Logistics Glossary

Know your Logistics Industry better

List of Key Terminology

Airmail: Mail travelling by air


Airway Bill (AWB): The cargo equivalent of a passenger ticket which means the document made out by or on behalf of the shipper. It evidences the contract between the shipper and the carrier(s) for carriage of goods over routes of the carrier.


Air Freight: A service that provides for the air transportation of goods. This mode of transportation allows for decreased shipping time, low damage ratios and for certain commodities, lower shipping costs.


Airfreight Forwarder: An Air Freight forwarder provides pickup and delivery service to and from the shipper’s dock. Responsibilities also include consolidating shipments from various shippers into larger units, preparing shipping documentation and tendering freight to the airlines. Forwarders do not generally operate their own aircraft and may be classified as an “indirect air carrier”.


All-Cargo Aircraft: An aircraft used for the sole purpose of transporting cargo only, rather than the combination of passengers and cargo. Freight is loaded in the bulk or ULD on the main or lower deck of the aircraft.


Air Operator: Company operating aircraft


Aviation and Transportation Security Act (ATSA): A bill passed November 2001, to improve aviation security in all modes of transportation.


Bill of Lading: A loading instruction document that contains all the detailed information about the sender and receiver, and information such as loading place and date, the place of delivery, type, amount, gross weight and delivery method of the goods.


Bonded Goods: Goods on which the customs duty has not yet been paid, and which therefore, are under the control of customs; usually in a Bonded warehouse.


Bonded Warehouse: A depository for goods on which the customs duty has not been paid; the warehouse proprietor must provide a bond (often in the form of a bank warranty or a mortgage) to the customs authorities as a security for any duties which may not be paid by the customer.


Bonded Terminal: An airline terminal that is approved by the U.S. Treasury Department for storage of goods until Customs duties are paid or the goods have been released.


Bulk Cargo: Bulk cargo is a shipping term for items that are shipped loosely and unpackaged as opposed to being shipped in packages or containers. An item may be classified as bulk cargo if it is not containerized and easily secured on a vessel. Items such as oil, grain, or coal are all examples of bulk cargo.


Cabotage: Cabotage is the transport of goods or passengers between two places in the same country by a transport operator from another country. It originally applied to shipping along coastal routes, port to port, but now applies to aviation, railways, and road transport as well.


Cargo: Goods carried by airline(s) / Shipping Lines on behalf of its customer.


Cargo Terminal: A building or location where cargo is received, stored, Customs cleared and prepared for delivery and delivered.


Cargo Manifest: A shipping document used by customs personnel reviewing a particular transport vehicle’s intended trip that summarizes all bills of lading that have been issued by the carrier or its representative for that particular shipment.


Carrier: Any individual or firm who, through a contract of carriage, undertakes to perform or procure the performance of carriage by rail, road, sea, air, inland waterway, or by a combination of modes.


Carriage and Insurance Paid to (CIP): Cost of goods, insurance and freight delivery in international trading. It is used for all types of transportation. Seller delivers the exported, customs duty-paid goods to a forwarder of its choice or to another party at a designated location (if the parties agreed to such a place) and pays the transportation costs. Seller draws up an insurance agreement and pays for the minimum coverage required based on the loaded goods. Seller is considered to have completed its delivery obligation not when the goods are delivered to the destination, but when they are delivered to the forwarder.


Carriage Paid to (CPT): Cost of goods and freight delivery in international trading. It is used for all types of transportation, especially multi-vehicle transportation. Seller delivers the exported goods, after the related customs duty is paid, to a forwarder of its choice or to another party at a designated location (if the parties agreed to such a place) and pays the transportation costs. As a general rule, all goods-related risks and non-freight expenses are transferred to the buyer when the goods are handed over to the first freight forwarder.


Cartage Agent: A ground transportation service that provides pickup and delivery of freight in locations not served directly by an air or ocean carrier.


Carting Order: carting order is the clearance given by the customs department to either load cargo or to transport the cargo after import clearance. This is very important document demanded at the port of disembarkation or when you want to use/dispose of the materials.


Cash Against Documents (CAD): Payment method stipulating delivery of documents to the importer upon payment of the export amount by the importer’s bank into the exporter’s bank. Afterwards, the importer has the right to clear the goods from customs with the payment documents it has received. This payment method is called cash against documents.


Cash Against Goods: Payment method that involves payment of the cost of exported goods after the importer takes delivery of them.


Certificate of Origin: A certificate of origin (CoO) is a document declaring in which country a commodity or good was manufactured. The certificate of origin contains information regarding the product, its destination, and the country of export. Required by many treaty agreements for cross-border trade, the CoO is an important form because it can help determine whether certain goods are eligible for import, or whether goods are subject to duties.


CFS: A CFS is an off-dock facility licensed by the customs department to help decongest a port by shifting containerised cargo and for carrying out customs-related activities outside the port area.


