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If the supply chain is only as strong as its weakest link, then you'll need to be able to speak the language of the entire freight-shipping industry. The process is easy enough to grasp, however, the scale at which it takes place is massive with hundreds of moving parts and possibilities for error.
As with anything, communication is key, and knowing some of the common shipping terms of the industry can make negotiating hauls and rates much more manageable. Knowing the correct shipping terminology can help clarify responsibilities, costs, and details of the process and ensure everyone involved is on the same page. The last thing you want are delays, damaged freight, or a payment dispute. Understanding terms brings everyone's expectations into alignment before anything gets loaded onto a truck. For example, who is responsible for paying shipping and insurance, and who actually owns the goods? You'll need to know the difference between FOB and CIF terms for that. Or how can you determine if all the necessary information is included and that you have a legally binding agreement between the two parties? Well, a Bill of Lading does that.
Freight shipping is an essential part of many businesses, allowing companies to efficiently transport goods across the country. However, with a wide variety of shipping options and a sea of acronyms, shorthand phrases, and jargon, understanding freight terms can be challenging, especially if you are new to the industry. This non-exhaustive list of terms will help you communicate across the different industries of freight shipping with a bit more ease.
Common Freight Shipping Terms You Need to Know
Freight: Anything that needs to be transported from one place to another is referred to as freight. You may also hear freight called a "load" or a "haul" depending on who you are talking to.
Carrier: The company that is hired to transport goods on behalf of the owner of the freight (the shipper) is the carrier. They quite literally carry it from one place to the other. The carrier owns the trucks and employs the drivers to get freight moving down the road.
Shipper: The shipper is the person or company who owns the goods and is paying to have them moved. They must find a carrier themselves to move their goods or work through a broker to find a carrier.
Freight Broker: A person or company who is responsible for coordinating carriers, shippers, and drivers to move freight efficiently.
Consignee: What is a consignee in shipping? It's the company or person who receives the freight.
Consignees could be a distribution center or a warehouse and sometimes even the final store where the goods are being sold to customers.
Warehousing and Distribution Centers: A large storage facility where shippers can hold freight before it is loaded to trucks is called a warehouse or storage facility. If there is a process for dividing, sorting, and re-loading freight to a new destination then it functions as a distribution center also.
Origin Terminal: The place where the carrier takes possession of the goods. This is the starting point for the shipment.
Terminal Handling Charge (THC): A fee carriers charge for loading and unloading the shipment at the origin terminal as well as the destination terminal.
Embargo: Embargos can be political or circumstantial. Whatever the event, an embargo prevents shipments from being handled or loaded and disrupts the supply chain.
Freight Class: There are about 18 different freight classes based on factors such as density, stowability, handling, and liability. However, freight classes are only relevant when using an LTL shipping method. Freight class is set by the National Motor Freight Traffic Association (NMFTA).
Here are a few examples of freight classes:
Class 500
The most expensive freight class is Class 500 which deals with freight that weighs less than one pound per cubic foot, uses a lot of space but isn't very heavy, or is of extremely high value. Ping-Pong balls or gold bars are examples.
Class 92.5
A class typically designated for computers, gas generators, appliances, etc. Freight in this class typically weighs within the 10.5-12 pounds per cubic foot range.
Class 55
Between 35-55 pounds per cubic foot. This freight tends to be things like bricks, cement, flooring, etc.
Bill of Lading (BOL): A bill of lading is a document that functions as a contract between the shipper and carrier. This document also is a receipt for the goods shipped in case something happens to the freight in transit such as delivery to the wrong destination or damage.
LTL (Less Than Truckload): If you have goods that don't fill an entire truck, your shipment may be put on a truck with other goods to fill the truck. LTL shipping allows shippers to share truck space in one multi-stop truckload and keeps gas and maintenance expenses lower.
FTL (Full Truckload): When your company has enough goods to fill an entire truck yourself it is called FTL.
Linehaul Mileage: One of the questions we hear a lot is "what is linehaul transportation?" Well, a good linehaul definition starts with understanding that carriers typically charge per mile for the transport of goods. Linehaul mileage is used to calculate the rate based on how many miles from point A to point B along a specific route.
Dry Van: A type of shipping container that is enclosed and used for transporting non-perishable goods.
Reefer: A type of shipping container that is refrigerated and used for transporting perishable goods.
Flatbed: A flat, open-bed trailer used to ship large equipment that must be loaded from the side or from above. One might see tractors, large construction equipment or materials, or stacks of heavy materials on a flatbed.
Step Deck or Drop Deck: A flat, open-bed trailer like a typical flatbed, only the deck is closer to the ground, allowing for taller cargo to be transported and pass under bridges and overhangs.
Container: These look like truck trailers without wheels and are best for cargo that travels truck-rail-truck or requires more than two modes of transportation.
Pallet: A wooden construction meant to stack and wrap goods for shipping. A pallet allows a forklift or hand truck to insert prongs under the goods to lift and move them around in a warehouse or truck. Using pallets increases efficiency and saves space.
Ready to Talk Shop?
Now that you've grasped the basics of "freight talk," you can navigate the shipping landscape with confidence, ensuring that your shipments are handled efficiently and effectively. What are the freight terms we missed? Whether you are a seasoned veteran or just starting out, it’s always a good idea to have a solid understanding of the industry, and these terms are an essential part of that foundation. If you want to see an exhaustive list of terms, check out the USDOT list.
Looking for a freight broker to manage your end-to-end hauls where you get the right price for nationwide and worry-free hauls? Talk to an expert today and streamline your supply chain with Veltri.
FAQs
A freight broker can provide you with access to a wide network of carriers, allowing you to find the most cost effective and efficient hauls for your needs. By using a broker, you can reduce paperwork, save time, and handle complex logistics with ease.
LTL (Less-Than-Truckload) is when a shipment doesn’t fill an entire truck and it’s put on a truck with other goods to fill the truck. FTL (Full Truckload) is when a shipment is large enough to fill an entire truck.
Bill of Lading (BOL) is a document that functions as a contract between the shipper and the carrier. It is also a receipt for the goods shipped in case something happens to the freight in transit such as delivery to the wrong destination or damage.
A pallet is a wooden construction meant to stack and wrap goods for shipping. A pallet allows a forklift or hand truck to insert prongs under the goods to lift and move them around in a warehouse or truck, increasing efficiency and saving space.