A Shipping Glossary: Shipping Terminology You Should Know

Diving headfirst into the world of shipping and logistics can be a daunting experience, especially when bombarded with shipping terminology that feels like a foreign language. Understanding these terms is crucial in navigating this complex field, whether it's a BOL, FOB, or COD you're trying to decipher. Industry-specific jargon isn't just a bunch of fancy acronyms. It's the nuts and bolts that hold the entire industry together. Mastering the terminology can help you avoid costly mistakes, improve communication with service providers, and ultimately streamline your shipping processes.

That's why we've created this glossary — your go-to guide for demystifying shipping lingo. With this resource at your fingertips, you can navigate the high seas of shipping terminology with confidence and ease.

Important Shipping Terminology

Domestic and international shipping uses various terms and acronyms to keep everything consistent and organized, from basic concepts to complex regulations. Here are some of the most commonly used shipping terms, so you can get up to speed quickly:

3PL (Third-Party Logistics)

Third-Party Logistics refers to companies that provide professional logistical services, such as inventory monitoring, order fulfillment, and transportation services. A 3PL provider is a link between the shipper and carrier, working to coordinate and provide their clients with a full range of services.

At ShipNetwork, we provide comprehensive 3PL services tailored to the needs of eCommerce businesses. We offer a nationwide network of fulfillment centers that enable us to reach most of the U.S. within two days. We also provide seamless integration with major eCommerce platforms, allowing for automatic import and quick shipping of orders. Our relationships with key shipping carriers allow for significant savings on shipping costs and reduced transit times.

Airfreight

This refers to the transportation of goods by air, typically using commercial or cargo-specific aircraft. This shipping method is often chosen for its speed, as it enables businesses to transport goods quickly over long distances, making it ideal for time-sensitive shipments or perishable items.

Air Waybill (AWB)

An Air Waybill (AWB) is a critical document issued by an air carrier or its agent. It serves as a contract of carriage between the shipper (typically the eCommerce business) and the carrier. The AWB details the specifics of the shipment, including the shipper's and recipient's information, description of goods, the number of pieces, weight, and volume of the shipment, and any special instructions for customs or delivery.

Application Programming Interface (API)

An Application Programming Interface (API) is a set of rules and protocols that allows different software applications to communicate with each other. It acts as a bridge, enabling one software system to access the services, functions, or data of another, thereby facilitating seamless integration and interaction.

Numerous APIs can be used to enhance the functionality of an eCommerce platform:

• Payment APIs allow for easy and secure online transactions. 
• Shipping APIs provide real-time shipping rates, tracking information, and more. 
• Inventory Management APIs help manage stock levels across various platforms. 
• Product Information Management (PIM) APIs facilitate managing and distributing product information across various channels. 
• Customer Relationship Management (CRM) APIs help businesses manage their interactions with current and potential customers. 
• Social Media APIs enable businesses to integrate their eCommerce platforms with social media networks for marketing purposes.

Back Order

When customers purchase an item that is not currently in stock and has a delayed delivery date, that item is on backorder. The order cannot be fulfilled now due to insufficient supply. This usually occurs when the demand for a particular product exceeds its supply in stock. The product on back order is often still in production or is awaiting restocking from the supplier.

Bar Code

A bar code consists of parallel lines of varying widths, spacing, and numbers representing data in a visual, machine-readable form. It can be scanned by a barcode reader to quickly and accurately identify a product. This encoded information often includes product identification, pricing, and inventory data.

Batch Fulfillment

Batch fulfillment refers to fulfilling multiple orders at once as a group or "batch" rather than handling each order individually. This often involves grouping orders based on criteria like product type, destination, shipping method, or order date. In a typical batch fulfillment process, all the items for the batched orders are picked from the inventory, sorted, packed, and shipped together.

Bill of Lading (BOL)

A Bill of Lading (BOL) is a legal document issued by a carrier to a shipper that outlines the type, quantity, and destination of the goods being shipped. It serves as a contract between the two parties, confirming the receipt of goods for transport and the terms and conditions of delivery.

In addition to detailing the shipment's specifics, the BOL also acts as a receipt for the goods shipped and a document of title, transferring ownership of the goods to the named consignee or their assignee.

