Comprehensive Guide to Ocean Freight Terms
Navigating the complexities of ocean freight terms can be challenging, especially with the extensive terminology used within the industry. Whether you’re a seasoned professional or a business new to shipping goods by ocean freight, understanding these terms is crucial. This guide provides clear and concise definitions of common and specific ocean freight terms, making it easier to manage and streamline your shipping processes.
Bill of Lading (B/L)
A Bill of Lading (B/L) is a vital document in ocean freight. It serves two primary purposes: it acts as a receipt for the goods shipped and as a contract of carriage between the shipper and the carrier. The B/L contains essential details such as the type and quantity of goods, the destination, and the agreed-upon terms of the shipment. This document ensures that both parties have a mutual understanding of the shipment details and helps in resolving any disputes that may arise during transit.
Importance of Bill of Lading:
- Receipt of Goods: Confirms that the carrier has received the goods as described.
- Contract of Carriage: Outlines the terms and conditions under which the goods will be transported.
- Ownership Transfer: Can be used to transfer ownership of the goods while in transit.
Types of Bill of Lading:
- Straight Bill of Lading: Non-negotiable; goods are consigned to a specific recipient.
- Order Bill of Lading: Negotiable; can be endorsed to transfer ownership.
- Bearer Bill of Lading: Transferable by delivery.
Demurrage
Demurrage charges apply when a container stays at a terminal beyond the allowed free time. For exports, this period begins when the container enters the port and continues until it gets loaded onto the ship. Conversely, for imports, demurrage starts when the ship arrives at the port and ends once the consignee picks up the container from the terminal. Carriers determine the specific demurrage period based on the container type and location.
Key Points about Demurrage:
- Free Time: The period during which no demurrage charges apply. This varies by carrier and port.
- Charges: Fees are calculated daily and can add up quickly if the container is not moved promptly.
- Avoidance: Proper planning and timely coordination with customs and transport providers can help avoid demurrage charges.
Understanding ocean freight terms is essential for accurately interpreting shipping documents and ensuring smooth international trade transactions.
Detention
Detention charges arise when a shipper uses a container beyond the agreed time outside the terminal. For exports, this period begins the moment the shipper picks up the empty container and concludes when they return the full container to the terminal. For imports, detention starts when the consignee picks up the full container from the terminal and ends once they return the empty container to the yard.
Key Points about Detention:
- Free Time: Similar to demurrage, detention has a free period that varies by carrier.
- Charges: Like demurrage, detention charges accumulate daily.
- Avoidance: Ensuring quick loading and unloading, and timely return of containers can minimize detention fees.
Duty
A duty refers to a tax that a government imposes on imported or exported goods, calculated as a percentage of their value. Governments impose duties not only to generate revenue but also to protect domestic industries from foreign competition.
Types of Duties:
- Ad Valorem Duty: Based on the value of the goods.
- Specific Duty: Based on a specific amount per unit of weight or quantity.
- Compound Duty: A combination of ad valorem and specific duties.
Key Points about Duties:
- Calculation: Determined by the value, classification, and origin of the goods.
- Purpose: Protects local industries, generates revenue, and controls the flow of goods.
- Compliance: Importers must comply with duty regulations to avoid penalties.
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Inland Transport
Inland transport involves moving goods from the port of entry to the final destination via road, rail, or river. It is a critical part of the logistics chain, requiring careful planning to ensure safe and efficient transportation.
Modes of Inland Transport:
- Road: Trucks offer flexibility and door-to-door service.
- Rail: Ideal for long-distance and bulk shipments.
- River: Barges provide cost-effective transport for heavy and bulky goods.
Key Points about Inland Transport:
- Coordination: Requires synchronization with port schedules and customs clearance.
- Efficiency: Timely transport reduces storage costs and speeds up delivery.
- Safety: Proper handling and security measures ensure the goods’ integrity during transit.
Port of Entry
The port of entry is where goods enter a country. These ports are typically located on the coast or major rivers and handle large volumes of goods, playing a pivotal role in the import process.
Key Points about Ports of Entry:
- Customs Clearance: Goods must clear customs before entering the country.
- Facilities: Equipped with necessary infrastructure to handle different types of cargo.
