Frequently Asked Freight Questions

Logistics is fundamentally the science of providing at a certain place what one wants and when one wants it. Every element of logistics is aimed at accomplishing this single goal.

Freight is movement of goods from Point A to Point B. This is a deceptively simple concept and the bane of procurement managers everywhere who overlook the complexity of moving goods. Multiple loadings, handlings, foreign government checks, etc. all conspire to make shipping goods a very uncertain business. No freight forwarder can guarantee that your goods will arrive where you want them, when you want them. Too many different entities are involved in the shipping of goods and traffic is accident prone by nature. What your freight forwarder should be able to promise is their commitment to see your shipments through any difficulties that may arise.

A freight forwarder is a company that coordinates the shipment of goods for individuals or other companies and may also act as a carrier.  A forwarder is often not the actual carrier.  More often the freight forwarder acts only as an agent, or as a third-party logistics provider that dispatches shipments via carrier and that books or otherwise arranges space for these shipments.  Carriers can be airliners, cargo ship lines, rail lines, and trucking compaines.The freight forwarder is a transportation specialist who consolidates many small lots of cargo to fill a seagoing container.

LCL means Less than a Container Load. It is shorthand for cargo that is consolidated with other shippers’ cargo in containers. Typical LCL cargo is shipped by pallets or crates.

LTL is essentially the same, only it is used to designate truck freight (Less than a Truckload).

The terms “break bulk” and “project cargo” are often used, but they mean two distinct things. Break bulk cargo is mostly transported by means of general cargo vessels and it is understood to be oversized, out of width, and out of gauge. Project cargo means cargo that is meant for shipping an entire project overseas. Due to the very nature of massive projects, most times plant and factory building require general cargo vessels for transport.

Ro/Ro stands for Roll on – Roll off and simply refers to wheeled or tracked rolling stock such as vehicles, cranes, caterpillars, etc.

A few dozen countries around the world require shipping documents to be validated by some legal authority. A very few countries require the legal authority to be consular sections of their embassies.

Cargo insurance protects merchandise while in transit from damage sustained in the shipping process, and from loss due to theft, fire, misplacement, etc.

An incoterm is one of the commercial terms published by the International Chamber of Commerce used in international commercial transactions.  A series of three-letter trade terms related to common sales practices.  Incoterms are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods.  Some of the most common Incoterms are FAS, CFR, CIF, and DDP.

A letter of credit (or LC) is a document issued by a bank for use in an international trade deal that guarantees a means of irrevocable payment.  Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another who typically do not have a track record together, thus necessitating a third-party payment/delivery instrument.

A bill of lading (or BOL or B/L) is a document issued by a carrier to a shipper, acknowledging that the shipper’s goods and merchandise have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified.

There is some confusion about what a shipping company is to the general public.  A “shipper” means, in the logistics industry, the party that is the sender of goods, usually the seller of the goods.  Thus, a shipping company can mean to a layman “a logistics company.”  But to a logistics company, “a shipping company” would probably denote a company that is shipping goods overseas.

An HTS code (or Harmonized Tariff System Code)  the global system of nomenclature that is used to describe most world trade in goods that determines tariffs and duties applied when entering goods into every nation in the world.