The terms used in international shipping are often confusing, as abbreviations and abbreviations abound and you must deal with them in the import operations you carry out in international trade, and you may not know most of them, and therefore this causes you some distraction in writing contracts or procedures for clearing the goods from the port of supply or port of arrival.
In this article, we present to you the 15 most popular terms related to shipping, so that you are ready to deal with these terms and have a clear understanding of them.
1- Gross Weight (VGM)
Verified Gross Mass is the weight of the sea cargo complete with the materials used to keep the cargo safe in the hold of the ship, as well as the empty weight of the container through which it is shipped.
The exact gross weight of packed containers is critical for proper storage and stacking of cargo inside the vessel – thus avoiding container pile collapse or loss at sea. For this reason, containers packed without VGMs may be refused to load on a vessel, and the shipper can be subject to fines and regulatory penalties. Under the terms of the International Convention for the Safety of Life at Sea (SOLAS), each country is required to apply the VGM law.
You are required to calculate the total weight of the cargo as part of the shipping instructions before the ship sets off, and there are two acceptable methods of calculating VGM.
- The weight of your sealed shipment container after it is packed.
- Weigh all the goods and container contents and then add these numbers to the empty weight of your container.
2. Total Shipping (FCL)
FCL or Full Container Load. It is freight by sea via a full container to transport goods from the country of supply to the country of import.
This method is one of the most commonly used shipping methods, as the cost is acceptable if you want to ship goods in bulk, so that you can reserve the entire container for you without sharing its space with other shippers.
3. Partial Shipping (LCL)
Partial shipping means using a portion of the container to ship your goods and is known as “less than container load” (LCL).
Partial freight or “LCL” is one of the means of sea freight, and is defined as a system for shipping small parcels and packages that are not enough to fill a full transport container, where different packages are placed in a common transport container for shipment.
For example, if you want to import a small package from a country, it is unreasonable to reserve an entire container and bear its costs to import this small package, so you can use partial shipping that relies on grouping several packages together and placing them in a shared shipping container.
4. Less than Truckload Charging (LTL)
Less than truckload freight shipping is a way to ship any type of cargo by road, and as the name indicates, it is a very important shipping method for importers who handle a relatively small amount of goods that are transported from one location to another.
This charging method can be used when the shipping weight is between 150 and 15,000 lbs. When you ship LTL, you’ll pay for part of the standard truck trailer your cargo occupies, while other importers and their shipments fill the free space.
Among the most important benefits that accrue to you as an importer when adopting the method of shipping with less than a truckload are:
- Lower cost (compared to the cost of parcel dispatch and shipping services with full truckload).
- Pallets provide greater load safety during transportation.
- Accurate shipment tracking.
- Load variety.
- Advantages related to the transport environment.
- Scalability and increased payload size.
5. Door to Door or D2D
The door-to-door (D2D) method describes the shipping method in which you receive your goods from your office or warehouse door without having to pick them up at the port of arrival and work on customs clearance procedures and clearance of goods from the port. This service is carried out by authorized freight forwarders in different countries.
Door-to-door shipping is a service in which the freight forwarder ensures that goods are received and delivered to locations specified by you. This service differs from door-to-port or port-to-port shipping because it starts and ends at specific addresses within the cities covered by the freight forwarder.
6. 20-foot equivalent unit
Twenty-foot equivalent unit or TEU: An accurate unit of measurement used to determine the freight capacity of container ships and terminals.
This measurement is important to you as an importer in shipping operations, and is derived from the dimensions of a standard 20-foot shipping container. Since standard containers can be 20 or 40 feet in total, the capacity of a container vessel can depend on the ratio of the two volumes.
In order to avoid confusion and standardize vessel capacity, the number of containers a vessel can load is translated into a 20-foot container (TEU). For example, a forty-foot container is two equivalent units.
Understanding how TEU works is important because when shipping companies provide price calculations, they do so for each TEU. So, when you receive a price calculation from a company, make sure you multiply it by the number (TEUs) that make up your shipment, not just the number of containers you ship.
The TEU is also used in reporting the capacity of container ships and terminals.