- Strategic Location: Positioned to facilitate international trade and transportation.
Port of Exit
The port of exit is where goods leave a country. Similar to ports of entry, they are located on the coast or major rivers and manage large volumes of exports, facilitating international trade.
Key Points about Ports of Exit:
- Export Procedures: Goods must undergo export clearance procedures.
- Logistics: Coordination with shipping lines and inland transport for timely departure.
- Infrastructure: Equipped to handle various types of cargo and shipping operations.
Familiarity with ocean freight terms can help businesses avoid costly mistakes and delays in the shipping process.
Shipping Line
A shipping line is a company that operates ships and provides transportation services. Shipping lines are essential to global trade, responsible for moving goods across the world’s oceans.
Key Points about Shipping Lines:
- Fleet: Operate a fleet of vessels catering to different types of cargo.
- Routes: Offer scheduled services on established trade routes.
- Services: Provide additional services such as cargo tracking, customs brokerage, and logistics solutions.
TEU (Twenty-foot Equivalent Unit)
TEU is a standard unit of measurement for containers, representing the dimensions of a standard 20-foot container. This measurement helps in managing and quantifying shipping capacity.
Key Points about TEU:
- Standardization: Facilitates global trade by providing a consistent measurement.
- Capacity Planning: Helps in planning vessel capacity and terminal operations.
- Efficiency: Streamlines logistics and container handling processes.
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Consignee
The consignee receives the goods being shipped. As the final recipient, they take responsibility for receiving and acknowledging the goods.
Key Points about Consignees:
- Responsibility: Ensure timely pickup and payment of any dues such as duties and taxes.
- Documentation: Must provide necessary documentation for customs clearance and delivery.
- Coordination: Work with freight forwarders and shipping lines to ensure smooth delivery.
Consignment
Consignment refers to the goods being shipped and includes all items in the shipping process.
Key Points about Consignments:
- Tracking: Must be tracked throughout the shipping process to ensure safe delivery.
- Documentation: Requires accurate documentation for customs and delivery purposes.
- Responsibility: Shippers must ensure the consignment is properly packaged and labeled.
NVOCC (Non-Vessel Operating Common Carrier)
An NVOCC is a company that provides transportation services without owning ships. They act as intermediaries, coordinating shipments and offering logistics solutions.
Key Points about NVOCCs:
- Services: Provide a range of services including booking space, issuing bills of lading, and arranging inland transport.
- Flexibility: Offer flexible shipping options and competitive pricing.
- Network: Utilize a vast network of carriers to provide comprehensive logistics solutions.
Ocean freight terms like Bill of Lading, Freight Forwarder, and Incoterms define the responsibilities and liabilities of parties involved in shipping.
Waybill
A waybill is a document used in transportation that provides essential details of the shipment, such as its origin, destination, and contents. Moreover, it serves as a receipt and helps track the shipment throughout its journey.
Key Points about Waybills:
- Documentation: Essential for tracking and verifying shipment details.
- Receipt: Confirms receipt of goods by the carrier.
- Tracking: Helps monitor the shipment’s progress and ensure timely delivery.
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Wharfage
The port charges wharfage as a fee for using a wharf to unload cargo from a vessel. Typically, carriers include this fee in the freight cost or Terminal Handling Charges (THC).
Key Points about Wharfage:
- Charges: Vary based on port regulations and type of cargo.
- Inclusion: Often included in overall shipping costs.
- Purpose: Covers the maintenance and operation of port facilities.
Commercial Invoice
The seller issues a commercial invoice as a bill for the goods to the buyer. Governments use this invoice to determine the value of goods for customs duties and to prepare consular documentation.
Key Points about Commercial Invoices:
- Documentation: Essential for customs clearance and determining duty payments.
- Details: Must include accurate information about the goods, value, and terms of sale.
- Compliance: Importers must ensure the invoice meets regulatory requirements.
Stowage
Stowage is the process of arranging cargo within a vessel to optimize space and prevent damage during transport.
Key Points about Stowage:
- Optimization: Ensures efficient use of space within the vessel.
- Safety: Prevents cargo shifting and damage during transit.
- Planning: Requires careful planning and coordination with loading personnel.
