If you plan to work in the ocean and air freight industry, you should know all the terms used in this type of setting. Even if you just want to use the shipping and logistic companies and their services, you should know some basic terminology. Why is this important? In order to know that one company is doing its job properly, you should monitor their work. Since they will be using a lot of terms that you might not be familiar with, you might miss out on some important details related to their work. On the other hand, if you want to work or form a partnership with logistics companies, you need to know the terminology in order to be able to work with them. For this reason, here are all the important terms used in logistics that you should know.
Terms used in logistics – landed cost
The first term you should know would be landed cost. As the name suggests, landed cost is the total cost of a product all the way to the point it’s ready to be delivered to its customer. What does this include? First, you need to purchase your product from your overseas suppliers. This landed cost includes the base cost, in addition to costs associated with transport, duties, taxes, insurance, handling fees, and many more. Why is it important to know what landed cost means? Knowing the landed cost will help you to price your products correctly. Then, you will be able to properly cover your costs. In addition to this, you will also have a better understanding of how to make more profit. In order to accurately predict landed cost, you should work closely with logistics companies in Middle East.
Consignee and Bill of Lading
The next term you should know would be consignee. A consignee is an entity that the shipper is sending the goods. Usually, it would be you as an importer but there can be several exceptions. Sometimes, there can be someone else that acts in your name. For this reason, you will see the consignee paired up with the consignor and consignment. The first one would be the shipper of your items while the second one refers to the item. In addition to this, the most common term would be a bill of lading. There are two types the house bill of lading and the master bill of lading. The house bill of lading is a receipt or a contract between you and the freight forwarder. The master bill of lading would be the contract between the freight forwarder and the carrier.
Terms used in logistics – Marine Insurance and 3PL
As you might know, if you are dealing with international shipping, you need to have insurance. You can never predict all the problems during transport no you can completely prevent them. For this reason, you should get insurance in order to protect items in case something happens. One such insurance would be marine insurance which is for ocean freight. This type of insurance will cover damage or loss to your cargo while in transit. It is usually quite cost-effective so it is worth getting one. In addition to this, you should know what 3PL stands for. 3PL stands for third-party logistics. It means that a 3PL service provider will outsource companies’ fulfillment and distribution needs. There are some instances where 3PL is necessary to hire, usually when smaller businesses cannot handle shipping by themselves any longer.
LCL, FCL, and Drayage
Here are the next three terms that you should know if you want to do business or anything related to logistics.
- LCL– This acronym stands for less than container load. This means if you use LCL, your shipment will share a container. there will be other cargo from different importers. In addition to this, if you use LCL, transit time will be longer because of consolidation and deconsolidation. this will happen both before and after ocean transit.
- FCL – The opposite of the first one, FCL stands for a full container load. It means that your cargo will be the only one in the container. In addition to this, it is faster to ship with FCL, it can be cheaper, and there are fewer possibilities of damages or loss.
- Drayage – This is actually a truck service that is responsible for moving containers to and from a port.
Terms used in logistics – Incoterms, Steamship/Carrier, and NVOCC
The first one among these three would be incoterms. This is a short version of international commercial terms. To be more specific, the International Chamber of Commerce published these terms and they are internationally accepted. In addition to this, you and your supplier use incoterms to define responsibilities and the risks in any transaction. Next, a steamship line or a carrier are two synonyms that mean and the operator of the vessel. If you are a large volume importer, you should sign a contract with steamship lines directly. This way, you can take advantage of their buying power. On the other hand, smaller shippers would usually use freight forwarders. The last thing you should know is NVOCC. this acronym stands for the non-vessel operating common carrier. Usually, when people use this acronym, they actually refer to the freight forwarder.
Ready to memorize them all?
As you can see, there are 11 important terms used in logistics that you should know. If you want to hire a logistics company or do anything related to this text, you should know the terminology. Otherwise, it might be extremely difficult to understand what is going on with your shipment. However, these would be the most common terms. There are many more that you should know if you plan to work in this industry. It might seem hard to memorize at first, but if you use them regularly and often, learning them will not be such a problem. You can always make a list and keep it with yourself until you memorize them.