Shipping terms, explained
The words that come up in freight and trade documents, in plain language.
- Bill of lading (B/L)
- A document issued by the carrier for cargo at sea. It is a receipt for the goods, evidence of the contract of carriage, and, in its negotiable form, a document of title: whoever holds it can claim the cargo.
- Breakbulk
- Cargo loaded piece by piece, such as steel, machinery or bagged goods, rather than in containers.
- CBM
- Cubic metre, the usual unit of volume for sea freight.
- Certificate of origin
- A document that states the country where goods were produced. Buyers and customs use it to apply the right duty and trade rules.
- Charter party
- The contract between a shipowner and a charterer for the use of a vessel.
- Commercial invoice
- The seller's invoice for the goods. Customs uses it to value the shipment.
- Contract of affreightment (COA)
- An agreement to carry a set quantity of cargo over a period, in several shipments, without naming each vessel in advance.
- Dangerous goods (DG)
- Goods that can harm people, vessels or aircraft, such as flammable liquids, gases or batteries. They travel under the IMDG Code by sea and the IATA Dangerous Goods Regulations by air.
- Demurrage
- Money owed to the shipowner when loading or discharge takes longer than the laytime allowed. For containers, it is the charge for keeping a container in the terminal beyond the free time.
- Detention
- The charge for keeping a carrier's container outside the terminal beyond the free time.
- Discrepancy
- A difference between the documents presented under a letter of credit and the terms of the credit. A discrepancy can delay or stop payment.
- FCL (full container load)
- A container used by one shipper for their cargo alone.
- HS code
- The Harmonized System number that classifies a product for customs. The first six digits are shared internationally; countries add more digits of their own.
- Incoterms 2020
- Rules published by the International Chamber of Commerce that set out which party, seller or buyer, pays for and takes the risk of each stage of delivery. There are eleven rules. For any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP. For sea and inland waterway only: FAS, FOB, CFR and CIF.
- Laycan
- The window of dates within which a chartered vessel must arrive to load. Short for laydays and cancelling.
- Laytime
- The time allowed in a charter for loading and discharging the cargo.
- LCL (less than container load)
- Cargo that shares a container with other shippers' cargo. You pay for the space it takes.
- Letter of credit (L/C)
- A bank's undertaking to pay the seller when the seller presents documents that comply with the terms of the credit. Most are issued subject to the ICC rules known as UCP 600.
- Out-of-gauge (OOG)
- Cargo too large to fit inside a standard container, often shipped on flat racks or open tops, or as breakbulk.
- Packing list
- A list of what is in each package, with weights and dimensions.
- Reefer
- A refrigerated container that holds cargo at a set temperature.
- Ro-ro (roll-on/roll-off)
- Shipping for wheeled cargo, such as cars, trucks and machinery, driven on and off the vessel.
- Sea waybill
- A non-negotiable alternative to a bill of lading. The named consignee can collect the cargo without presenting an original document.
- Time charter
- A charter in which the charterer hires the vessel for a period and pays hire by the day.
- Voyage charter
- A charter in which the shipowner carries a cargo on one voyage for freight paid per tonne or as a lump sum.
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