrier

You become a private carrier when you use your own trucks or vehicles to move your goods. Many large companies, like grocery chains, use private carriers. You control the schedule, routes, and drivers.

Note: Private carriers give you flexibility, but you must handle all costs and responsibilities.

• You manage your own fleet.

• You set your own delivery times.

• You handle maintenance and driver training.

Intermodal Transport

You use intermodal transport when your shipment needs more than one type of transportation. For example, your goods might travel by truck, train, and ship. Intermodal transport helps you save money and reduce delays.

Intermodal transport works well for long-distance and international shipments. You can track your cargo at every step.

You build confidence in logistics when you master freight terminology. Knowing the right words helps you avoid mistakes and communicate clearly. To keep improving, try these strategies:

1. Learn key documents like the Bill of Lading and Commercial Invoice.

2. Understand the difference between a carrier and a freight forwarder.

3. Get familiar with pricing terms such as FCL and LCL.

Keep this guide handy and explore more resources to deepen your shipping knowledge.

FAQ

What is the difference between a shipper and a consignee?

You act as the shipper when you send goods. The consignee receives the goods. The shipper prepares and sends the shipment. The consignee accepts and inspects the delivery.

Why do I need a bill of lading?

You need a bill of lading to prove what you ship, where it goes, and who receives it. This document protects you if problems happen during shipping.

How can I avoid demurrage and detention fees?

Plan your pickup and delivery times carefully. Track your shipments and communicate with your carrier. Quick action helps you avoid extra charges.

What does Incoterms mean for my shipment?

Incoterms show who pays for shipping, insurance, and customs. You should check the Incoterm before you agree to a deal. This helps you know your costs and risks.

When should I use a freight forwarder?

You should use a freight forwarder when you ship goods internationally or need help with customs, paperwork, or complex routes. Freight forwarders make shipping easier for you.

See Also

PGL Connects West Coast Freight to FBA Solutions

Begin Your Freight Journey with PGL’s FTL Services

PGL Offers Expert Solutions for LTL and FTL Shipping

PGL Helps You Decide on LTL, FTL, and Drayage

Reliable Air Freight Export Services by Premier Global Logistics