Blind Shipping

Blind shipping is a method used in the shipping process where the identity of the shipper or supplier is hidden from the recipient. In other words, the product recipient isn't aware of the actual sender (usually the manufacturer or wholesaler). Businesses often use this method to ship an order directly from their supplier to the customer while making it appear as if the product came directly from them.

By keeping the source anonymous, businesses can prevent their customers from bypassing them and going directly to the supplier. This allows them to protect their customer base and maintain control over the sales process.

Carrier

A carrier refers to a shipping company offering delivery and transportation services. Carriers play a crucial role in the eCommerce supply chain, ensuring that products purchased online reach their intended recipients promptly and efficiently. Well-known examples of carriers include United Parcel Service (UPS), FedEx, DHL, and the United States Postal Service (USPS).

Collect On Delivery (COD) 

Also known as Cash On Delivery, Collect on Delivery is a transaction where the recipient makes payment for goods at the time of delivery rather than in advance. The payment could be cash, check, or electronic methods, depending on what is acceptable to the seller. In a COD transaction, the shipping carrier is usually responsible for collecting the payment and then remitting it to the seller. 

Commercial Invoice

A commercial invoice is a legal document in international trade that provides a detailed account of the goods being sold and shipped from a seller (exporter) to a buyer (importer). It serves as a contract between the buyer and seller, declaring the sold products, their value, and their quantity.

This document is essential for customs clearance as it allows customs authorities to assess and collect the appropriate duties and taxes based on the value of the goods. The commercial invoice typically includes the following:

• Seller's and buyer's contact information.
• Description of the goods, including Harmonized System codes (international standard for reporting goods to customs).
• Terms of sale (also known as Incoterms)
• Country of origin/manufacture.
• Quantity of items
• Price per unit and total cost.
• Shipping method and costs.
• Date of shipment

Container Load

A container load refers to the quantity of goods that can be packed into a standardized shipping container for transport. There are two main types of container loads in shipping:

1. Full Container Load (FCL): An entire container is filled with goods from a single shipper. FCL is often used when a business has enough merchandise to fill a container or prefers to isolate its goods from others for safety or security reasons.
2. Less than Container Load (LCL): Multiple shippers' goods are combined to fill a single container. LCL is often used when a business doesn't have enough merchandise to fill an entire container. It's a more economical choice for smaller shipments, as you pay only for the space your goods occupy in the container.

Dangerous Goods 

Dangerous goods, also known as hazardous materials or hazmat, are substances or materials that pose a risk to health, safety, property, or the environment during transportation. These goods have explosive, flammable, toxic, infectious, or corrosive properties and require special handling and packaging to ensure safe transportation.

Examples of dangerous goods include:

• Certain types of chemicals.
• Radioactive materials
• Biological materials
• Flammable liquids
• Combustible materials
• Toxic or infectious substances.
• Lithium batteries

These items are subject to strict regulations by various agencies, such as the International Air Transport Association (IATA), the Federal Aviation Administration (FAA), and the United Nations, to name a few.

Demurrage

Demurrage is the charges a retailer, wholesaler, or importer must pay when their merchandise remains at a shipping terminal longer than the agreed-upon time. This can happen for various reasons, such as delays in customs clearance, documentation issues, or logistical bottlenecks.

Dimensional Weight (DIM Weight)/Volumetric Weight

Dimensional Weight (DIM Weight) or Volumetric Weight is a pricing technique used by shipping carriers to account for the size of a package rather than just its actual weight. This method ensures carriers are compensated for the space a package takes up in their vehicle and its weight.

The DIM weight is calculated by multiplying a package's length, width, and height to determine its cubic size and then dividing by a specific DIM factor. The dimensional factor can vary based on the shipping carrier and the type of shipment (domestic or international).

Dispatch

Dispatch refers to sending goods or shipments from a source location to a destination. It involves scheduling, routing, and tracking the delivery of packages to ensure they reach their intended location on time.

Expedited Shipping

Expedited shipping is a speedy shipping method. It can involve various carriers, such as airfreight or express delivery services, depending on the nature of the shipment and its destination. This shipping method is often used to deliver time-sensitive or high-value packages quickly.

