Mastering Supply Chain: Essential Logistics Terms Every Business Owner Must Know
Logistics is a critical function in today's global economy, facilitating the efficient transportation of goods around the world. However, for those outside the industry, the terminology can seem complex and confusing. In this blog post, we'll define 100 key logistics terms that everyone should know in order to better understand this vital sector.
Logistics encompasses everything from warehousing and materials handling to freight transport by road, sea, air, and rail. There are terms for the modes of transport, the equipment used, necessary documentation, players involved, and much more. Mastering some logistics lingo will help make you an informed consumer and allow you to better grasp the journey your online orders take before arriving at your door.
Whether you are in retail, manufacturing, international business or simply want to understand how your Amazon Prime order shows up so fast, this post is for you. So let's dive in and start decoding the language of logistics!
Below are the most common logistics terms every business owner should know when seeking and planning supply chain services:
What are Common Shipping & Freight Terms?
Air freight: Transporting goods domestically or globally via airplane.
Bill of lading (BOL or B/L): Legal document between shipper and carrier detailing contents of shipment. Serves as a receipt, contract, and document of title.
Blank Sailing: A scheduled sailing of a cargo vessel that is canceled or skipped by the carrier due to low demand or operational adjustments.
Breakbulk: Non-containerized general cargo stored in boxes, bales, pallets, or drums. Usually loaded directly into the cargo hold of a ship.
Bulk cargo: Loose materials like grain, coal, ores, and gravel shipped in large unpackaged amounts.
Cabotage: Transporting freight between two points within the same country.
Demurrage: Fees applied when cargo remains in a shipping container or warehouse beyond the agreed timeframe.
Demurrage and Detention Fees: Charges for exceeding free time for cargo loading/unloading and use of containers.
Density Rating: Calculating freight costs by combining the product's density, length, width, and height.
Detention: Fees charged when a truck and driver are kept idle, waiting to load or unload cargo.
Drayage: Transporting freight over a short distance, often as part of a longer overall move.
Dry Run: Truck route without a trailer to become familiar with the lanes and delivery sequence.
Dunnage: Packing material used to protect cargo in transit.
FCL (Full Container Load): Entire ocean container is reserved for one customer’s cargo.
Freight Class: Classification system that groups products with similar transportation characteristics. Used to determine freight rates.
Freight Consolidation: The process of combining multiple smaller shipments into one larger shipment to reduce transportation costs.
Freight forwarder: Arranges cargo transport on behalf of shippers via carriers and books space. Does not move goods.
Freight Invoice: A bill issued by the carrier to the shipper for transportation services rendered.
Interline freight: Transport involving two or more motor carriers working cooperatively.
Intermodal Freight: The movement of cargo using multiple modes of transportation (e.g., truck, rail, ship) without handling the cargo itself when changing modes.
LCL (Less than Container Load): Partial container load, shipped with other LCL cargo.
Liftgate delivery: Truck equipped with a lifting platform, used to lower shipments to ground level at the destination.
LTL (Less Than Truckload): Shipping freight that is less than the full 48-53 foot trailer load. Multiple LTL shipments are consolidated to fill a full truckload.
Milk Run: A route setup to pick up and deliver multiple orders in one trip.
Ocean bill of lading (OBL): Document that details cargo and terms for ocean freight. Legal contract between shipper and carrier.
Ocean Freight: Transporting goods overseas via cargo ship.
Reefer: Refrigerated truck trailer used for transporting perishable freight.
Roll-on/roll-off (ro-ro): Cargo that is driven on and off ships rather than lifted.
Waybill: Document containing details about a shipment and the route. Serves as a receipt and
What Are Common Transportation Methods?
3PL (Third-Party Logistics): A firm that provides outsourced logistics services to companies for part or all of their supply chain management.
Bobtailing: Driving a tractor without an attached trailer.
Container on flatcar (COFC): Intermodal transport using containers loaded directly onto flatbed railcars.
Container ship: Oceangoing vessel designed to hold shipping containers.
FTL (Full Truckload): Shipping freight that fills an entire 48-53 foot trailer.
Flatbed: Open trailer without sides, often used to haul machinery or other large products.
Heavy Hauler: An oversize load specialist. Trucks for extremely large cargoes.
