Freight & Shipping Terms

The freight forwarding and logistics industries are full of obscure and interesting terms. Many originate from shipping, or from the legislation that governs different aspects of the process.

This page provides a glossary of the most common shipping terms and freight forwarding terms. The acronyms are given in brackets in the title of the term, followed by the explanation of the meaning and its use.

Many of these terms are marked as Incoterms: these are a set of definitions of the most commonly used trade terms in foreign trade, used all over the world and issued by the International Chamber of Commerce.

Click here to go to the Incoterm definitions page on this portal.

Alternatively, take a look at the definitions at their source by visiting https://www.iccwbo.org/incoterms/id3040/index.html

 

Click on the bars below to view the glossary terms.

 

A B C D E F G H I L M N O P Q R S T U V W
 

A


Ad Valorem

Ad Valorem means "according to the value": it’s a percentage of the value of goods that is used to calculate customs duties and taxes.

AEO (Authorised Economic Operator)

An Authorised Economic Operator is an individual who has been certified by their national Customs organisation as complying with security standards set by the World Customs Organisation.

Agent

Someone who sells something on behalf of an overseas supplier (called a Principal) and earns a fee or commission.

AWB (Air Waybill)

An Air Waybill or Consignment Note is the document airlines issue when they accept cargo for shipment. It is provided as evidence for the contract to transport the consignment, but does not offer or imply any ownership of the goods. The document includes an 11-digit Air Waybill number that you can use to track your goods in transit.

ATR1

This is a customs document that allows goods moving between an EU country and Turkey to benefit from cheaper rates of duty.

 

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B


B/L (Bill of Lading)

A Bill of Lading is the document that shipping companies issue on when they accept cargo for shipment to provide evidence for the contract of carriage. As well as setting out all the details for each shipment, it includes a Bill of Lading Number you can use to track your goods in transit.

BAF (Bunker Adjustment Factor)

The Bunker Adjustment Factor, or BAF, is one of the charges levied on goods transported via Sea Freight. It is designed to cover those costs that can fluctuate wildly over time, such as oil prices.

BIFA (British International Freight Association)

BIFA is a trade association for UK registered freight companies. They publish Standard Trading Conditions to provide industry standards for members.

Beneficiary

The seller who is named as the person who will benefit from a Letter of Credit.

Bill of Exchange

This document is an instruction from a seller to a buyer to pay for goods within a particular time period.

Bill of Lading (B/L)

This is a document used when transporting goods by sea. It is a contract to transport the goods, and also defines ownership of the goods so that this ownership can be transferred from seller to buyer. It’s usually produced in triplicate: the carrier signs it and leaves a copy with the person sending the goods as a receipt, while the recipient can produce a copy to prove their ownership of the goods on the other side.

  • Combined Transport / Multimodal B/L
    A B/L covering transport by shipping container to and from the loading port. Most freight forwarders and shipping companies call their B/Ls "Bill of Lading for Combined Transport or Port-to-Port shipment" or something similar.
     
  • Congen B/L
    A kind of Bill of Lading used in shipments by chartered ship.
     
  • Clean B/L
    A Bill of Lading indicating that the goods were received by the carrier in good condition, without fault notices or damaged packaging.
     
  • Dirty, Foul or Claused B/L
    A Bill of Lading that declares faults with the goods or packaging.
     
  • House B/L
    A Bill of Lading used when a freight forwarder acts as a carrier.
     
  • Master B/L
    The kind of Bill of Lading issued by a shipping company to a freight forwarder for all of the goods covered by one or more House B/Ls on the one ship going from one loading port to one destination port.
     
  • Ocean B/L
    A Bill of Lading covering port-to-port shipment.
     
  • On Board or Shipped On Board B/L
    A Bill of Lading showing that the goods were loaded onto the ship in good condition and without damage to packing, and ‘Shipped’ shows that the ship has left the port.
     
  • Order B/L
    A Bill of Lading used when the goods being shipped don’t have a buyer, so the seller or consigner signs it, and only someone presenting the Bill can take delivery of the goods.
     
  • Straight B/L
    A Bill of Lading that names a consignee but does not imply or allow a transfer of ownership.

BIP (Border Inspection Post)

Border controls run by the Port Health Authorities

Bonded Warehouse

A warehouse or area that is controlled by Customs so that goods can be stored or worked on with officially entering the country – so that they’re not liable to customs duties whilst they’re there.

Breakbulk

Cargo that is not shipped in shipping containers.

BTIS (Binding Tariff Information System)

A system created by the EU to classify products to a specific Customs commodity code in order to establish the amount of VAT and Duty applicable to it.