Export Clearance

Export clearance is the process of obtaining official permission from the relevant authorities to ship goods out of a country. This typically involves preparing and submitting necessary documentation, paying duties or taxes if applicable, and ensuring compliance with domestic and international trade regulations.

First-Mile Delivery

First-mile delivery is the initial stage of the delivery process, where a product is picked up from the seller and transported to a courier's warehouse, distribution center, or another transit hub.

Freight Broker

A freight broker is an individual or company that serves as the intermediary between shippers who need to transport goods and carriers who can provide the transportation service. The key role of a freight broker is to help shippers find reliable carriers ready to haul the load. This involves understanding the shipping needs of the shipper, finding suitable carriers, negotiating rates, and coordinating the logistics to ensure the cargo is picked up and delivered as agreed.

Unlike freight forwarders, freight brokers do not take possession of the shipped goods or own any transport vehicles. They leverage their network of carriers and knowledge of the freight industry to facilitate the shipping process.

Freight Forwarder

A freight forwarder is a company or individual that organizes and coordinates shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer, or final point of distribution. They act as intermediaries between the shipper and transportation services, negotiating deals with carriers to achieve the most economical, reliable, and fastest route.

Freight forwarders handle significant logistics that ensure your cargo reaches its destination safely and on time. These tasks include arranging cargo movement to an international destination, booking or contracting transport carriers like ships, aircraft, or trucks, preparing shipment documents, obtaining necessary insurance, and complying with local and international regulations.

They can also handle customs documentation and clearance, ensuring that the goods comply with the import and export regulations of the involved countries.

Freight Shipping

Freight shipping transports goods and commodities from one place to another by a carrier, typically on land or sea. It can involve various products, from raw materials and food items to manufactured goods, equipment, and hazardous materials. Freight shipping is often used by businesses that need to transport large quantities of goods or products that are too big for regular parcel carriers.

There are several types of freight shipping, including:

• Less Than Truckload (LTL Carrier) is used for shipments larger than a parcel but does not require a full truckload. Multiple shippers' goods are combined to fill a single truck.
• Full Truckload (FTL) is used when the quantity of goods is large enough to fill an entire truck or when a shipper wants to dedicate a single truck to their goods.
• Intermodal involves using two or more modes of transportation, like truck and rail, to deliver goods. It's often used for long-distance shipments to minimize costs and environmental impact.
• Airfreight is the fastest mode of freight shipping. It is typically used for high-value or time-sensitive goods that need to be delivered over long distances quickly.
• Ocean Freight ships large volumes of goods internationally. It's the most cost-effective way to transport goods globally, though it's also the slowest.

Fulfillment

This shipping terminology refers to receiving, processing, packaging, and delivering customer orders. It encompasses all the steps between when customers order online and when they receive their purchased item. These include:

• Receiving: The fulfillment process starts with receiving the goods that will later be sold. This involves moving the items to a warehouse and keeping track of the inventory.
• Inventory Storage and Monitoring: After receiving the goods, they must be stored properly. Efficient storage and inventory monitoring ensure quick and accurate processing of orders.
• Order Processing: When a customer places an order, the relevant items must be located, picked from the shelves, and prepared for shipment. This step may also involve packing the items securely for transport.
• Shipping: The packed orders are then shipped to the customers using a reliable courier or postal service. The shipping process often includes providing tracking information to the customer.
• Returns Management: If a customer is unsatisfied with their purchase and wishes to return it, the fulfillment provider handles the returns process. This can involve inspecting returned items, restocking items, and processing refunds.

Fulfillment Center

A fulfillment center is a large warehouse facility that handles order fulfillment processes for businesses, particularly for eCommerce operations. These centers play a crucial role in the supply chain, serving as the hub for receiving, processing, and delivering customer orders.

ShipNetwork operates a nationwide network of eCommerce fulfillment centers strategically located to optimize product shipping and end delivery. Our Ground Delivery Network ensures that 98% of the U.S. is reachable within two days via ground shipping, while our team can provide you with a shipping analysis to better inform your shipping decisions.

HS Codes

HS codes, or Harmonized System codes, are internationally accepted numbers for classifying goods exported or imported. These codes help customs authorities identify the type of product, its country of origin, and its value. Customs authorities also use them to determine applicable taxes and duties for imported goods.

