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Understanding Logistics Terminology
Whether you're new to shipping or looking to deepen your understanding, this comprehensive glossary covers 50 essential transportation and logistics terms. Each definition is tailored specifically for shippers to help you make informed decisions about your freight operations.
A
Accessorial Charges
Additional fees charged by carriers beyond the base freight rate for special services or circumstances. Common examples include residential delivery fees, liftgate service, inside delivery, or appointment scheduling. As a shipper, understanding accessorial charges helps you budget accurately and negotiate better rates by minimizing unnecessary services.
PricingAdvanced Shipping Notice (ASN)
An electronic document sent by shippers to receivers before shipment arrival, detailing what products are being shipped, quantities, and expected delivery times. ASNs improve receiving efficiency, reduce dock congestion, and enable better inventory management for both shippers and consignees.
DocumentationAir Waybill (AWB)
A non-negotiable document issued by an airline or freight forwarder that serves as a receipt for goods and evidence of the contract of carriage for air freight shipments. Unlike ocean bills of lading, AWBs cannot be transferred to another party, making them simpler but less flexible for shippers.
DocumentationAppointment Scheduling
A service where shippers or receivers schedule specific delivery or pickup times with carriers. This is often required for facilities with limited dock space or strict receiving hours. While it provides better control, it typically incurs additional fees and requires careful coordination to avoid delays.
OperationsAudit
The process of reviewing freight invoices and shipping documents to verify accuracy of charges, detect billing errors, and ensure compliance with negotiated rates. Regular freight audits help shippers recover overcharges, identify billing patterns, and improve cost management. Many shippers use third-party audit services or automated systems to streamline this process.
FinancialB
Bill of Lading (BOL)
A critical legal document that serves three functions: a receipt for goods, evidence of the contract of carriage, and a document of title. Shippers must ensure BOLs are accurate and complete, as errors can cause delivery delays, billing disputes, or legal issues. The BOL details shipment contents, origin, destination, and terms of carriage.
DocumentationBroker
A licensed intermediary who arranges transportation between shippers and carriers but doesn't own transportation equipment. Freight brokers help shippers find capacity, negotiate rates, and manage logistics. Shippers benefit from brokers' carrier networks and expertise, but should verify broker licensing and insurance to ensure protection.
Service ProviderBulk Freight
Shipments that are not packaged in individual containers but loaded directly into transportation equipment, such as liquids, grains, or raw materials. Bulk freight typically requires specialized equipment and handling, often resulting in different pricing structures and service requirements than packaged freight.
Freight TypeC
Carrier
A company that physically transports goods from origin to destination. Carriers can be asset-based (owning equipment) or non-asset-based (arranging transportation). Shippers must evaluate carriers based on service reliability, coverage area, pricing, and equipment availability to ensure their freight needs are met consistently.
Service ProviderClass Rating
A standardized freight classification system (NMFC) that categorizes commodities from Class 50 (lowest density, highest value) to Class 500 (highest density, lowest value). Class rating directly impacts freight pricing, as higher classes cost more to ship. Shippers should understand their products' classifications to negotiate rates and ensure accurate pricing.
PricingConsignee
The party receiving a shipment, typically the buyer or end customer. Shippers must provide accurate consignee information including name, address, and contact details to ensure successful delivery. Incorrect consignee information can result in failed deliveries, additional charges, and customer dissatisfaction.
PartiesConsolidation
The practice of combining multiple smaller shipments into a single larger shipment to achieve better rates and efficiency. Shippers can consolidate their own shipments or use consolidation services from carriers or 3PLs. This strategy reduces per-unit shipping costs but may extend transit times slightly.
StrategyCross-Docking
A logistics practice where incoming shipments are immediately sorted and transferred to outbound vehicles with minimal or no storage time. This reduces handling costs and inventory holding time. Shippers benefit from faster order fulfillment and reduced warehousing costs, but require precise coordination and timing.
OperationsCube Out
A situation where a trailer reaches its volume capacity before reaching its weight limit. This commonly occurs with lightweight, bulky products. Shippers experiencing cube-out issues may need to optimize packaging, use different equipment, or adjust pricing strategies to account for space utilization rather than just weight.
CapacityD
Dedicated Fleet
Transportation equipment and drivers assigned exclusively to a single shipper's account. Dedicated fleets provide consistent capacity, better service control, and often improved relationships with drivers. While more expensive than transactional shipping, dedicated fleets offer reliability and flexibility that can justify the premium for high-volume shippers.
Service TypeDemurrage
Charges assessed when freight containers or trailers are held beyond the free time allowed at a facility. Demurrage fees incentivize quick unloading and equipment return. Shippers can minimize demurrage by improving dock efficiency, scheduling appointments, and ensuring receivers are prepared for deliveries.
PricingDensity
The weight per cubic foot of a shipment, calculated by dividing total weight by total cubic feet. Density is crucial for freight pricing, as carriers charge based on whichever is greater: actual weight or dimensional weight. Understanding density helps shippers optimize packaging and negotiate fair rates.