 

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C


C of O (Certificate of Origin)

A document issued by national authorities to prove where goods come from.

CAF (Currency Adjustment Factor)

The portion of a freight charge that covers variations in the international currency exchange rates.

CHIEF (Customs Handling of Import and Export Freight)

The computer system used by the UK’s HMRC to manage both the declaration and movement of goods into and out of the UK. The system also manages the movement of goods owned by UK residents and businesses across EU borders.

Commercial Release

A document sent to a warehouse operator to notify them that goods are ready for release to an authorised collector, and that all applicable taxes and duties have been paid.

Consignee

The individual shown on the Bill of Lading or Air Waybill to whom the shipment is being sent.

Consolidation

Where a freight forwarder groups together, or consolidates, one or more shipments for one or more shippers to a single destination as a single shipment.

Container Demurrage

If a container is used for longer than it was booked for, the extra time is referred to as demurrage.

CPT (Carriage Paid To) (Named Place of Destination) – Incoterms

A contract in which the seller has to pay the costs and freight required to bring the goods to their destination, but the risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier. Being based on FCA, this term may be used for any mode of transport.

Customs Cleared

Goods becomes customs cleared once they have gone through Customs at their destination point, and all required taxes and duties have been paid. Once cleared, goods are ready for onward shipment.

Customs Commodity Code

A 6, 8 or 10-digit code that identifies exactly what the cargo is to the Customs authorities. See also Harmonised System Code.

Container Stuffing List (CSL)

This is a list of the goods in a shipping container which also indicates how they are stowed.

CVC (Certificate of Veterinary Check)

A Certificate of Veterinary Checks/Inspection is issued by a vet to confirm that the information contained in the other documentation required to ship livestock is accurate.

CWD (Container Weight Declaration)

A Container Weight Declaration shows the weight of a container, and is required in many jurisdictions before containers can be transported by road or rail.

 

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D


DAF (Delivered at Frontier) (Named Place) – Incoterms

A contract in which the seller has to pay the costs and freight to bring the goods to a land border, but before the customs border of the next country. This term is for land transport only.

DDP (Delivered Duty Paid) (Named Place of Destination) – Incoterms

Under this contract, the seller bears all the costs of transport to the delivery point, including any taxes due. This term can be used for all modes of transport.

DDU (Delivered Duty Unpaid) (Named Place of Destination) – Incoterms

Under this contract, the seller bears all the costs of transport to a specified point in the destination country, but the buyer is then responsible for paying taxes and duties so that the goods can proceed to the delivery point. This term can be used for all modes of transport.

Deferment Account

This is a credit account with HMRC in the UK: duties and VAT are added to the account and paid up at intervals rather than being payable on each cargo individually.

Demurrage

If a container is used for longer than it was booked for, the extra time is referred to as demurrage.

DEQ (Delivered ex Quay) (Named Port of Destination) – Incoterms

A contract in which the seller makes the goods available to the buyer on the wharf or quay after having unloaded it from the ship at the destination port, and is responsible for all costs and risks until that point, as well as arrival within the given period. This term is usually used for bulk cargo on a chartered ship.

DES (Delivered ex Ship) (Named Port of Destination) – Incoterms

A contract in which the seller makes the goods available to the buyer on board the ship at the destination port, and is responsible for all costs and risks until that point, as well as arrival within the given period. This term is usually used for bulk cargo on a chartered ship.

Devan

To unload or unpack goods from a shipping container.

DGN (Dangerous Goods Note)

A Dangerous Goods Note is usually completed by a specialist within the consignor company who is certified competent to complete the document. The DGN contains all the hazardous information required for the goods to be transported safely, and is required for all hazardous goods shipments by air or sea.

DIM weight – (Dimensional Weight)

Also referred to as the volume weight, cubed weight or measurement weight, the dimensional weight is a method of calculating freight transport fees based on the cargo height, width and length.

DTHC (Destination Terminal Handling Charges)

The charges levied for handling the cargo at the terminal.

Dunnage

This is a term for the packaging material used to protect and support cargo in transit including pallets and bracing etc.

 

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E


End-Use Relief

This is an arrangement to make certain goods exempt from tax and duties, including some foods, and aircraft and ships parts.

ERTS (Enhanced Remote Transit Shed)

A warehouse outside the port controlled by HMRC where goods can be held as un-cleared (Duty VAT unpaid, Non EEC status). For example a groupage container might be moved to these locations for unloading and then each individual shipment can be cleared separately through customs.