BAF (Bunker Adjustment Factor)
BAF refers to the floating part of sea freight charges representing adjustments due to oil prices.
Key Points about BAF:
- Adjustment: Reflects changes in fuel prices, impacting overall shipping costs.
- Transparency: Ensures shippers are aware of the fuel cost component in freight charges.
- Fluctuation: Varies based on market conditions and fuel price changes.
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CUC (Chassis Using Charge)
CUC is a fee for using chassis, the undercarriage used to transport containers by road.
Key Points about CUC:
- Charges: Applied for the use of chassis during inland transportation.
- Purpose: Covers maintenance and operation costs of chassis.
- Inclusion: Often included in overall shipping costs or charged separately.
LFD (Last Free Day)
LFD, or Last Free Day, marks the final day of the free period allowed for a container at a terminal. After this day, demurrage or detention charges begin.
Key Points about LFD:
- Free Period: The time during which no additional charges apply.
- Charges: Demurrage or detention charges begin after LFD.
- Planning: Proper planning can help avoid extra charges by ensuring timely container pickup or return.
LSC (Low Sulfur Fuel Contribution)
LSC, or Low Sulfur Surcharge, is applied to cover the costs of using low sulfur fuel. This surcharge is specifically aimed at reducing pollution from ships.
Key Points about LSC:
- Environmental Impact: Encourages the use of cleaner fuels to reduce emissions.
- Charges: Passed on to shippers as part of freight costs.
- Regulation: Complies with international regulations on sulfur emissions.
Mastering ocean freight terms allows shippers to negotiate better rates and services with carriers and logistics providers.
LSS (Low Sulfur Surcharge)
LSS, or Low Sulfur Surcharge, is a tax imposed to offset the higher costs of using low sulfur fuel. This tax is designed to minimize environmental impact.
Key Points about LSS:
- Environmental Protection: Supports efforts to reduce sulfur emissions from shipping.
- Costs: Higher costs for low sulfur fuel are passed on to shippers.
- Compliance: Ensures compliance with international environmental standards.
PRS (Piracy Risk Surcharge)
PRS is an additional charge to cover the risk and costs associated with shipping through areas prone to piracy.
Key Points about PRS:
- Security: Covers additional security measures to protect against piracy.
- Charges: Applied to shipments passing through high-risk areas.
- Insurance: Often includes costs for additional insurance coverage.
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AGS (Aden Gulf Surcharge)
AGS, or Aden Gulf Surcharge, is applied to shipments passing through the Gulf of Aden, a high-risk area for piracy. This surcharge is implemented to cover the additional security measures required in this region..
Key Points about AGS:
- Risk Area: Reflects the heightened risk of piracy in the Gulf of Aden.
- Charges: Covers additional security and insurance costs.
- Planning: Shippers must factor in AGS when planning routes through this region.
CRF (Container Return Fee)
CRF, or Container Return Fee, is the charge applied for returning empty containers to the yard after delivery. This fee ensures proper handling and storage of containers once they have been emptied.
Key Points about CRF:
- Return Process: Encourages timely return of empty containers to avoid additional charges.
- Charges: Applied to cover the cost of container repositioning and handling.
- Coordination: Proper coordination with transport providers can help avoid CRF.
DOF (Delivery Order Fee)
DOF, or Delivery Order Fee, is charged for issuing a delivery order, which authorizes the release of goods to the consignee. This fee is essential for ensuring that the consignee can legally receive the shipment.
Key Points about DOF:
- Documentation: Necessary for the release of goods from the terminal.
- Charges: Typically included in overall shipping costs.
- Process: Ensures the consignee receives the goods as planned.
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CAMS/AMS (Canadian Advanced Manifest System)
CAMS/AMS refers to systems for the advanced electronic transmission of cargo information to Canadian customs authorities.
Key Points about CAMS/AMS:
- Compliance: Ensures compliance with Canadian customs regulations.
- Efficiency: Speeds up the customs clearance process.
- Documentation: Requires accurate and timely submission of cargo details.
CSF (Carrier Security Fee)
CSF, or Cargo Security Fee, is charged by carriers to cover the cost of security measures for protecting goods during transport. This fee is crucial for ensuring the safe delivery of shipments.
