Which Jargon Do I Really Need To Know?
Like any other industry, freight is rife with jargon. Freight glossaries will tell you what an abbreviation stands for, and that’s great – if you’re doing a quiz. Here’s the jargon that you absolutely need to understand, and the reasons why.
FOB & Other Freight Terms
By international convention, every international sales contract must include an incoterm (standardized freight terms that define when the shipment’s responsibility and liability transfers from the seller to the buyer). Both parties must agree to one – no incoterm, no shipment.
Each incoterm has it’s pros and cons, and some of those cons are frightening!
Here’s your go-to incoterms:
- Free On Board: FOB plays to both your and your supplier’s strengths. Your supplier arranges the shipment within their country. Your forwarder arranges main leg and delivery.
- Ex-Works: EXW gives you total control of the shipment from pickup to delivery. You’ll pay more freight costs than with FOB, so use a freight rate calculator to help work out how much better you’ll want the deal to be.
Less than container load (LCL) is when your shipment won’t fill a plane or container. It gets “consolidated” with other shipments at a freight consolidation center (grand name, but it’s just a type of warehouse located near airports and seaports).
Why do you need to understand this? So that you understand why your shipment takes longer and costs more than with a full container load (FCL). It carries more risk of delay or loss, too, so ensure your cartons are clearly marked – carton count, gross weight, net weight, country of origin, and tracking labels (e.g. FBA shipment labels).
Can you keep tabs on all the shipping documents that come your way? Do you know your Bills of Lading from your Letter of Credit? Do you need to? For now, check out why these few key freight documents are important for you.