The words on your freight bill, in plain English.
They turn up on quotes, bills of lading and customs paperwork, usually without an explanation. Here each one gets two lines and a link to the service behind it.
Pricing
How a rate is built, and what it’s measured in.
- W/M Weight or measure
How LCL ocean freight is priced: on the cubic meters or the metric tons, whichever is greater. One cubic meter is weighed against 1,000 kg.
Ocean freight- CBM Cubic meter
The volume unit ocean freight is priced on: length × width × height in meters. A pallet 1.2 × 1.0 × 1.5 m is 1.8 CBM.
Ocean freight- LCL Less than container load
Cargo too small to fill a container, shipped in one shared with other shippers and priced on W/M.
Ocean freight- FCL Full container load
A container booked by one shipper, sealed at origin and not opened again until destination, unless customs pulls it for an exam.
Ocean freight- Chargeable weight
What air freight is billed on: the actual weight or the volumetric weight, whichever is greater. Volumetric weight is length × width × height in centimeters divided by 6,000.
Air freight- Consolidation
Putting several shippers’ cargo into one container, or onto one air pallet, so each pays only for the space it uses. Taking it apart at destination is deconsolidation.
Ocean freight- Door-to-door and port-to-port
Door-to-door covers pickup, the main leg and final delivery. Port-to-port covers the ocean or air leg and the terminal charges at origin. Charges at the destination terminal are billed at destination.
Ocean freight- FTL / LTL Full truckload / less than truckload
FTL means the whole trailer is yours. LTL means your pallets share the trailer with other freight and you pay for the space they take.
Trucking
Incoterms® rules
Eleven trade terms set by the International Chamber of Commerce (ICC), current edition 2020. The three letters on a quote or invoice decide who pays for each leg of the trip, and who takes the loss if the cargo is damaged on the way.
Who pays, and where the risk changes hands
- E
EXW
The buyer collects at the seller’s door and pays for the rest.
- F
FCA · FAS · FOB
The seller gets the goods to the buyer’s carrier at origin. The buyer pays the main freight.
- C
CPT · CIP · CFR · CIF
The seller pays the main freight, but the risk passes at origin.
- D
DAP · DPU · DDP
The seller pays to the destination and carries the risk until the goods arrive.
Rules of thumb
- Export customs is the seller’s job under every rule except EXW.
- Import customs and duties are the buyer’s job under every rule except DDP.
- Only CIF and CIP make the seller insure the cargo.
- The Incoterms® rules don’t say when ownership passes or when payment is due. The sales contract does.
- Write the rule, an exact place and the edition, like FOB Port of Miami, Incoterms® 2020. A city on its own usually isn’t precise enough.
Any mode of transport 7 rules
- EXW Ex Works
The seller has the goods ready at the named place, usually its own door, and that’s where its part ends. The buyer loads them, clears export, pays for every leg and carries the risk the whole way. For goods crossing a border, the ICC suggests FCA instead.
Trucking- FCA Free Carrier
The seller clears export and hands the goods to the buyer’s carrier at the named place, loaded onto the buyer’s truck at the seller’s door or brought to a terminal or warehouse ready to unload. Freight and risk are the buyer’s from there. For container cargo, the ICC recommends it over FOB.
Import and export consulting- CPT Carriage Paid To
The seller pays the freight to the named destination, but the risk passes to the buyer as soon as the first carrier takes the goods. Damage on the way is the buyer’s loss, so the buyer should insure.
Air freight- CIP Carriage and Insurance Paid To
CPT with insurance. The seller pays the freight to the named destination and must insure the cargo for the buyer, with all-risks cover (Institute Cargo Clauses A) for at least 110% of the sale price. The risk still passes when the first carrier takes the goods.
Air freight- DAP Delivered at Place
The seller pays for the whole trip and carries the risk until the goods reach the named place, still on the truck. The buyer unloads, clears import customs and pays the duties.
Trucking- DPU Delivered at Place Unloaded, formerly DAT
Like DAP, but the seller also takes the goods off the truck at the named place. It’s the only rule that makes the seller unload. Import customs and duties stay with the buyer.
Warehousing and distribution- DDP Delivered Duty Paid
The seller handles all of it: freight, risk, import customs, duties and taxes, right up to the named place. The buyer only unloads. A seller should check it can clear customs in the buyer’s country before agreeing, because some countries don’t allow a foreign company to.
Customs clearance
Sea and inland waterway only 4 rules
- FAS Free Alongside Ship
The seller clears export and delivers the goods next to the buyer’s ship at the named port, on the dock or on a barge. Loading, freight and risk are the buyer’s from there. It’s mostly used for heavy machinery and other cargo that doesn’t travel in a container.
Project cargo- FOB Free on Board
The seller clears export and pays until the goods are loaded on the buyer’s ship at the named port. Once they’re on board, the ocean freight and the risk are the buyer’s. In U.S. domestic shipping, “FOB” is a different term that uses the same letters.
Ocean freight- CFR Cost and Freight
The seller pays the ocean freight to the named destination port, but the risk passes to the buyer once the goods are on board at origin. The seller doesn’t have to insure them, so the buyer should.
Ocean freight- CIF Cost, Insurance and Freight
CFR with insurance. The seller pays the ocean freight to the named destination port and insures the cargo for the buyer, but only with basic cover (Institute Cargo Clauses C) for at least 110% of the sale price. A buyer who wants more cover should ask for it in the contract.
Ocean freight
Incoterms® is a trademark of ICC. Its use here does not imply association with, approval of or sponsorship by ICC. The Incoterms® rules are protected by copyright owned by ICC. More on the rules is on the ICC website.