PricingDetention
Fees charged when a driver and equipment are held at a pickup or delivery location beyond the free time allowance, typically two hours. Detention compensates carriers for lost productivity. Shippers should ensure facilities are prepared for timely loading/unloading to avoid these charges, which can add significantly to shipping costs.
PricingDimensional Weight (DIM Weight)
A pricing method that calculates shipping charges based on package volume rather than actual weight. Carriers use a formula (length × width × height ÷ dimensional factor) to determine billable weight. Shippers shipping lightweight, bulky items pay based on dimensional weight, making efficient packaging crucial for cost control.
PricingDock
A loading platform where freight is transferred between transportation equipment and facilities. Dock efficiency directly impacts shipping costs through detention and demurrage. Well-managed docks with proper scheduling, adequate staffing, and appropriate equipment reduce delays and improve carrier relationships.
FacilitiesE
Expedited Freight
Shipments requiring faster-than-standard delivery service, often with guaranteed delivery times. Expedited services command premium pricing but provide time-sensitive shippers with reliability and speed. Shippers should evaluate whether the urgency justifies the cost premium or if standard service meets their needs.
Service TypeF
Freight All Kinds (FAK)
A pricing arrangement where multiple commodities with different class ratings are shipped together at a single, negotiated rate. FAK rates simplify pricing and can reduce costs for shippers with mixed product lines. However, shippers must ensure FAK rates are competitive compared to individual class-based pricing.
PricingFreight Forwarder
A company that arranges and coordinates shipments on behalf of shippers, often consolidating freight and handling documentation. Freight forwarders provide expertise, carrier relationships, and can simplify complex shipping requirements. Shippers benefit from forwarders' knowledge and network, particularly for international or specialized shipments.
Service ProviderFull Truckload (FTL)
Shipments that occupy an entire trailer, typically 24-26 pallets or 45,000+ pounds. FTL service provides direct point-to-point transportation without intermediate stops, offering faster transit times and reduced handling. Shippers with sufficient volume benefit from FTL's speed and reduced risk of damage, though at higher per-shipment costs than LTL.
Service TypeG
General Rate Increase (GRI)
An annual or periodic across-the-board rate increase implemented by carriers, typically ranging from 3-7%. GRIs affect base rates but not necessarily total shipping costs, as discounts and accessorials also impact final pricing. Shippers should analyze GRIs' actual impact on their freight spend and negotiate accordingly during contract renewals.
PricingGuaranteed Service
A premium shipping option where carriers commit to specific delivery times with financial penalties for late delivery. Guaranteed services provide shippers with reliability and accountability, often including refunds or credits for service failures. While more expensive, guaranteed service protects shippers from costly delays and supply chain disruptions.
Service TypeH
Hazmat (Hazardous Materials)
Shipments containing materials classified as dangerous goods, requiring special handling, documentation, and compliance with regulations. Hazmat shipping involves additional costs, training requirements, and regulatory compliance. Shippers must properly classify, package, label, and document hazmat shipments to ensure safety and regulatory compliance.
ComplianceI
Intermodal
Transportation using multiple modes (typically truck and rail) within a single shipment. Intermodal combines the long-haul efficiency of rail with the flexibility of trucking for first/last mile. Shippers benefit from cost savings on long distances while maintaining reasonable transit times, though coordination complexity increases.
Service TypeL
Less-Than-Truckload (LTL)
Shipments that don't require a full trailer, typically 1-6 pallets or under 10,000 pounds. LTL carriers consolidate multiple shipments, making it cost-effective for smaller shipments but with longer transit times due to multiple stops. Shippers benefit from LTL's flexibility and cost efficiency for smaller volumes, though with increased handling and potential damage risk.
Service TypeLiftgate
Equipment on a truck that can raise or lower freight to ground level, eliminating the need for a loading dock. Liftgate service is essential for deliveries to locations without dock facilities but incurs additional charges. Shippers should identify liftgate-required deliveries upfront to budget accurately and avoid surprise charges.
EquipmentLogistics
The overall process of planning, implementing, and controlling the efficient flow of goods, services, and information from origin to consumption. For shippers, logistics encompasses transportation, warehousing, inventory management, and supply chain coordination. Effective logistics management reduces costs, improves service levels, and enhances competitive advantage.
GeneralM
Minimum Charge
The lowest amount a carrier will charge for a shipment, regardless of actual weight or distance. Minimum charges ensure carriers cover base costs for small shipments. Shippers with frequent small shipments should understand minimum charges to optimize shipping strategies, potentially consolidating shipments or negotiating lower minimums.
PricingN
National Motor Freight Classification (NMFC)
A standardized system that classifies commodities for LTL shipping based on density, stowability, handling, and liability. NMFC classifications determine freight class ratings, which directly impact pricing. Shippers must ensure accurate classification to avoid reclassification fees and billing disputes, and to negotiate appropriate rates.