Incoterms

International Commercial Terms, commonly known as Incoterms, are a set of internationally recognized rules that define the responsibilities of sellers and buyers in exchanging goods in international trade. Developed by the International Chamber of Commerce (ICC), these terms simplify international trade by providing standardized definitions for common contractual sales practices.

Incoterms clarify who pays for and manages the shipment, insurance, documentation, customs clearance, and other logistical activities. They help to reduce misunderstandings between traders, thereby minimizing trade disputes and litigation.

There are 11 Incoterms, each represented by a three-letter acronym:

1. EXW (Ex Works): The buyer assumes all shipping costs and risks once the goods are available at the seller's premises.
2. FOB (Free on Board): The seller delivers the goods on board the vessel nominated by the buyer, and the risk of loss or damage to the goods passes when the goods are on board the ship.
3. CIF (Cost, Insurance, and Freight): The seller pays for the cost, freight, and insurance to transport the goods to the specified port. However, the risk is transferred to the buyer once the goods are loaded on the ship.
4. DDP (Delivered Duty Paid): The seller assumes all responsibility and costs for delivering the goods to the destination, including import duties and taxes.
5. CFR (Cost and Freight): The seller is responsible for arranging and paying for transporting goods by sea or inland waterway to a destination port and the cost of the goods. However, the risk of loss or damage to the goods and any additional costs due to events occurring after the goods have been loaded onto the ship is transferred from the seller to the buyer.
6. CPT (Carriage Paid To): The seller is responsible for arranging carriage to the named place but not for insuring the goods to the named place. This means the seller bears all the costs and risks of bringing the goods to the destination, including transportation charges.
7. FCA (Free Carrier): The seller delivers the goods to the carrier or another person nominated by the buyer at the seller's premises or another place. The risk of loss or damage to the goods passes when the goods have been delivered into the carrier's custody.
8. DAP (Delivered at Place): The seller pays for all costs and risks of bringing the goods to the named destination, including transportation and insurance.
9. DPU (Delivered at Place Unloaded): The seller is responsible for arranging and paying for transportation to the named place but not for unloading the goods.
10. CIP (Carriage and Insurance Paid to): The seller pays for transportation and insurance associated with delivering the goods to the named place. The risk of loss or damage to the goods is transferred from the seller to the buyer once delivered to the carrier.
11. FAS (Free Alongside Ship): The seller is responsible for delivering the goods alongside the ship at the named port of shipment. The risk of loss or damage passes from the seller to the buyer when the goods are alongside the ship.

Kitting

Kitting refers to grouping, packaging, and selling multiple related products as a single unit. At ShipNetwork, we offer comprehensive kitting services to enhance your eCommerce business. We bundle multiple items into one unique SKU, treating it as a single unit for efficient inventory monitoring and an improved customer experience.

Our team collaborates with you to design the most appealing kits, which are then assembled in our nationwide fulfillment centers. Whether you need permanent or promotional kits, we manage your inventory based on sales patterns to ensure your kits are always ready for shipment. 

Last Mile Delivery

Last-mile delivery refers to the final step of the delivery process when a parcel is moved from a transportation hub to its final delivery destination, which is typically a personal residence or business. This phase of the delivery process is considered one of the most critical and challenging aspects of shipping because it directly involves the customer.

Logistics

Logistics refers to storing, handling, and transporting goods from the manufacturer or supplier to the customer. This includes everything from inventory monitoring, warehousing, and order fulfillment, to shipping, delivery, and returns management.

Lot

A lot refers to a batch or a set of items grouped for inventory tracking and monitoring purposes. This term is often used in the context of "lot tracking," a system used to track products from the supplier across storage in a logistics center to shipping and receipt by the end customer.

Lot tracking is one of the additional services offered by ShipNetwork, providing businesses with a robust system to monitor and manage their inventory. In this system, a unique lot number is assigned to a batch of products. This number serves as an identifier that can be used to track the entire life cycle of the products in that batch — from the supplier through the logistics chain to the customer.

Manifest

This is a document that lists all the items or goods being shipped. It's typically provided to a shipping carrier and includes essential details such as the quantity, nature, type of goods, weight, dimensions, value, and the seller's name.