Hot Shot: Time-sensitive freight delivery via truck and driver team.
Intermodal: Moving freight by multiple transport modes seamlessly in containers or trailers.
Intermodal Container: Standardized container for multi-modal transport. Stackable metal box.
Land Bridge: Cargo routing where containers are double-handled over an isthmus or narrow body of land.
Lift-on/Lift-off (lo-lo): Cargo handling method using cranes to lift containers instead of using a ship’s gear.
Motor carrier: Company that provides truck transportation.
Panamax Vessel: A ship dimensioned to fit through the original Panama Canal locks with little room to spare.
Stevedore: Individual or firm that loads and unloads ships.
Straddle Carrier: Truck-like machine that lifts containers via an overhead frame. Used at ports and terminals.
Twentieth Foot Equivalent Unit (TEU): Standard container size equivalent to a 20-foot long container.
Yard Jockey: Driver that moves trailers around within a terminal or warehouse yard.
What Are Common Supply Chain Management Terms?
ASN (Advance Shipping Notice): Notification containing details about a pending delivery. Given to the consignee before the shipment arrives.
EDI (Electronic Data Interchange): The electronic transfer of data between supply chain partners in a standardized format.
Gateway: Major port or point for interchange between transport modes or carriers.
Hub and Spoke: Central warehouse that supplies other warehouses/distribution centers. The spokes feed into the central hub.
Just in time (JIT): Inventory strategy that receives inventory as needed rather than stocking excess. Requires precise coordination with suppliers.
Lead Time: The time it takes from placing an order to the final delivery of goods.
Logistics: Overall coordination of materials flows through supply chains.
Omnichannel: Providing customers with a seamless shopping experience across channels like mobile, online, and brick-and-mortar.
Over, Short, and Damaged (OS&D): A term used to refer to the discrepancy in the amount or condition of goods delivered compared to what was ordered.
Reverse Logistics: Process of returning products from consumers back upstream to retailers, distributors, or manufacturers.
Supply chain: The connected network involved in moving products from suppliers to consumers.
TMS (Transportation Management System): Software designed to manage transportation operations and optimize routes and freight costs.
Transloading: Transferring bulk shipments from one mode of transportation to another. For example, container to railcar.
What Are Common Warehousing & Storage Terms?
Bonded Warehouse: Secured warehouse authorized by Customs to store goods until duties or taxes are paid.
Chock: Wood or metal block wedged against cargo to prevent rolling.
Container Yard (CY): Facility that handles storage and staging of containers.
Floating Warehouse: Ship used for waterway storage before transshipment by smaller vessels.
Pallet: Portable platform used for handling, storage, and movement of materials as a unit load.
Palletization: Stacked, standardized units (pallets) used for shipping and storage. Makes handling with forklifts and pallet jacks easier.
Pier: Platform extending into water where ships dock to load and unload.
Port: Harbor with facilities for loading, unloading, and storing cargo.
WMS (Warehouse Management System): Software used to manage, control, and optimize the movement and storage of goods within a warehouse.
Wharfage Fees: Charges assessed by a pier or dock owner for handling cargo.
Yard Management: Coordinating the movement of trucks and trailers within a shipping terminal, cross dock, or warehouse yard.
What Are Common Documents & Fees?
Bill of Lading (BOL or B/L): Legal document between shipper and carrier detailing contents of shipment. Serves as a receipt, contract, and document of title.
Carnet: Customs document that allows the holder to import goods without paying duties or taxes.
Customs Brokerage: Service provided by professionals who assist importers and exporters in clearing goods through customs.
Freight Invoice: A bill issued by the carrier to the shipper for transportation services rendered.
Tariff: A tax or duty imposed on imported or exported goods. It is used by governments to regulate international trade and raise revenue.
Tariff Classification: System to classify imported goods based on type, use, components, etc. Used to calculate duties owed.
We encourage our readers to print out this comprehensive logistics terms glossary to have on hand as a handy reference. With over 75 key industry terms defined, this cheat sheet provides helpful context into the terminology and acronyms used across modern supply chain operations.
Our goal is to make the language of complex shipping processes more transparent. This glossary is a tool to supplement the knowledge you gain from our regular educational blog content.
- Andrew J.
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