Documents and filings
The paperwork that travels with the cargo, and the filings due before it sails.
- Bill of lading (B/L)
The ocean shipping document that is at once the receipt for the cargo and the contract of carriage, and, when issued negotiable, the title to the goods. Whoever holds the original can claim the cargo.
Ocean freight- NVOCC Non-vessel-operating common carrier
A carrier that sells ocean transportation under its own bills of lading without operating ships, licensed by the Federal Maritime Commission. EFI is one.
About EFI- HBL / MBL House bill of lading / master bill of lading
The NVOCC issues the house bill to you; the ocean carrier issues the master bill to the NVOCC. Your cargo moves under both.
Ocean freight- Air waybill (AWB) MAWB, HAWB
The contract of carriage for air freight. The airline issues the master air waybill (MAWB) to the forwarder, the forwarder issues a house air waybill (HAWB) to each shipper, and neither one is a document of title.
Air freight- ISF (10+2) Importer Security Filing
Ten data elements the importer must send to CBP no later than 24 hours before ocean cargo is loaded at the foreign port. A late, wrong or missing filing can cost $5,000 per violation.
Customs clearance- AES / EEI Automated Export System / Electronic Export Information
The export filing the U.S. Census Bureau requires when a shipment has more than $2,500 of goods under one Schedule B number, or needs an export license. On ocean cargo it goes in at least 24 hours before loading.
Import and export consulting- HTS / Schedule B
The 10-digit codes that classify goods: HTS on U.S. imports, where it sets the duty rate, and Schedule B on U.S. exports.
Import and export consulting- VGM Verified gross mass
The weighed total of a packed container: cargo, packing and the box itself. Since July 1, 2016, a container without one can’t be loaded.
Ocean freight
Customs
What stands between the port and your door.
- Customs bond
The guarantee CBP requires before it releases goods on a formal entry. A single-transaction bond covers one entry; a continuous bond covers every entry you file, at every port, for a year.
Customs clearance- In-bond IT, T&E, IE
Moving imported goods under a CBP bond before duty is paid: to another U.S. port for clearance (IT), across the U.S. for export (T&E), or straight back out of the country (IE).
Customs clearance- Bonded warehouse
A warehouse approved by U.S. Customs to hold imported goods before duty is paid. Cargo in it can be stored, consolidated or moved on in bond without clearing first.
Warehousing and distribution- Section 321 The de minimis rule
The rule that let shipments worth $800 or less enter the U.S. duty-free. It’s suspended, and a 2025 law ends it for good on July 1, 2027.
Customs clearance- CTPAT Customs Trade Partnership Against Terrorism
CBP’s voluntary supply-chain security program. Members meet its security criteria for cargo, buildings and people.
Customs clearance
Charges and deadlines
The clocks that turn into invoices.
- Free time
The days a carrier or terminal allows before demurrage or detention starts.
Ocean freight- Demurrage
The charge for leaving a loaded container at the port terminal past its free days.
Trucking- Detention Also called per diem
The carrier’s charge for keeping its container outside the terminal past the free days, usually per container, per day.
Trucking- Cutoff Also written cut-off
The last moment cargo or documents can reach the warehouse or terminal to make a sailing or flight. Miss it and the cargo waits for the next one.
Schedules
Warehouse, trucks and equipment
Where cargo waits, how it moves, and what it ships in.
- CFS Container freight station
A warehouse where LCL cargo is loaded into shared containers (consolidation) or taken out of them (deconsolidation). Ours is a bonded CFS in Medley.
Cross-docking- Cross-docking
Moving cargo from an inbound truck or container straight to an outbound one, with little or no storage in between.
Cross-docking- Drayage
Short-distance trucking of a container between a port or rail yard and a warehouse.
Trucking- Flat rack and open top
Containers for cargo too tall or too wide for a standard box. A flat rack has no roof and no sides; an open top has no roof, so it loads by crane from above.
Equipment guide- OOG Out of gauge
Cargo that sticks out past a standard container’s dimensions. It ships on a flat rack or open top and is planned piece by piece.
Project cargo- ISPM 15
The international standard for wood packaging: pallets and crates must be heat-treated (56 °C for 30 minutes) or fumigated, and carry the IPPC stamp. Plywood and other processed wood are exempt.
Warehousing and distribution- POL / POD Port of loading / port of discharge
Where the cargo goes onto the vessel and where it comes off.
Shipping lanes- Transshipment
Moving cargo from one vessel to another at an intermediate port on the way to its destination.
Shipping lanes
Air freight and dangerous goods
Terms from the airport side, and from cargo that needs a declaration.
- AOG Aircraft on ground
An aircraft that can’t fly until a part arrives. AOG shipments take the first available lift, not the cheapest routing.
Air freight- TSA IAC Indirect air carrier
A company the TSA approves to tender cargo to passenger airlines on its own authority. EFI holds IAC certification.
Air freight- Dangerous goods (DG) Also called hazmat
Cargo that can harm people, the vessel or the aircraft, like batteries, chemicals, gases and flammables. It moves under IATA rules by air, the IMDG Code by sea and 49 CFR on U.S. roads.
Dangerous goods consulting- UN number
The four-digit number the United Nations assigns to each dangerous substance or article, such as UN 3480 for lithium-ion batteries.
Hazmat compatibility- SDS Safety data sheet, formerly MSDS
The manufacturer’s document describing a product’s hazards. Carriers ask for it to decide whether the cargo is dangerous goods.
Dangerous goods consulting
A word on your paperwork that isn’t here?
Send it with the shipment details and we’ll explain what it means for your cargo, in plain words, with the quote.
Miami, FL 33166
(Medley)
8:30 AM – 5:00 PM ET