EORI (Economic Operator Registration and Identification scheme)

Organisations have to register with HMRC in the UK before they start shipping goods in or out of the country. An EORI number, formerly TURN number or VAT Number is a number, unique throughout the European Community, assigned by a customs authority in a Member State to economic operators (businesses) or individuals. By registering for customs purposes in one Member State, an Economic Operator (EO) is able to obtain an EORI number which is valid throughout the Community. They can then use this number as an identifier in all communications and paperwork - for example in customs declarations.

EORI Number (Economic Operator Registration and Identification Number)

EORI numbers are unique identifiers used to identify individual shipping operators to customs throughout the EU. Those issued in the UK start with the letters GB. Most are then followed by 12 digits based on the trader’s VAT number.

EUR1

An EU-specific form that entitles exporters to lower or zero-rated import duties when importing certain goods to countries with an EU trade agreement.

Express Release Bill

An EU-specific form that entitles exporters to lower or zero-rated import duties when importing certain goods to countries with an EU trade agreement.

EXW (Ex Works) (Named Place) – Incoterms

This contract places all costs and risk and responsibility for shipping and taxes onto the buyer: the seller just makes the goods available at their premises – whether a warehouse or manufacturing unit.

 

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F


FAF (Fuel Adjustment Factor)

This is the part of a transport cost that covers fluctuations in fuel prices. The equivalent sea freight surcharge is BAF (Bunker Adjustment Factor).

FAK (Freight All Kinds)

This term is a general description of the goods on a master Bill of Lading covered under the one freight rate regardless of what the individual goods are.

FAS (Free Alongside Ship) (named port of shipment) – Incoterms

In this contract, the seller just has to bring the goods up to the ship ready for embarkation. The buyer is responsible for all costs and risks on the goods from then on. The term is only used with chartered ships or goods that aren’t shipped in a container.

FCA (Free Carrier) (Named Place) – Incoterms

In this contract, the seller is responsible for getting export clearance, but is only responsible for costs and risks on the goods until they are handed over to a carrier, or another person, named by the buyer at the Named Place or point. This term can be used for any mode of transport, including multi-modal transport.

FCL (Full Container Load)

Full Container Load, generally but not always indicating that goods in the container are from one seller who packed the container, going to one buyer who will unpack the container.

FI (Free In)

In ocean freight terminology, the word “Free” means “Not included”. So if Free In, then the shipper is responsible for the cost of loading goods onto a vessel for shipping overseas. So it kinda means the opposite of what it says, because they have to pay the costs on it because these have not been paid already.

FO (Free Out)

In ocean freight terminology, the word “Free” means “Not included”. So Free Out is the international shipping term in ocean freight that indicates that the consignee (recipient) is responsible for the cost of unloading cargo from the vessel at the destination. So it means the opposite of what it says if you’re receiving the goods, because the recipient has to pay the costs on it because these have not been paid already.

FIO (Free In & OUT)

In ocean freight terminology, the word “Free” means “Not included”. This term is used in the ocean freight industry and means that the carrier is not responsible for the cost of loading and unloading goods onto or from the ship.

FIS (Free Into Store) – Incoterms

This term means the same as DDP - Delivered Duty Paid: that the seller pays all the costs of shipping, including taxes, up to delivery to the buyer.

FEU (Forty Foot Equivalent Unit)

The length of a container in foot. Also written as 40’ or 40ft. A FEU is twice the size of a TEU (Twenty-foot Equivalent Unit).

FIATA (International Federation of Freight Forwarding Associations)

International Federation of Freight Forwarders Associations is a non-governmental organisation representing about 40,000 forwarding and logistics companies in 150 countries.

Flat Rack

A device which is designed for cargos which will not fit into containers to be shipped on container ships, it consists of a base and two ends of the same dimensions as an ISO (standard) container.

FOB (Free On Board) (Named Port of Shipment) – Incoterms

This contract passes responsibility for costs and risks of transport from the seller to the buyer once the goods are cleared for export and have passed over the ship's rail at the named port of shipment. This term can only be used for sea or inland waterway transport when using a chartered ship, or when goods are not containerised.

Force Majeure

A clause in a contract which protects all parties in the event that part of the contract cannot be complied with for reasons outside the control of the signatories. It broadly means things like natural disasters, civil disturbances or outbreaks of war.

FOS (Financial Ombudsman Service)

The Financial Ombudsman Service is the UK’s official organisation to deal with customer complaints relating to financial and insurance products and services.

Free Circulation Goods

Goods on which all import taxes and duties have been paid so that they are no longer subject to Customs control.

 

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G


General Cargo

Any cargo that isn’t packed into a standard container for shipment, either because it’s being transported in bulk or because it’s an item that is too big for a container.

Groupage

Another term for Consolidation – when smaller shipments are grouped together into a single container going to a single port of destination.