ClassificationO
Origin
The location where a shipment begins its journey, typically the shipper's facility or warehouse. Accurate origin information is critical for rate calculation, routing, and carrier assignment. Shippers should ensure origin addresses are complete and correct to avoid misrouting, incorrect pricing, and delivery delays.
LocationOver, Short, and Damage (OS&D)
A report documenting discrepancies between shipped and received quantities, or damage discovered upon delivery. OS&D reports initiate claims processes and help identify issues in the supply chain. Shippers should have clear OS&D procedures to protect their interests and recover losses from carriers or insurance.
ClaimsP
Pallet
A platform structure used to stack, store, and transport goods. Standard pallet sizes (typically 48"x40" in North America) enable efficient loading and maximize trailer utilization. Shippers should use standard pallets and proper stacking techniques to minimize freight costs and reduce damage risk.
EquipmentProof of Delivery (POD)
Documentation confirming that a shipment was delivered to the consignee, typically including recipient signature, date, and time. PODs are essential for billing, claims, and customer service. Shippers should ensure PODs are obtained and retained for all shipments to resolve disputes and verify service completion.
DocumentationR
Rate
The price charged by a carrier to transport freight from origin to destination. Rates can be based on weight, distance, class, or negotiated contracts. Shippers should understand rate structures, compare carrier rates, and negotiate favorable contracts based on volume, service requirements, and shipping patterns.
PricingReconsignment
Changing a shipment's destination or consignee after it's been picked up but before delivery. Reconsignment services allow shippers flexibility but incur additional charges. This service is valuable for addressing customer order changes, inventory redistribution, or routing errors, though costs and transit time impacts should be considered.
ServiceS
Shipper
The party that originates a shipment and contracts with a carrier for transportation services. As the shipper, you're responsible for accurate documentation, proper packaging, payment of freight charges, and ensuring compliance with regulations. Understanding your responsibilities helps avoid delays, disputes, and additional costs.
PartiesShipping Terms (Incoterms)
Internationally recognized terms that define responsibilities and costs between buyers and sellers for international shipments. Common terms include FOB (Free On Board), CIF (Cost, Insurance, Freight), and EXW (Ex Works). Understanding shipping terms clarifies who pays for what and assumes liability at various points in the shipping process.
TermsSpot Market
The transactional freight market where shippers and carriers negotiate rates for individual shipments without long-term contracts. Spot rates fluctuate based on supply and demand, often higher than contract rates but providing flexibility. Shippers use spot markets for overflow capacity, one-time shipments, or when contract carriers are unavailable.
PricingSupply Chain
The entire network of organizations, people, activities, information, and resources involved in moving products from suppliers to end customers. For shippers, effective supply chain management coordinates transportation, inventory, warehousing, and information flow to optimize costs and service levels while meeting customer demands.
GeneralT
Third-Party Logistics (3PL)
Companies that provide outsourced logistics services including transportation, warehousing, distribution, and freight management. 3PLs offer shippers expertise, technology, and scale advantages, allowing focus on core business activities. Shippers should evaluate 3PLs based on capabilities, technology, service levels, and cultural fit.
Service ProviderTransit Time
The duration from pickup to delivery of a shipment. Transit times vary by service level, distance, and mode of transportation. Understanding transit times helps shippers set customer expectations, manage inventory, and choose appropriate service levels. Faster transit typically costs more but may be necessary for time-sensitive shipments.
ServiceTransportation Management System (TMS)
Software that helps shippers plan, execute, and optimize freight movements. TMS solutions provide rate shopping, carrier selection, shipment tracking, and analytics capabilities. Shippers benefit from TMS through improved efficiency, cost savings, better visibility, and data-driven decision making.
TechnologyU
Unit Load Device (ULD)
Standardized containers used in air freight to consolidate and protect cargo. ULDs enable efficient aircraft loading and protect freight during handling. Shippers benefit from ULDs through reduced handling, better protection, and potentially lower rates for consolidated shipments.
EquipmentW
Weight Out
A situation where a trailer reaches its weight capacity before filling available space, opposite of cube out. Weight-out typically occurs with dense, heavy products. Shippers experiencing weight-out may need to optimize product density, consider different equipment, or adjust pricing strategies to account for weight utilization.
CapacityWhite Glove Service
Premium delivery service providing extra care and handling, often including inside delivery, unpacking, setup, and removal of packaging materials. White glove service is essential for high-value, fragile, or large items requiring special handling. While expensive, it protects shippers from damage and provides superior customer experience.
Service TypeZ
Zone
Geographic areas used by carriers to determine freight rates based on distance from origin. Zones are typically numbered (1-8 or similar), with higher numbers indicating greater distance and higher rates. Understanding zone-based pricing helps shippers estimate costs, negotiate rates, and optimize distribution strategies.
Pricing