7. Estimated time of arrival or ETD)
It can be said that the estimated time of arrival of the shipment indicates two things:
1. Estimated departure time, which is the beginning of the delivery journey at the last mile, when your shipment leaves the storage facility.
2- Estimated time of delivery, which refers to the last point in the import process, or the moment of delivery of the goods to you.
The estimated delivery time is frequently used by carriers and package/product delivery companies. It is important to note that delivery estimates differ from arrival estimates (ETA). For example, if your shipment arrives at the port of arrival at five o’clock on Friday, you may not be delivered until days later until the customs clearance procedures are completed and you receive the goods.
8. Estimated Time of Arrival (ETA)
Estimated time of arrival is the concept that denotes the arrival of a cargo ship to a particular destination. It also helps in knowing the expected duration of the ship’s path. The goal is to always be aware of the progress of the cargo ship in the ocean.
Example: A ship departing from Los Angeles will have an expected time of arrival in Rotterdam. Knowing the exact arrival time accurately allows port authorities to prepare for the arrival of the vessel.
Impact: The estimated time of accurate arrival can make the entire import process more efficient and reliable, positively impacting importers and suppliers around the world.
9. Port of loading (POL)
A port of loading is a port or place where goods are loaded onto a secured vessel ready for transport. It can also be called the port of exit.
10. Proof of delivery or POD
It is a document signed by the importer to confirm receipt of the goods in good condition.
Proof of delivery is physical documents. But due to the pandemic, many shipping and delivery companies have moved to electronic proof of delivery (ePOD) to help automate and streamline delivery documents.
11. Freight rate increase (GRI) indicator
The “GRI” indicator is an abbreviation for “General Rate Increase”, meaning “rate of increase in freight rates”, and is one of the factors affecting the rise in the price of shipping.
The Freight Increase Rate (GRI) index is defined as an adjustment of sea freight rates across all trade routes or specific trade routes over a specified time frame. It is the average amount by which shipping companies increase tariff rates applicable to base rates of freight rates.
This increase usually occurs during the peak shipping seasons, which causes a significant rise in shipping costs, especially if dealing with large shipping volumes, and the GRI index may vary greatly from month to month, as well as between carriers and commercial corridors.
12. Bill of Lading
It is a document issued by the transport or shipping company when it accepts the carriage of the goods of a particular importer to a specific destination for a transportation fee indicated therein.
It includes the details of the shipment and the limits of responsibilities of the carrier, supplier and importer. The bill of lading is one of the most essential documents in international trade.
There are 4 types of bill of lading:
1- A bill of lading with the word “shipped board B/L” on it.
2- A bill of lading showing that the goods have been received for shipment (Received For Shipment B/L).
3- Direct B/L bill of lading for shipping from one port to another port directly.
4- A trans-shipment policy (Through B/L) for goods reshipped at a port covering this entire stage.
13. Commodity Code Code (HS)
The commodity coding system “Harmonized System” is a system used to classify goods through an international code used by all countries of the world for the same product.
For example: potatoes have a certain code because potato names are different between countries and when importing you should be aware of the name of the product you are supplying or importing.
14. US Commodity Code Code (HTS) (if sold in Amazon USA)
It is a system used to classify goods by a 10-digit code specific to the United States. It is also called HTS numbers by the U.S. International Trade Commission (ITC).
It is very important that all U.S. importers know and use the correct HTSUS codes, because commodity duties are assessed based on this classification.
The HTS code takes the same shape as the HS symbol for the first six digits and then contains four different last digits.
15. Peer-to-Peer or P2P parcel delivery service
Peer-to-peer (P2P) parcel delivery is an interesting emerging trend. It is the act in which the traveler carries an expulsion from the sender to the recipient during a trip that he or she has already intended to undertake and receives a fee to contribute to his travel costs.
The person delivering the package can be a professional shipping company, or someone who sets off from one place to another. Peer-to-peer shipping networks can be used to ship almost anything, from large to small cargo.
The cost of shipping goods using peer-to-peer shipping depends on how much you need to ship, how much you need them immediately, and whether you need help packing or loading your items onto the truck.
Finally, you have learned about the 15 most important terms in the shipping industry, and if you look closely at each of them, you will be able to take control of the import process better than before, and you will be better able to conduct business deals with different suppliers around the world.