10 Freight Terms Every Shipper Must Know
Here are the top 10 freight terms every shipper must know.
If you are new to freight shipping then a quick recap of the most commonly used terms will be a great resource. Understanding the vocabulary not only helps in effectively booking your shipments, but it can also save your business time and money. While this list is not exhaustive, it does provide the more commonly used terms that would be found in typical shipments. With out further introduction, here are the top 10 freight terms every shipper must know.
In the freight world, a shipper normally indicates the point of origin of the shipment, while the consignee is the entity financially responsible for the shipment. Varying arrangements may be entered into whereby the shipper is financially responsible, or a 3PL may be engaged to coordinate the shipment on behalf of the consignee.
9) Bill of Lading (BOL)
The Bill of Lading is a formal document that provides the carrier with information necessary to properly invoice the shipment. It will include information on the shipper/consignee, types and amounts of commodities being shipped, a classification of the freight being shipped, and any special instructions. If required accessorial include any other specifics of the shipment including special handling, oversized items, or liftgate service. Here is a generic sample of what a BOL should look like.
When shipping LTL or FTL, accessorial charges are additional fees incurred when the carrier performs non-standard services. This includes the use of special equipment, planned delays, or requiring redelivery of the shipment. Common types of accessorial charges are for reclassification, reweigh and inspection, liftgate, load/unload fee, and inside or limited-access delivery. Accessorial charges should be planned and included on the original BOL where possible.
7) Freight Class/Classification
Carriers determine the type of freight (classification) being shipped according to a formula that takes into account multiple factors. These factors include size, density, value, stow-ability, handling, and liability of the freight. Freight is also placed into a class that range from 50 (highest PCF) to 500 (lowest PCF). Freight classification is a specialized skill within the industry and only applies to LTL shipments.
6) Dimensional Weight
Simply put, dimensional weight is the amount of space a shipment takes up in relation to its weight. For most carriers the dimensional weight is the length x width x height / 139. To save money on your shipment you should use the proper size box or container to pack your items, and avoid unused space that will increase the cost of shipping. Our video on calculating dimensional weight provides additional information on this topic.
5) National Motor Freight Classification (NMFC)
LTL shipments are grouped by the National Motor Freight Transportation Association into 18 categories. Each category is assigned a freight code referred to as the National Motor Freight Classification (NMFC). The code is then used by carriers to determine the shipment’s sale price. Generally speaking the price of a shipment increases in relation to the increase in the class code. Packaging requirements, claims process, and BOL requirements are also established by the NMFC.
4) Third Party Logistics Provider (3PL)/Broker/Carrier
Carriers are the entities that own and manage the facilities and equipment that move your goods. Brokers are third parties that enter into contracts with carriers on behalf of their customer and coordinate the shipment of products from point A to pint B. Third party logistics providers coordinate the movement of goods for their customers across multiple carriers and transport methods.
3) Full Truck Load (FTL), Less Than Truck Load (LTL), Volume/Partial Truck Load
Full Truck Load’s are as the name implies when a customer secures the right to all available space on a trailer. These trucks are dedicated and have no stops in between the pickup and delivery resulting in faster transit times. Less Than Truck Load is ideal for shipper who have fewer than 6 pallets or below 12 linear feet. Transit times are longer than FTL’s as there are usually multiple stops between the origination and destination. Volume or Partial truckloads are available for shippers with more than 6 but less than 26 pallets. These types of shipments are generally slower than a FTL but quicker than LTL. For more information on the different types of truck service you can visit our freight services page.
2) Dry Van, Reefer Van, Flatbed
These are your basic types of shipping trailers. Dry Van refers to a standard 53′ enclosed trailer ideal for standard non-perishable goods. Dry Van’s (and reefer vans) can accommodate up to 26 standard pallets.
A reefer van is a refrigerated trailer which can accommodate shipments for both frozen and climate controlled goods.
A flatbed, as the name implies, is an open top flat trailer that is best for accommodating larger and bulkier items.
1) Cargo/Marine Insurance
Shipment insurance is the standard liability coverage required for every carrier for the movement of your goods. Most carriers have a claim liability of anywhere from $0.05 to $0.50 per lb of the goods transported. Cargo and Marine insurance is supplemental coverage elected by the consignee to cover the replacement cost of the goods if a covered event were to occur. You can read more about insurance on our other services page.