Glossary of Shipping Terms

Clock  17 minutes to read

The shipping and logistics industry is packed full of technical terms and jargon. Although we try not to use it as much as we can, sometimes it’s unavoidable. With that in mind, we’ve created this glossary of shipping terms to help you successfully navigate the logistics industry.

Terms A-Z

A

Abnormal Load

Any cargo that is too large, heavy or cumbersome to be transported safely and securely in a standard shipping container is generally referred to as an abnormal load, or ‘exceptional cargo’.

AEO (Authorised Economic Operator)

An authorised economic operator is an internationally recognised quality mark given to companies that exhibit efficient and compliant custom controls and procedures. AEO consignments are fast-tracked through customs, so companies that hold AEO status benefit from more efficient shipping processes.

B

BAF (Bunker Adjustment Factor)

The acronyms come thick and fast in our shipping glossary. Also known as a bunker surcharge, a BAF is a sea freight surcharge that’s applied by operators to smooth out the impact of oil price fluctuations on carrier costs. The surcharge changes periodically, typically on a monthly or quarterly basis.

Bill of Lading (BOL or B/L)

This is a document issued by shipping companies once they have received cargo for shipment as evidence of the contract of carriage. It sets out the details for each shipment and includes a bill of lading number that can be used to track the progress of goods in transit.

Bonded Warehouse

A secure area where goods which attract duty can be stored and manipulated without the requirement to pay VAT and duty.

Bulk Cargo

Cargo that is stowed loosely in the hold of a ship which is not enclosed in a shipping container. Common examples include coal, oil, grain and ore.

C

CAF (Currency Adjustment Factor)

Just as the BAF is a surcharge to cover the fluctuations in the price of oil, the CAF is a currency surcharge applied by the carrier which reflects changes in foreign exchange rates.

Cargo

Goods or merchandise being transported by air, land or sea.

Cargo Manifest

A list of the cargo being transported that includes commercial details such as transport document numbers, consignors and consignees (see below,) and descriptions and quantities of goods.

Carrier

Any firm or individual that undertakes to transport cargo by air, land or sea, or through a combination of those methods.

Carrier Alliance

An agreement make by multiple carriers to share their vessels so they can expand their services and geographic coverage.

CBF & CBM (Cubic Feet & Cubic Metre)

Non-metric units of measurement that are used to calculate the volume of a payload in the UK, the US and Canada.

Certificate of Origin (C of O)

An official document which, when stamped by the relevant authorities, certifies the country the goods in transit originated from. This is not always required, but it can help to reduce the payable import duties in some countries.

CFR (Cost and Freight)

CFR terms on the seller’s invoice mean the seller is responsible for arranging and paying for the carriage of goods by sea to the port of destination and providing the buyer with the necessary documents to collect the goods from the carrier. CIF (Cost, Insurance and Freight) terms are also common and include a marine insurance policy which has been paid for by the seller.

CHIEF System

The Customs Handling of Import and Export Freight (CHIEF) system processes customs declarations for imports and exports transported between the UK and non-EU countries. The system, which is operated by HM Revenue and Customs, checks for errors and calculates the duty and taxes payable automatically. It also identifies the consignments which will require examination or additional documentation. CHIEF is currently being phased out and will be replaced by the new Customs Declaration Service (CDS) in 2019.

Clean Bill of Lading

A receipt provided after goods have been inspected by the carrier to confirm that the goods are undamaged and in the correct quantity.

Commodity Codes

Commodity codes are assigned to different types of goods for import and export to ensure the correct amounts of VAT, tax and duty are paid. You can find the relevant commodity codes on the government website.

Consignee

A consignee is a person or firm (usually the buyer) responsible for receiving the goods once they have been shipped.

Consignment

Very simply, a consignment is a batch of goods that are delivered by the seller (the consignor) to the buyer (the consignee).

Consignor

A person or company responsible for sending the goods, usually the seller. They retain ownership of the goods until a point when it’s transferred to the consignee.