Key Points about CSF:
- Security: Covers costs for enhanced security measures.
- Charges: Passed on to shippers as part of freight costs.
- Protection: Ensures the safety and security of goods during transit.
FES (Fuel Escalation Surcharge)
FES is a surcharge covering increases in fuel costs over a certain period.
Key Points about FES:
- Fluctuation: Reflects changes in fuel prices over time.
- Adjustment: Adjusted periodically based on market conditions.
- Transparency: Ensures shippers are aware of fuel cost impacts on shipping charges.
CNS (Congestion Surcharge)
CNS, or Congestion Surcharge, is applied to shipments to cover the additional costs caused by port congestion. This fee helps carriers manage delays and increased operational expenses due to overcrowded ports.
Key Points about CNS:
- Congestion: Reflects additional costs and delays due to congested ports.
- Charges: Passed on to shippers as part of freight costs.
- Planning: Proper planning and routing can help avoid congested ports and CNS.
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PCS (Port Congestion Surcharge)
PCS is similar to CNS, charged when ports are congested, causing delays and increased handling costs.
Key Points about PCS:
- Delays: Covers costs associated with delays and additional handling.
- Charges: Applied to shipments passing through congested ports.
- Avoidance: Choosing alternative ports or scheduling during off-peak times can reduce PCS.
EFF (Environmental Fuel Fee)
EFF is a surcharge covering the costs of using environmentally friendly fuels.
Key Points about EFF:
- Sustainability: Supports the use of cleaner, more sustainable fuels.
- Charges: Passed on to shippers as part of freight costs.
- Compliance: Ensures adherence to environmental regulations and standards.
LoLo (Lift On/Lift Off)
LoLo, or Lift-On/Lift-Off, refers to a cargo handling method where cranes lift containers on and off vessels. This method is commonly used in ports that are equipped with the necessary crane infrastructure.
Key Points about LoLo:
- Method: Used for loading and unloading containers.
- Equipment: Involves the use of ship or shore cranes.
- Efficiency: Facilitates efficient handling of containers at ports.
PSS (Peak Season Surcharges)
PSS, or Peak Season Surcharge, consists of additional charges applied during peak shipping seasons when demand is high. These charges help carriers manage increased costs and maintain service levels during busy periods.
Key Points about PSS:
- Demand: Reflects increased demand for shipping services during peak times.
- Charges: Applied to cover additional costs and ensure capacity.
- Planning: Proper planning can help avoid peak season surcharges.
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AWS (All Water Service)
AWS refers to shipping services that transport goods entirely by water without involving land transport.
Key Points about AWS:
- Service: Provides uninterrupted water transport.
- Efficiency: Often more efficient and cost-effective for long-distance shipping.
- Planning: Requires careful planning to coordinate schedules and routes.
ETA (Estimated Time of Arrival)
ETA is the planned arrival time of a ship at a specific port.
Key Points about ETA:
- Scheduling: Helps in planning and coordinating port and inland transport activities.
- Tracking: Allows stakeholders to monitor shipment progress.
- Accuracy: Accurate ETAs ensure smooth operations and timely deliveries.
Tare Weight
Tare weight is the weight of an empty container or packing materials, not including the goods inside.
Key Points about Tare Weight:
- Measurement: Important for calculating the total weight of a shipment.
- Documentation: Must be documented for customs and shipping purposes.
- Calculations: Used to determine net weight and shipping charges.
THC (Terminal Handling Charge)
THC, or Terminal Handling Charge, is the fee charged for handling containers at a port or terminal. This fee covers the costs associated with loading and unloading the containers.
Key Points about THC:
- Charges: Typically included in overall shipping costs.
- Coverage: Covers costs for terminal operations and services.
- Transparency: Ensures shippers are aware of handling costs at the port.
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W/M (Weight or Measurement)
W/M is a method of calculating sea freight based on either weight (in tonnes) or volume (in cubic meters), depending on which is higher.
Key Points about W/M:
- Calculation: Ensures fair pricing based on the most significant metric.
- Efficiency: Helps in optimizing shipping costs and capacity.
- Documentation: Accurate documentation is essential for calculating W/M charges.
