In the global shipping industry, precise understanding of specialized terminology is crucial. With trade activities flourishing and international logistics demands surging, mastering fundamental freight terms not only facilitates smooth business operations but also helps prevent costly misunderstandings during transportation. This guide systematically explains key freight terms and associated costs.
1. Trade Terms (Incoterms)
- FCA (Free Carrier) : Seller bears costs and risks until goods are delivered to the carrier's specified location.
- FAS (Free Alongside Ship) : Seller delivers goods alongside the vessel at the port of shipment, transferring risk.
- FOB (Free on Board) : Seller loads goods onto the vessel at the port of shipment, transferring risk.
- CFR (Cost and Freight) : Seller covers costs until goods reach the destination port.
- CIF (Cost, Insurance and Freight) : Seller handles costs and insurance until destination port.
- CPT (Carriage Paid To) : Seller pays freight to specified destination.
- CIP (Carriage and Insurance Paid To) : Seller covers freight and insurance to destination, offering buyer additional protection.
- DAF (Delivered At Frontier) : Goods delivered to border point with risk transfer.
- DES (Delivered Ex Ship) : Seller responsible until vessel arrives at destination port.
- DEQ (Delivered Ex Quay) : Seller delivers goods to specified wharf at destination.
- DDU (Delivered Duty Unpaid) : Seller delivers to destination without paying duties.
- DDP (Delivered Duty Paid) : Seller bears all costs until goods reach buyer.
2. Cost Terminology
- ORC (Origin Receiving Charges) : Local receiving fees, primarily in Guangdong province.
- THC (Terminal Handling Charges) : Port handling fees, typically charged in Hong Kong.
- BAF (Bunker Adjustment Factor) : Fuel surcharge adjusted for price fluctuations.
- CAF (Currency Adjustment Factor) : Currency depreciation surcharge based on exchange rate changes.
- YAS (Yard Surcharges) : Port yard fees charged by terminal operators.
- EPS (Equipment Position Surcharges) : Fees for equipment positioning.
- DDC (Destination Delivery Charges) : Destination port delivery fees.
- PSS (Peak Season Surcharges) : Additional fees during high-demand periods.
- PCS (Port Congestion Surcharge) : Additional fees due to port congestion.
- DOC (Document Charges) : Fees for shipping documentation.
- O/F (Ocean Freight) : Costs for transoceanic shipping.
3. Shipping Documents
- B/L (Bill of Lading) : Legal document for sea freight.
- MB/L (Master Bill of Lading) : Carrier's bill documenting main shipment.
- MTD (Multimodal Transport Document) : Documentation for combined transport methods.
- L/C (Letter of Credit) : Payment guarantee protecting both parties.
- C/O (Certificate of Origin) : Document certifying goods' country of origin.
- S/C (Sales Confirmation) : Document confirming sales transaction.
- S/O (Shipping Order) : Instruction for cargo loading.
4. Billing Units
- W/T (Weight Ton) : Charges based on actual weight.
- M/T (Measurement Ton) : Charges based on cargo volume.
- W/M (Weight or Measurement ton) : Charges based on whichever yields higher revenue between weight or volume.
5. Container Terminology
- CY (Container Yard) : Storage and handling area for containers.
- FCL (Full Container Load) : Exclusive container use by single shipper.
- LCL (Less than Container Load) : Multiple shippers sharing container space.
- CFS (Container Freight Station) : Facility for container loading/unloading.
- TEU (Twenty-feet Equivalent Units) : Standard container measurement unit.
- A/W (All Water) : Transport primarily via sea routes.
- MLB (Mini Land Bridge) : Intermodal transport connecting U.S. coasts via land.
In the complex shipping industry, mastering these terms and costs empowers businesses to operate efficiently with transparent processes. Precise understanding of this information significantly enhances corporate competitiveness. May this guide prove valuable in your shipping operations!