Container

One of the most common terms in shipping, a container is the standardised metal box, usually measuring either 20ft or 40ft in length, that cargo travels in. Containers are usually provided by a shipping line as part of its service.

Customs Declaration Service (CDS)

The new system for declaring imports and exports outside of the EU, which will replace the CHIEF system in early 2019.

Customs Duty

Customs duty is a tax imposed on the import of goods from outside of the EU. Unlike import VAT, customs duty is not recoverable so increases the cost of the goods being imported.

D

Dangerous Goods Note (DGN)

A dangerous goods note is usually completed by the seller to accompany all hazardous substances which are capable of causing a serious risk to safety, health or property when travelling by sea or air.  

DAP (Delivered at Place)

DAP terms of sale place the responsibility for transporting goods to the named terminal or destination with the seller. The buyer is then responsible for unloading the goods on arrival.

DAT (Delivered at Terminal)

DAT terms indicate that the seller is responsible for delivering the goods to the named destination or port. They are also responsible for unloading the items ready for the buyer to collect.

DDP (Delivered Duty Paid)

All the duties and taxes on the goods being imported will be paid by the seller. That increases the cost for the seller while minimising cost and risk for the buyer. The buyer becomes responsible for the goods when they arrive for unloading at their destination.

Deferment

A bank account that’s held with HMRC from which the relevant duties and VAT for a shipment can be paid.

Demurrage

A charge payable to the owner of a chartered ship commonly when it takes longer than the allotted time to load or unload.

Density

Density is the weight per cubic foot of a container of cargo. It is calculated by multiplying the width, length and height of a container and dividing the total by 1728.

Dock Receipt

A receipt that’s issued by a carrier to confirm a shipment has arrived at the intended facility. The dock receipt proves that the goods arrived at the right place and time. It also transfers the responsibility for the cargo from the shipper to the carrier.

Dunnage

Loose materials such as wood, matting, paper and inflatable bags that are used to keep the cargo in a container in place. It can also be used to protect cargo in a ship’s hold.

E

EORI (Economic Operator Registration and Identification) Number

Prior to the arrival or departure of goods, UK businesses and individuals must register with HMRC. They are then assigned an EORI number, which is used to keep a record of all the goods they import and export outside of the EU. The EORI number is unique throughout the EU and can be used in communications with any customs authorities.

Excise Duty

Excise duty is an indirect tax charged by the government on particular goods such as alcohol, tobacco products, energy drinks and electricity. Goods moving within the EU should already have excise duty included in the price.

Export Licence

Certain items require a government-issued export licence before they can be shipped internationally. Most goods being shipped from the UK don’t require a licence, but there are a few notable exceptions such as artwork, animals, plants and medicines.

Express Release Bill

This is a bill of lading that’s used when the shipper wants cargo to be released to a consignee immediately, rather than waiting for the original bill of lading to be produced.

F

FAK (Freight All Kinds)

A carrier’s tariff classification that refers to all kinds of goods that are consolidated and shipped together at one freight rate.

FCL (Full Container Load Shipment)

The standard set by the International Organisation for Standardisation (ISO) for one 20ft or 40ft container that is filled with cargo either by bulk or maximum weight.

Feeder Vessel

A small ship which is used to move goods short distances to and from the port. They are commonly used when a shipper wants to use a port that the primary vessel is too large to serve.

Free Trade Zone

An area where non-prohibited goods can be handled, stored, used and re-exported where taxes and duties aren’t applicable. This type of zone makes buying and selling goods cheaper and is often used to boost the economies in developing countries.

Freight

Goods that are transported from one place to another by air, land or sea.

Freight Forwarder

An independent business that dispatches shipments on behalf of exporters for a fee. Freight forwarders tend to handle all requirements for an export shipment, from preparing the relevant documentation to arranging shipping, warehousing and delivery.

G

General Cargo

Any goods that have not been packed into a standard container for shipment. That could be an item that’s too big to fit into a container or bulk cargo such as fertilisers or grain.

Groupage

Smaller shipments that do not fill a container can be grouped together to make it easier and cheaper to ship them to a common destination.