Transshipment
Transshipment involves sending an exported product through an intermediate country before reaching its final destination.
Key Points about Transshipment:
- Routing: Allows for more flexible and cost-effective routing options.
- Documentation: Requires accurate documentation for each stage of the journey.
- Planning: Proper planning ensures smooth transshipment processes and minimizes delays.
Comprehensive knowledge of ocean freight terms is crucial for compliance with international shipping regulations and customs requirements.
Stripping
Stripping refers to the unloading of a container.
Key Points about Stripping:
- Process: Involves removing goods from the container.
- Efficiency: Properly planned stripping ensures quick and safe unloading.
- Coordination: Requires coordination with terminal and transport operators.
Stuffing
Stuffing is the process of loading goods into a container.
Key Points about Stuffing:
- Process: Involves placing goods into the container for transport.
- Efficiency: Proper stuffing ensures optimal use of space and prevents damage.
- Coordination: Requires careful planning and coordination with shippers and carriers.
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POD (Port of Discharge)
POD, or Port of Discharge, is the port where goods are unloaded from a vessel. This location marks the final step in the sea transportation process before the goods are transferred to their next destination.
Key Points about POD:
- Documentation: Essential for tracking and coordinating delivery.
- Efficiency: Proper planning ensures quick unloading and smooth operations.
- Coordination: Requires coordination with terminal and transport operators.
POL (Port of Loading)
POL, or Port of Loading, is the port where goods are loaded onto a vessel. This port serves as the starting point for the sea journey, initiating the transportation process
Key Points about POL:
- Documentation: Essential for tracking and coordinating shipment.
- Efficiency: Proper planning ensures quick loading and smooth operations.
- Coordination: Requires coordination with shippers and terminal operators.
POR (Place of Receipt)
POR, or Place of Receipt, refers to the location where the shipper receives the goods for shipment. This location begins the transportation process, ensuring the goods are ready for their journey.
Key Points about POR:
- Documentation: Essential for tracking and coordinating shipment.
- Efficiency: Proper planning ensures timely receipt and processing of goods.
- Coordination: Requires coordination with shippers and carriers.
Federal Maritime Commission (FMC)
The FMC is an independent agency that regulates ocean-borne transportation of foreign commerce and domestic offshore trade in the United States.
Key Points about FMC:
- Regulation: Ensures fair and efficient ocean transportation.
- Compliance: Shippers and carriers must comply with FMC regulations.
- Protection: Protects the interests of shippers, carriers, and the public.
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CFS (Container Freight Station)
CFS is a warehouse where consolidation containers are loaded or unloaded.
Key Points about CFS:
- Consolidation: Facilitates the consolidation and deconsolidation of goods.
- Efficiency: Ensures smooth handling and processing of shipments.
- Coordination: Requires coordination with shippers, carriers, and terminal operators.
Conclusion
Understanding these ocean freight terms is essential for anyone involved in shipping goods by sea. This comprehensive glossary can serve as a valuable resource, helping to simplify the complex processes and improve efficiency in your shipping operations. For any further assistance or inquiries, feel free to contact us.
Contact Information – Eurovan International
For more information or assistance with your ocean freight needs, please contact us at:
- Email: logistics@eurovan-eg.com
- Phone: +201276205619
- WhatsApp: https://wa.me/201276205619
- Address: 5 el-Sheikh kamel Khadr ST– el Safarat distract, Nasr city, Cairo , Egypt
At Eurovan International, we help our clients Navigate the complexities of the many different ocean freight terms. Our experts are ready to help you find effiecient and affordable service.
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Key Takeaways
- The Bill of Lading (B/L) is vital for the receipt and contract of carriage.
- Demurrage and Detention charges are incurred for extended use of containers.
- Duties are taxes on imported or exported goods.
- Inland Transport is critical for moving goods from the port to their final destination.
- TEU is a standard measurement for container capacity.
FAQs
Demurrage charges apply when a container stays at the terminal beyond the free time, while detention charges apply when a container is used outside the terminal beyond the agreed time.
Duty is typically calculated as a percentage of the value of the goods, used to generate revenue and protect domestic industries.
A B/L is a document issued by a carrier, serving as a receipt for goods and a contract of carriage between the shipper and carrier.