Clearance: The completion of customs entry requirements resulting in the release of goods from customs authority to the importer.


Combined Transportation: Transportation system, in which roads are used during start and end stages of the shipment, and in which long-distance transportation involves railway, river, channel or seaway shipping.


Commercial Invoice: A required document identifying the transaction between a seller and buyer. The form should have the invoice number, date, shipping date, the mode of transport, delivery and payment terms, description of goods and the quantity. The government uses the commercial invoice to determine the true value of goods for assessing custom duties and prepare documentation. Custom requires a commercial invoice that includes the following information. (1) The port of entry. (2) Name of shipper and receiver. (3) Description of items. (4) Quantity in weight and measures. (5) Country of origin. The invoice and any attachments must be in the English language.


Concealed Damage: When products in a seemingly undamaged state are discovered to have been damaged.


Consignee: A person whose name appears on the AWB as the party to whom the goods are to be delivered.


Consignor (Shipper): A person whose name appears on the AWB as the party contracting with the carrier(s) for carriage of goods.


Consignment (Shipment): One or more pieces of cargo accepted by the carrier from a single shipper, destined for one specific address moving on one AWB to one consignee.


Consolidation (CONSOL): A collection of shipments belonging to different shippers travelling to one destination or area to be distributed to several consignees.


Container: Standard metal load cases that are durable against all atmospheric conditions, are used especially in sea transportation-linked combined transportation, can be handled easily with loads that can be stacked on top of each other inside.


Container Yard (CY): A facility for holding FCL (full container load) and empty containers that are received from or delivered to consignors or consignees by or on behalf of a carrier. It also provides a location to receive merchandise from consignors for packing into containers.


Contract Logistics: Logistics operations based on a contract between logistics service providers and customers by using outside resources.
Contract Warehouse: A warehouse at which warehousing operations are conducted on behalf of customer(s) according to a contract.


Cost and Freight (CFR): Cost of goods and freight delivery in international trading, used only for maritime and inland water transportation. The seller delivers the goods to the loading port by undertaking all costs and risks, and the goods are brought onto the ship after the customs duty for export is paid. Risk of damage and loss of goods transfers to the buyer once the goods are loaded onto the ship; costs are transferred to the buyer at the destination port.


Cost, Insurance and Freight (CIF): Cost of goods, insurance and freight delivery in international trading, used only for maritime and inland water transportation. The seller delivers the goods to the loading port by undertaking all costs and risks, and the goods are brought onto the ship after the customs duty for export is paid. In addition, the seller draws up an insurance agreement for the minimum coverage amount in the name of the buyer, to protect against loss or damage sustained during shipment. Risk of damage and loss of goods transfers to the buyer once the goods are loaded onto the ship; costs and risks are transferred to the buyer at the destination port.


Cross Docking: Products obtained from the supplier are delivered by sorting them according to customer needs without taking them into inventory and by keeping them in their container to prevent disruption to the content.


Customs Declaration: A declaration document that states the specifications, dimensions and features of the goods that are due to enter or exit customs offices or the country or that will be subject to transit or other transactions. It is drawn up in copies.


Customs: The designated government authority that regulates the flow of goods to/from a country and collects duties levied by a country on imports and exports.


Customs Clearance: The procedures involved in getting cargo released by Customs through designated formalities such as presenting import license/permit, payment of import duties and other required documentations by the nature of the cargo such as FCC or FDA approval.


Customs Duty: A tax levied and government collection by custom officials of duties that is imposed by law on imports.


Customs Permit: A customs document that states that all legal requirements have been fulfilled and the vehicle can leave.


Customs Registration: Submitting the customs declaration, which exporter, importer or customs agent prepares, for customs approval so that the commodity can be imported.


Customs Union: A covenant that aims to facilitate import transactions between one or more countries, remove or reduce customs duties, and put in place the same customs tariff in all countries.


Cut-off Time: The latest time cargo will be accepted for a specific flight / vessel prior to its departure.


Deferred Air Freight: Air Freight shipments that are not time sensitive and can be delivered at a lower cost on later flights. Delivery service is as a rule, between three to five business days.


Demurrage: A penalty for exceeding free time allowed for loading or unloading at a pier or freight terminal.


Delivered at Terminal (DAT): Cost of goods, insurance, freight, and domestic transportation delivery in international trading. It is used for all types of transportation, including multi-transportation. Seller delivers the goods into the possession of the buyer at the designated destination or port terminal. The seller unloads the goods from the transportation vehicle. In DAT, the goods are delivered to the buyer and the seller undertakes any unloading costs incurred at the terminal point designated by the buyer and seller.