H

Haulier

A firm or individual that’s responsible for transporting goods to or from a port typically using a lorry or van.

House Bill of Lading

A legal document issued by a freight forwarder or cargo forwarder to each exporter for all the goods to be transported as a group. It can also be referred to as a groupage document.

High Cube (HC)

A high cube is a container that’s 9ft 6in high, which is a foot higher than the standard 8ft 6in container.

I

Import Duty

A tax collected by customs on the arrival of goods into the country, typically calculated as a percentage of the goods’ value.

Import Licence

Most items being imported into the UK don’t require a licence, but some do. It is the importer’s responsibility to check whether an import licence is required and to put it in place.

Import Quota

The amount of a certain commodity that can be imported at a lower rate of duty than would usually apply. Import quotas only apply to particular goods from specific countries.

Insulated Container

A special type of container that uses dry ice or bubble wrap to maintain the temperature of the goods inside. Commonly used for transporting food and pharmaceuticals.

K

Kerbside Delivery

These are the standard delivery terms for a shipment. The delivery truck containing the goods is parked in the recipient’s premises who then assumes responsibility for unloading the goods.

L

LCL (Less than Container Load Shipment)

If a shipment does not fill a standard 20ft or 40ft shipping container, it is referred to as an LCL. In that case, the container will be filled with goods from multiple sellers and separated on arrival.

Local charges

Contributing to the shipping costs are local charges that must be paid to the terminal and the government or local authority when the goods arrive. These should be considered when calculating the total cost of shipping goods. 

 M

Manifest

A document that lists the passengers, crew and cargo of a ship for the use of customs and other officials.

Marine Cargo Insurance

An insurance policy that’s designed to cover the loss or damage to goods in transit.

Master Bill of Lading

A document created for shipping companies by their carriers as a receipt of transfer. It summarises the contents of the shipment and a description of the freight under each bill of lading.

MSDS (Material Safety Data Sheet)

A form that contains information on hazardous cargo and details how it should be handled during shipping.

N

NES (National Export Service)

Another acronym to add to our glossary of shipping terms. NES is a service that’s used by exporters to electronically declare their intent to export goods to non-EU countries.

Net Weight

Quite simply, the net weight is the total weight of a shipment not including the weight of pallets, containers and straps.

NIRU (National Import Relief Unit)

The department of HMRC which is responsible for controlling the import of goods from outside the EU where reliefs are being claimed or certain procedures apply.

Notify Party

The person or company to be notified of the ship’s landing at its destination as indicated on the bill of lading.

NVOCC (Non-Vessel Operating Common Carrier)

A freight forwarder or forwarding agent that organises shipments for individuals or firms using vessels that are not owned or operated by them.

O

OBNI (Overseas Business Networks Initiative)

OBNI is a service designed to support UK exporters selling goods to markets in China, Japan, Hong Kong, Mexico and India and drive growth in emerging markets.

Open Top Container

A container that opens from the top to make it easier to load and unload bulky and heavy goods or goods that have an awkward shape. The removable roof provides simple access for a crab or crane.

Over-Landed

The term used to describe goods that are on a ship but are not included in the ship’s manifest. These goods arrive unexpectedly at the port and have to be dealt with.

P

Packing List

A document that’s prepared by the shipper which lists the different types and quantities of goods included in a container, often including dimensions and weight. A copy of the packing list is usually sent to the consignee so they can check all the goods are present when the shipment is received.

Pallet

The structural foundation of a unit load for storing and transporting freight. Goods are often placed on a pallet and secured with strapping, shrink wrap or stretch wrap before being placed in a container. 

Payload

The maximum weight of cargo, including dunnage, which can be loaded into a shipping container.

POD (Port of Discharge)

A port where goods are off-loaded from the ship and discharged for collection. The port of discharge may not be the final destination port, in which case the goods can be discharged for further onward transportation.

POL (Port of Loading)

A port where goods are loaded onto a ship for transportation.

