Decoding Logistics Jargon: Understanding Key Terms

May 28,2024

In the world of logistics, understanding industry-specific terminology is crucial for effective
communication and operations. This blog serves as a comprehensive guide to decoding
common logistics jargon, providing clarity on terms like freight and warehousing. From basic
concepts like 1PL, 2PL, and 3PL to more complex terms like Bill of Lading and Cross Dock,
each term is defined and explained to demystify the logistics landscape. Dive into the world of logistics terminology and enhance your understanding of this dynamic industry.

Logistics Jargon Decoded: What do terms like freight and warehousing really mean?

1PL (First Party Logistics): The logistics are taken care of by the company that produces the goods itself.
2PL (Second Party Logistics): Logistics service providers focused on classical logistical tasks such as transportation and warehousing.
3PL (Third Party Logistics): Providers offering logistics services but not carrying them out themselves. They often collaborate with 2PL providers.

Bill of Lading: A written commitment outlining the agreement on freight transport, including
necessary data for execution.

Bonded Warehouse: A secure facility where imported goods can be stored, manipulated, or
processed without payment of import duties and taxes.

Consolidation: Combining various shipments to save on transportation costs, also known as groupage.

Container: A special vessel for transporting cargo, typically 20 or 40 feet long and stackable.

Cross Dock: A cost-effective platform where goods move directly from unloading to loading
docks, reducing transportation and stocking costs.

Dangerous Goods / Hazardous Substances: Materials requiring strict regulation for transportation, classified into nine categories.

Export: Goods produced or designed domestically and shipped abroad.

FCL (Full Container Load): When a party offers enough goods to fill an entire container.

LCL (Less than Container Load): Shipments consolidated by freight forwarders into a single container.

FTL (Full Truck Load): Truck loaded with cargo for transport to a single address.
Freight Forwarder / Shipping Agent: Organizes shipping or transport between the shipper and carrier.

Forwarder / Shipper: Party transporting cargo with a logistics service provider.

Gross Weight of Goods: Total weight of goods to be transported, including packaging.

LTL (Less than Truck Load): Consignment not enough to fill a truck completely.

Multimodal (Freight): Transport using different modalities covered by a single document.

Order Picking: Collecting goods in a warehouse based on a packing list.

Track & Trace: Real-time tracking of shipments using GPS data.

Warehouse: Building for storing goods or performing Value Added Logistics activities.

Shipping Terms:

  • FOB (Free On Board)
  • CIF (Cost, Insurance, and Freight)
  • EXW (Ex Works)
  • DDP (Delivered Duty Paid)
  • DAP (Delivered At Place)
  • DDU (Delivered Duty Unpaid)

Understanding these terms is essential for navigating the logistics industry effectively and
efficiently. Whether you’re a newcomer or a seasoned professional, this guide provides valuable insights into the complex world of logistics terminology

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