GSP (Generalised System of Preferences)

A scheme that allows organisations in developing countries to ship goods into the EU and other developed countries and pay lower or zero rates of duty.

 

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H


Haulage

The process of moving goods to or from a port.
The transport of goods by road.

Haulier

A person or company responsible for moving goods by road.

HAWB (House Airway Bill)

A House Airway Bill is used to describe the contents of a container when Freight Forwarders offer a consolidation service to combine goods from several different shippers into a single container.

HiAb

A lorry or truck that comes with a small crane attached. The name comes from the original manufacturer of the crane - the Swedish firm, Hydraliska Industri AB.

HS Code (Harmonised Code / Tariff Heading)

A six-digit identification number scheme that is used to describe goods being shipped. The system was developed by the World Customs Organisation and is used around the world.

 

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I


IATA (The International Air Transport Association)

The International Air Transport Association is the trade association for the world’s airlines, representing about 265 airlines worldwide.

ICD (Inland Clearance Depot)

An inland area that operates as an extension to a port and offers similar services as an approved Customs warehouse where cargo can be stored before being customs cleared.

Import Quota

The quantity of a commodity that can be imported at a lower rate of duty than would otherwise apply.

INCO Terms

International Commercial Terms

Incoterms 2000

A set of definitions of the most commonly used trade terms in foreign trade, recognised throughout the world, issued by the International Chamber of Commerce.

https://www.iccwbo.org/incoterms/id3040/index.html

IPR (Inward Processing Relief)

An exemption from taxes and duty on goods being imported from outside the EU simply to be processed in some way before being exported outside the EU.

IVA (Individual Vehicle Approval)

Approval and certification that a vehicle complies with UK standards and regulations.

 

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L


Landed Cost

The total cost which an importer pays to have goods delivered into their premises. This includes the costs of the goods, international transport, insurance, port charges, customs duties, delivery charges, bank charges etc.

LC (Letter of Credit)

A letter of credit is a letter from a bank guaranteeing a buyer’s payment for goods. If the buyer is subsequently unable to pay for the goods, the bank is required to cover any outstanding costs.

Letter of Credit - Confirmed

A letter of credit which has been further guaranteed by a local bank, usually in the exporter's country.

Letter of Credit - Irrevocable

A credit which cannot be revoked, cancelled or amended unless the beneficiary agrees.

Letter of Credit - Discrepancy

Where a document does not comply strictly with the terms and conditions of a Letter of Credit.

Letter of Credit - Under Reserve

Where documents don’t comply strictly with the terms of a Letter of Credit, a bank can make a provisional payment, subject to confirmation from the issuing bank that the payment will be met. In the event the documents are refused, the bank reserves the right to claim the money back.

Liner terms

Freight rates with regular shipping lines which include loading and unloading charges.

LCL (Less than a Container Load)

This describes a shipment that is too small to fill a container on its own. The shipment will be grouped with other shipments to the same destination in order to fill a container.

LO-LO (Load-On, Load-Off)

This term refers to the charge made for loading and unloading goods onto a lorry.

 

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M


Manifest

A list of all the shipments being carried on a ship or aircraft.

MAWB (Master Airway Bill)

The Master Airway Bill is the receipt and statement of terms issued by the main carrier of goods when they receive them from a freight forwarder to deliver to their destination.

Moffitt Truck

A type of lorry with a fork-lift attached.

 

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N


NCTS (New Computerised Transit System)

The computer system traders use to declare goods that will be moved by road across borders between EU countries.

NIRU (National Import Relief Unit)

The department of HMRC in the UK that manages imports from outside the EU in cases that have particular processes to go through, or reliefs or exemptions to apply.

Notify Party

The person or company to be informed by the carrier when goods arrive at their destination port.

NOVA (Notice of Vehicle Arrival)

This is a statutory notification of arrival into the UK for all vehicles, and has to be made to HMRC within 14 days. No vehicle can be registered with the DVLA without a NOVA declaration.

 

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O


Original Bill of Lading

The bill of lading is given to the shipper as a receipt for the goods. Shipping lines may require this document to be given to them before they will release the goods at their destination port.

Overlanded

The term used to describe goods or containers that arrive unexpectedly at a port because they are not declared on the ship’s manifest. So it means that a ship has landed an goods over its manifest statement – rather than that goods have arrived overland.

 

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P


Packing List

A document which details the contents, and often dimensions and weight, of each package or container.

Port Health

The organisation responsible for protecting the public against contamination and disease from ships or imported goods.

Pre-Lodged

This refers to goods that are registered with the tax authorities before they arrive at a port.