Delivered Duty Paid (DDP): Cost of goods, insurance, freight, and domestic transportation delivery in international trading. It is used for all types of transportation, including multi-transportation. Seller’s delivery liability ends once the seller prepares the goods for disposal at the designated location in the import country. Seller bears the risks and expenses, including taxes, duties and other fees, required to transport the goods to that point, as well as costs related to clearing import customs.


Demurrage: A penalty charge that applies when the ship exceeds the allocated loading or unloading period, or when the goods waiting inside the container are not cleared from customs and unloaded.


Destination: The ultimate stopping place according to the contract of carriage.


Dimensions of Vehicles: Length, width and height of vehicles loaded or without load in order to ensure safe travel on roads.


Direct Shipment: Sending the goods to customer without a storage operation.


Duty: A tax levied by a government on merchandise imported, exported from another country. Duties are based on the value of goods, while other factors include weight on quantity or combination of value and other factors (compound duties).


Embargo: Refusal by carrier for a limited period to accept goods for transportation.


Ex Declaration: Export declaration.


Ex Works: An international trading delivery method that involves only the cost of goods and requires the seller to deliver goods at its own warehouse or place of business. Upon delivery of goods, all expenses, risks and other liabilities related to the goods are undertaken by the buyer. The seller is not required to load the goods onto a transportation vehicle, nor is it required to deal with customs.


Export: Commerce that occurs when the goods are shipped from the present country into another one.


FAK: Refers to Freight All Kinds. Consolidated cargo that is shipped at one rate. FAK cargo is usually shipped in a container filled with a variety of merchandise or commodities.


Federal Aviation Administration (FAA): Federal Aviation Agency was created in 1958 and appointed with the responsibility of making known of the operational standards and procedures for all classes of aviation in the United States. The FAA monitors any/all dangerous goods (HAZMAT) for air cargo transportation.


Federal Communications Commission (FCC): A federal agency responsible with regulating interstate and international communications by television, radio, telephone, telegraph, as well as broadcasting standards and cable television operations. Customs clearance may rely on FCC approval regarding the nature of the cargo.


Feeder Service: Receiving or delivery of goods from large sea vessels to small sea vessels or to barges, or the other way around. Many times, it is not possible to provide direct service from large vessels.


Fictive: A type of bonded warehouse where a private company stores duty-paid goods that belong only to the company.


Foreign Trade Zone (FTZ): Special restricted-access commercial and industrial areas in or near ports of entry that are designated by the government for duty-free entry of any non-prohibited goods. Foreign and domestic merchandise, including raw materials, components, and finished goods may be stored, displayed, and used for manufacturing within the zone and re-exported without duties being paid. Duties are imposed only when the original goods or items manufactured from those goods pass from the zone into an area of the country subject to customs authority.


Fourth Party Logistics – 4PL: Companies that combine their own organization’s resources, skills and technologies with those of the third-party logistics companies (3PL) so as to provide their customers with comprehensive supply chain solutions, and that undertake to handle the design and management of the whole chain. 4PL companies are required to have the expertise and capability to add value along the whole supply chain.


Free Alongside Ship (FAS): An international trading delivery method that is used in maritime and inland water transportation, with the cost of goods and internal shipping fees to the port having been paid. Seller completes export customs clearance and delivers the goods alongside the ship at the port designated by the buyer: Buyer is responsible for risks such as loss or damage to the goods after delivery. From this point on, buyer pays all expenses and freight for the goods.


Free Carrier (FCA): An international trading delivery method that is used in all type of transportation methods with the cost of goods, and internal shipping fees to the designated location have been paid. Seller’s liability ends after the goods have been delivered, with customs clearance completed, to the freight forwarder designated by the buyer at the location stated by the buyer. If the buyer designates an individual that is not a freight forwarder, seller is considered to have fulfilled its obligation upon delivery of goods to this person.


Free On Board (FOB): An international delivery method. Seller loads the goods onto the ship, which is provided by the buyer, at the designated date and location. Buyer is responsible for all damages, losses and expenses that may occur after the goods have been loaded onto the ship. Seller prepares all documents for export and delivers the goods by completing customs clearance.


Free Trade Zone: A free-trade zone is a class of special economic zone. It is a geographic area where goods may be landed, stored, handled, manufactured or reconfigured and re-exported under specific customs regulation and generally not subject to customs duty. Free trade zones are generally organized around major seaports, international airports, and national frontiers—areas with many geographic advantages for trade.


Freight: The fee that is paid for the transportation services.


Freight Forwarder: An independent business that dispatches shipments for exporters for a fee. Transportation can include shipping by land, air, or sea, or other resources. Usually it handles all the services connected with an export shipment, including full preparation of documents arranging for shipping, warehousing, delivery and export clearance.


Full Container Load (FCL): A delivery of cargo that fills a given container either by bulk or maximum weight.


Full Truck Load (FTL): The load size that would fully fill up a trailer’s transportation capacity (volume, weight).