National Motor Freight Classification

The National Motor Freight Classification (NMFC) is an industry-standard system that assigns a standardized rating to goods transported by truck. This system provides a uniform pricing structure for all commodities, including furniture, electronics, apparel, chemicals, and more.

It is based on a classification system that groups commodities into 18 different classes — ranging from Class 50 (lowest class) to Class 500 (highest class), based on four different characteristics: density, storability, handling, and liability. Each class has a corresponding freight rate based on the density of the commodity, plus other factors such as special handling requirements.

Paperless/Electronic Trade

Paperless or Electronic Trade refers to the digital process of transmitting customs and shipping documents electronically rather than traditional paper documents. This includes commercial invoices, bills of lading, and other necessary customs documentation required for international shipments.

Return Label 

A return label is a prepaid, pre-addressed postage label that is included in the original shipment to facilitate the return of goods. It provides information such as the seller or warehouse address, shipping barcode, and potentially other details that a shipping carrier uses to process the return shipment.

If a customer needs to return a product, they can use the return label to send the item back without paying for postage. They attach the return label to the package, drop it off at a post office, or schedule a pickup with the shipping carrier.

Shipping Label 

A shipping label contains all the necessary information needed for the transportation and delivery of a package. It is usually attached to the outside of a package and serves as a guide for mail carriers to ensure the package reaches its intended destination.

Key information typically included on a shipping label includes:

• Sender's address
• Recipient's address
• Tracking ID
• Bar code
• Shipping class or service type.
• Package weight and dimensions.
• Postal routing code
• Special instructions or handling requirements.

Shipping Zone

A shipping zone in eCommerce refers to a geographic area or region to which a seller or carrier delivers goods. These zones are typically defined by a grouping of ZIP codes, states, or countries. They are measured from the point of origin (where the package is shipped from) to its destination.

Carriers use shipping zones to calculate shipping rates and delivery times. The cost and transit time can vary depending on the distance between the origin and destination — the further the shipping zone, the higher the cost and the longer the transit time.

Supply Chain

A supply chain refers to the network of all the individuals, organizations, resources, activities, and technology involved in creating and selling a product or service. This interconnected journey starts from sourcing raw materials and includes every step until the finished product reaches the customer.

Critical elements of a supply chain include:

• Raw material suppliers provide the basic materials to create products.
• Manufacturers convert these raw materials into finished or semi-finished products.
• Distributors move products from manufacturers to retailers, often storing goods in warehouses.
• Retailers sell the final products directly to consumers.
• Customers are the end users who purchase and use the finished products.

Thermal Label

A thermal label is a type of label printed using a thermal printer. These labels are commonly used for packaging and shipping goods in the eCommerce industry due to their efficiency, readability, and durability. They're quick to print, resistant to damage from shipping conditions, and easily scanned by shipping carriers, ensuring accurate tracking and delivery of packages.

Tracking ID

This is a unique code assigned to each package when it's shipped. This code allows both the sender and the recipient to monitor the package's progress as it travels from the point of origin to its destination. The shipping carrier typically issues the tracking ID, which can be used on the carrier's website or app to check the shipment status.

The tracking information usually includes the date and time of each stage of the delivery process, such as when the package was picked up, when it arrived at various sorting facilities, and when it was delivered.

Warehouse

A warehouse is a large storage facility where businesses store their inventory or goods. These goods are typically stored until they are sold and need to be shipped to the customer. Unlike fulfillment centers, warehouses do not handle the other aspects of order fulfillment, such as packaging and shipping. Instead, they are used mainly for storage and can be automated or manual.

ShipNetwork: We Know All About Shipping

Shipping is an integral part of any eCommerce business. However, that doesn't mean it's an easy process, especially with complicated shipping terminology. Partnering with an experienced and knowledgeable shipping provider like ShipNetwork is essential.

With our nationwide network of fulfillment centers, comprehensive kitting services, lot tracking systems, freight forwarding services, and API integrations, you can have peace of mind knowing that your products will reach your customers safely and on time. Whether you're a start-up or a large enterprise, we are committed to providing the most secure and reliable shipping services to meet your needs.

Contact us today to get started!