Port Handling Charge

Also known as a terminal handling charge, this is a sum payable to the shipping carriers to cover the cost of handling the containers. This charge is payable per container on import and export shipments.

Q

Quota

Some countries place limits on the amount of certain types of goods that can be imported within a particular time frame. It is the importer’s responsibility to be aware of the quotas and ensure they have the right licence in place. If a quota is exceeded then additional duties may apply.   

R

Rating

The maximum weight of a container, including its contents, which is permitted in particular countries. Importers and exporters should consider the weight limits in the countries of origin and destination.

REDS (Registered Excise Dealer and Shipper)

Approval given by HMRC to traders so they can receive duty-suspended goods from EU countries.

Reefer Container

A refrigerated container that’s used to keep food and other perishable items at a temperature of less than 15oC.

Restitution

The process of returning a container to port or other designated area as specified by the shipping line.

Roll-On/Roll-Off

Some vessels can accommodate cargo that is wheeled or self-propelled and can make its own way onto and off a ship via a loading ramp. That includes cars, trucks, trailers and other specialist wheeled equipment.

S

Sea Freight

Goods that are transported by sea. This is generally the most cost-effective way to transport goods internationally. It is also commonly referred to as ocean freight.

Shipment

Perhaps the least technical of all the terms in our shipping glossary, a shipment is quite simply a quantity of goods transported by sea.

Shipper

The person or company responsible for sending the goods, usually the consignor.

Shipping Agent/Agency

A firm or individual that works at the port and deals with any issues that arise on behalf of the shipping company. That includes paying the relevant port taxes, fees and duties, arranging maintenance and repairs and ensuring the wellbeing of the crew.

Shipping cost per unit

The cost associated with shipping an individual unit of cargo. It is calculated by dividing the total cost of shipping by the number of units sent.

Short-Landed

Goods or containers that have been recorded on the ship’s manifest but were not loaded and do not arrive at the port of discharge.

Spot Freight Rates

A one-off rate obtained for transporting goods by sea that’s typically valid for one shipment only. Spot freight rates fluctuate daily based on external factors such as the economy and supply and demand.

STC (Said To Contain)

A term used on a bill of lading that indicates that the supposed contents of a container have not been verified by the carrier.

T

Tare

The weight of an empty shipping container.

Tariff Code

Also known as a commodity code, a tariff code is assigned to certain products to determine the duty payable to clear UK customs.

Tremcard (Travel Emergency Card)

A document that accompanies hazardous goods to identify the hazard, detail how it should be handled and what should be done if an incident occurs.

TEU (Twenty-Foot Equivalent Unit)

The capacity of a ship is measured in the number of 20ft containers it can carry, known as TEU.

Transaction Statement

A document that sets out the agreement between the importer and exporter. It clearly explains the terms and conditions for the benefit of both parties.

Tranship

The process of transferring cargo from one ship to another so it can continue its journey.

Transit Time

The time between a ship leaving the port of loading and arriving at the port of discharge.

U

UCR (Unique Consignment Reference)

A unique number that’s assigned to a shipment to identify it as it moves around the world. The UCR is used by everyone in the shipping process, including ports, customers, shipping lines and authorities.  

UKTI (UK Trade and Investment)

The department responsible for promoting British trade around the world. The UKTI provides information, advice and services that cover every area of exporting.

V

VAT (Value Added Tax)

A tax payable to HMRC when importing goods to the UK. VAT may also be due when exporting goods to EU countries.

VBS (Vehicle Booking System)

This refers to the system operated at many UK ports to govern the movement of trucks collecting and delivering cargo. Vehicles must pre-book a time window to avoid congestion at the port.

Ventilated Container

A container used in the transport of goods that need to be protected from condensation. Ventilation systems in the container walls help to prevent the build-up of moisture.

W

Wharfage

The final term in our glossary of shipping terms is actually one of the most commonly misunderstood. Wharfage refers to a charge that’s applied to cover the cost of handling goods that have arrived or are leaving a port. The charge is applied by the port and paid by the importer.