Shipping Jargon: A Glossary for Beginners
Navigating the world of shipping can feel like getting lost in a labyrinth of acronyms, jargon, and obscure terms. Whether you’re a fledgeling eCommerce business owner, a seasoned logistics manager, or simply someone interested in understanding this expansive industry better, this guide is for you.
Let’s delve into a few shipping terms and demystify the language that keeps global trade flowing. We’ll also spice things up with real-world stories and case studies to give these terms context and meaning.
Bill of Lading (BOL)
What it is:
A bill of lading is a legal document issued by a carrier to a shipper that serves as a receipt for the goods being shipped. It includes details like the type of goods, the quantity, the destination, and the name of the vessel.
Real-world Story:
Imagine this: Sarah, a toy manufacturer in Birmingham, sends a shipment of handcrafted wooden toys to a retailer in New York. Her carrier mistakenly delivers the toys to a tech store in New Jersey. In this unfortunate mix-up, the bill of lading comes to the rescue, helping Sarah prove that the toys were indeed intended for New York, not New Jersey.
Case Study:
In 2017, a London-based fashion retailer faced significant delays because their bill of lading had incorrect information. This minor error led to a two-week delay and an additional expense of £20,000. Always triple-check your BOL!
Freight On Board (FOB)
What it is:
FOB signifies the point at which ownership and liability for goods pass from the seller to the buyer. The term is usually followed by the name of a location, such as “FOB New York.”
Real-world Story:
Jack, an antique dealer in Edinburgh, sells a priceless vase to a collector in Tokyo. They agree on FOB Edinburgh, meaning that once the vase is loaded onto the ship, it’s officially the collector’s property and responsibility.
Case Study:
A medium-sized business in Manchester imported raw materials with the agreement on FOB Shanghai. Unfortunately, they overlooked that FOB meant taking responsibility for the goods once they were onboard, and failed to insure them. A storm struck, and they lost £100,000 worth of materials.
Less Than Load (LTL)
What it is:
LTL shipping involves the transport of goods that don’t fill an entire truck. It’s ideal for small businesses that have shipments weighing between 150 and 15,000 pounds.
Real-world Story:
Lucy, who owns a small organic soap business in Bristol, uses LTL shipping to regularly send batches of her products to stores across the UK. This enables her to keep shipping costs down while her business grows.
Case Study:
An online bookseller in Leeds transitioned from parcel shipping to LTL and saved £35,000 a year in shipping costs, all while improving delivery times by 30%.
Demurrage and Detention
What it is:
Demurrage fees are charged when import containers are not cleared and removed from the port within a given time. Detention fees occur when containers are held outside the port longer than the agreed-upon free time.
Real-world Story:
Tim, a wine importer in Liverpool, once faced a workers’ strike at his local port. His shipment of French wine sat at the port for two weeks, accumulating demurrage charges that nearly crippled his business.
Case Study:
In 2020, a tech company in Cambridge paid £25,000 in detention fees because they failed to return empty containers within the agreed 10-day free period. This cautionary tale emphasises the importance of understanding the terms of your shipping contracts.
Intermodal Transportation
What it is:
Intermodal transportation refers to the use of two or more modes of transport to move goods from the origin to the destination. For instance, a shipment may start its journey on a truck, transfer to a train, and finally get loaded onto a ship.
Real-world Story:
Emily, a bicycle manufacturer in Sheffield, wanted to send a shipment of mountain bikes to a customer in Berlin. Using intermodal transportation, her bikes went from truck to train and finally onto a ferry, smoothly crossing borders and arriving on time.
Case Study:
A medium-sized food distributor in Newcastle adopted an intermodal strategy to reduce their carbon footprint. By shifting 40% of their truck-only shipments to a combination of rail and truck, they cut their CO2 emissions by 20% and saved £50,000 annually.
Deadhead
What it is:
Deadhead refers to the return trip of a vehicle, usually a truck, running empty after delivering a shipment. For carriers, this represents lost revenue and is generally something they try to avoid.
Real-world Story:
Rob, a truck driver from Cardiff, had just delivered a load of electronics to a warehouse in London. Rather than return empty, he used a mobile app that helped him find a load of furniture needing to go back to Cardiff, thus avoiding a deadhead trip.
Case Study:
A logistics company in Southampton invested in a smart scheduling system that minimised deadhead trips. Within a year, they saw a 15% increase in overall revenue, directly attributing this to their reduced number of empty-return journeys.
Carrier Haulage
What it is:
Carrier haulage is when the transportation of a shipping container to or from the port is organised by the ocean carrier, offering a door-to-door service for the shipper.
Real-world Story:
Sophie, who runs a pottery studio in Glasgow, wanted to export her ceramics to a gallery in San Francisco. Opting for carrier haulage, she enjoyed the convenience of having the ocean carrier handle the entire trip, from her studio door to the gallery door.
Case Study:
A Bath-based furniture company chose carrier haulage for their exports to Dubai. Although this initially seemed more expensive, the integrated service ultimately saved them time and administrative costs, making the overall operation more cost-effective.
Cubiscan
What it is:
Cubiscan is a technology that automates the measuring and weighing of items for handling, shipping, and freight quoting. This can greatly speed up the process and reduce human error.
Real-world Story:
Alice, who runs a gourmet food store in Nottingham, decided to invest in Cubiscan technology to automate the weighing and measuring of her products. This reduced the number of disputes with carriers over dimensions and weight, smoothing out her shipping processes significantly.
Case Study:
A Leicester-based automotive parts distributor integrated Cubiscan into their warehouse system. This led to a 25% reduction in freight chargebacks in the first year, amounting to savings of around £30,000.
Free Carrier (FCA)
What it is:
FCA is a trade term specifying at what point the seller transfers the responsibility of the shipped goods to the buyer. In FCA arrangements, the seller is responsible for delivering the goods to a mutually agreed-upon location.
Real-world Story:
John, a brewer in Brighton, used FCA to specify that his craft beers would be transported to the London Gateway, where the buyer’s shipping agent would then take over. This ensured that the transportation and cost responsibilities were clearly defined.
Case Study:
A Reading-based electronics retailer lost a legal dispute over a shipment of damaged smartphones because they didn’t fully understand their responsibilities under an FCA agreement. The court ruled they were responsible for all damages incurred after the goods left their premises, costing them nearly £200,000.
Consignee
What it is:
The consignee is the person or company to whom the shipment is to be delivered. This term is crucial for ensuring that shipments reach their intended destinations.
Real-world Story:
Belinda, a florist in York, had a major event to cater to and was awaiting a shipment of exotic flowers from Holland. Thanks to clear consignee information, her flowers were delivered directly to her shop’s doorstep without any issues.
Case Study:
An Oxford-based pharmaceutical company faced severe penalties because their critical medical supplies were mistakenly delivered to the wrong consignee—a pet shop! The mistake was traced back to unclear consignee information in their shipping documentation, resulting in a delay that had significant consequences.
The world of shipping and logistics is teeming with terminology that, at first glance, may seem like an indecipherable code. However, each term encapsulates a specific, crucial element of this intricate network that keeps the world’s goods moving. Armed with this expanded glossary, complete with real-world examples and case studies, you are now better prepared to navigate the complexities of the shipping industry. Whether you’re a business owner, logistics manager, or just an interested party, understanding these terms can save you time, money, and quite a bit of hassle.
