Understanding Freight Terms: A Glossary for Beginners

freight terms

Navigating the world of freight and shipping can be a daunting task for beginners. The industry is rife with jargon, acronyms, and terms that can be confusing for those unfamiliar with the intricacies of logistics. To help demystify this complex field, we’ve compiled a glossary of essential freight terms that every beginner should know. Whether you’re a business owner looking to ship products or an individual curious about the logistics behind your online orders, this guide is for you.

1. Bill of Lading (BOL)

A Bill of Lading is a legally binding document issued by a carrier to a shipper. It details the type, quantity, and destination of the goods being carried. The BOL serves as a receipt for the cargo and outlines the terms of the delivery. Additionally, it can be used as evidence in case of disputes between the shipper and the carrier. 

The BOL also provides crucial information for customs clearance during international shipments. It’s imperative for shippers to ensure the accuracy of the BOL to avoid potential legal complications.

2. Consignee

The consignee is the person or entity to whom the goods are being shipped. In most cases, this is the buyer or recipient of the cargo. The consignee’s details, such as address and contact information, must be accurately provided to ensure correct delivery. 

Any discrepancies can lead to delays or misdeliveries. It’s also the consignee’s responsibility to check the received goods against the BOL to ensure they match.

3. Consignor

Conversely, the consignor is the person or entity that ships the goods. Typically, this is the seller or sender of the cargo. The consignor is responsible for preparing the shipment, including packaging and labeling. They also need to provide accurate documentation, like the BOL, to the carrier. Any errors on the consignor’s part can lead to shipment delays or additional charges.

4. Deadhead

This term refers to the portion of a trip where a truck is traveling without cargo. For example, if a truck delivers goods from Point A to Point B and returns to Point A without any cargo, the return trip is considered a deadhead. 

Deadheading can increase operational costs for carriers, as they’re covering distances without earning revenue. This is why carriers often seek backhauls to minimize deadhead trips. Efficient route planning can also help in reducing the frequency of deadhead trips.

5. Detention

Detention occurs when the loading or unloading of a shipment takes longer than expected, causing delays. Carriers may charge fees for these delays, known as detention charges. These fees are meant to compensate for the lost time and potential revenue. 

Various reasons, including inadequate staffing at the receiving dock or paperwork issues can cause detention. It’s essential for both shippers and receivers to be prepared to avoid these additional costs.

6. FOB (Free On Board)

FOB is a crucial term that indicates when the responsibility and ownership of goods transfer from the seller to the buyer. If a shipment is marked “FOB Origin,” the buyer assumes responsibility once the goods leave the seller’s premises. Conversely, “FOB Destination” means the seller retains responsibility until the goods reach the buyer’s location. 

Understanding FOB terms is vital for insurance purposes, as it determines who is liable in case of damage or loss. It also affects the accounting and inventory management processes of both parties. Clear communication between the buyer and seller is essential to avoid misunderstandings regarding FOB terms.

7. Intermodal

Intermodal refers to the use of multiple modes of transportation (e.g., truck, train, ship) to move cargo. This method is often used to optimize efficiency and reduce costs. By leveraging different transportation modes, shippers can take advantage of each mode’s strengths. 

For instance, rail might be more cost-effective for long distances, while trucks offer flexibility for door-to-door delivery. Intermodal also promotes sustainability by potentially reducing carbon emissions.

8. Less-Than-Truckload (LTL)

LTL shipments are those that do not require an entire truck. These smaller shipments are consolidated with others to fill a truck and are typically more cost-effective for shippers with smaller loads. LTL offers flexibility for businesses that don’t have enough goods for a full truckload. 

However, LTL shipments might have longer transit times since they often involve multiple stops. It’s crucial for shippers to package their goods securely, as LTL shipments may be handled multiple times during transit.

9. Over-the-Road (OTR)

OTR refers to long-haul trucking that covers significant distances, often across state or country borders. These trips can last several days and require drivers to be on the road for extended periods. 

OTR transportation is essential for connecting distant freight markets and ensuring goods reach their destinations. However, it’s also challenging due to factors like varying regulations across states or countries and the physical demands on drivers.

10. Reefer

No, this isn’t a reference to a chilled snack. In freight terms, a reefer is a refrigerated truck or container used for transporting perishable goods like food or pharmaceuticals. Reefers are equipped with temperature control systems to maintain the desired climate inside. 

This ensures that sensitive goods remain fresh and safe for consumption. Given the critical nature of their cargo, reefer operators must regularly monitor and maintain their equipment to prevent spoilage.

11. Tare Weight

This is the weight of an empty container or vehicle. Knowing the tare weight helps in determining the net weight of the cargo by subtracting the tare weight from the gross weight. This distinction is vital for compliance with weight regulations on roads and rails. 

Overloading can result in fines and can be hazardous. Accurate tare weight measurements also ensure that shippers are charged appropriately for their shipments.

12. Third-Party Logistics (3PL)

3PL companies provide outsourced logistics services, such as warehousing, transportation, and fulfillment. They play a pivotal role in streamlining the supply chain for many businesses. By outsourcing to 3PLs, companies can focus on their core competencies and leave the logistics complexities to experts. 

3PLs often have vast networks and resources, allowing them to offer cost-effective and efficient solutions. They also bring expertise in areas like customs clearance and international shipping regulations.

13. Waybill

A waybill is a non-negotiable document issued by a carrier that provides details about a shipment, its origin, destination, and the consignor and consignee. Unlike the BOL, it doesn’t serve as a title to the goods. However, it’s an essential document for tracking and verifying shipments. 

The waybill accompanies the shipment throughout its journey and is used by various parties, including customs officials, to check the shipment’s details. It’s crucial for the waybill to be accurate and free of discrepancies to avoid delays.

14. Yard Jockey

A yard jockey is an individual responsible for organizing and moving trailers within a freight yard, ensuring efficient loading and unloading processes. Their role is critical in maintaining the flow of goods in and out of warehouses or distribution centers. 

Yard jockeys need to have excellent spatial awareness and coordination, as they often work in tight spaces. Their efforts contribute significantly to reducing turnaround times and improving overall supply chain efficiency.

Wrapping Up

Understanding freight terms is essential for anyone involved in shipping or receiving goods. While this glossary covers some of the basics, the world of freight is vast and ever-evolving. As you delve deeper into logistics, you’ll encounter many more terms and concepts. 

However, with this foundation, you’re well on your way to mastering the language of freight and ensuring smoother, more informed transactions in the future.