 

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Q


Quota

The Import Quotas system allows the import of limited amounts of goods at a rate of duty lower than would otherwise apply. Quotas apply to certain goods from particular countries - so they are very specific.

 

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R


REDS (Registered Excise Dealer & Shipper)

A Registered Excise Dealer and Shipper is authorised for EMCS (Excise Movement & Control System) by the UK tax authorities – so they are able to arrange for the Customs clearance and payment of excise duty on alcohol imported for EU member states.

Release

A document sent to a warehouse operator to notify them that goods are ready for release to an authorised collector, and that all applicable taxes and duties have been paid.

Restitution

The return of a container to a port or other holding location.

RoRo (Roll On / Roll Off)

The term for lorries and vans that can be driven on and off a vessel via the ramp.

 

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S


Sea Waybill

The document shipping lines issue on receipt of cargo for shipment.

Sight Draft

A Bill of Exchange drawn "at sight" means that as soon as the drawee accepts the bill, they have to pay it.

STC (Said To Contain)

This term is used in the description of goods on a Bill of Lading when the carrier does not actually know the nature or quantity of the goods placed in the packages or the containers.

Short-Landed

The term used to describe goods or containers that are recorded but have not arrived as expected, because they were not loaded on board a vessel or aircraft. See also Short Shipped.

Short-Shipped

The term used to describe goods or containers that are recorded but have not arrived as expected, because they were not loaded on board a vessel or aircraft.

See also Short-Landed, listed above.

Shunt

The term used to describe a movement of a container over a short distance such as from the quayside to a warehouse in a port.

SSN (Standard Shipping Note)

A standard shipping note is a form that contains information about the goods and the companies involved in sending, shipping and receiving goods overseas.

SVA (Single Vehicle Approval)

The former name of the vehicle approval process now called IVA (Individual Vehicle Approval).

SWB (Sea Way Bill)

A Sea Waybill is the document shipping lines issue when they load cargo for shipment. It is provided as evidence for the contract to transport the consignment, but does not offer or imply any ownership of the goods.

 

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T


T1 / TAD (Transit Accompanying Document)

A document generated by the EU’s transit system that accompanies uncleared goods as they move from one authorised location to another.

Tare

The weight of packaging or of an empty container.

Tenor

The period of time before a bill of exchange falls due for payment.

Term Draft

A Bill of Exchange drawn for a period of time other than ‘at sight’ or ‘on demand’.

Tremcard (Travel Emergency Card)

A document that all hazardous goods have to have when in transit. It identifies the hazard, explains how to handle the goods, and what should be done in the event of a spillage or other accident.

Turn Number (Traders Union Reference Number System)

The unique identifying number system for shipping that has been replaced by the EORI identification system.

TEU (Twenty-foot Equivalent Unit)

The capacity of container ships is measured by the number of 20-foot containers they can carry (the smallest container size), so the unit of measurement is TEU – the number of twenty-foot equivalents. So a twenty-foot container is 1 TEU and a forty-foot container is 2 TEU.

Transhipment

Describes goods being transferred from one ship to another during a transit. It can also refer to goods being transferred from one mode of transport to another – so from lorry to rail, for example.

 

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U


UCN (Unique Consignment Number)

The unique identifying number that is used to identify a shipment in transit anywhere in the world at each stage of the journey. Sometimes called the UCR - Unique Consignment Reference.

UCR (Unique Consignment Reference)

The unique identifying number that is used to identify a shipment in transit anywhere in the world at each stage of the journey. Sometimes called the UCN - Unique Consignment Number.

 

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V


Value for Duty

The value of an import declared to the customs, which is then used to calculate any taxes due.

Volumetric

This is the basis of charging for sending goods by air – based on the volume as well as weight of the goods. It’s generally stated as 6000 cm3 = 1 kg, meaning that the total volume in cubic centimetres is divided by 6000 to give an equivalent weight in kgs. The airline or forwarder will charge whichever is the greater of the actual weight and volumetric weight. It can also be shown as 167 kg = 1 cbm

VBS (Vehicle Booking System)

This is the system used to control the flow of traffic arriving in many UK ports to drop off and pick up containers and cargo. It requires vehicles to book a specified time slop in advance.

VGM (Verified Gross Mass)

This is a statutory statement of the gross mass of a container, which has to be supplied to the shipping line before they can load a container. It can either be calculated by adding together the weight of everything in the container, including packaging, or by simply weighing the container on approved equipment.

 

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W


Wharfage

Wharfage is the charge made for loading and unloading goods from a ship.

Wet Bond

This is a term used to describe a bonded warehouse that handles alcoholic drinks, tobacco and other goods subject to excise duties. A Dry Bond handles anything else.

 

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