Basic Freight Shipping Definitions
The freight industry is full of terminology that's important to understand. Here are some common freight terms and definitions that will be helpful to know for your daily shipping operations.
Accessorial charges: When shipping via LTL or FTL, accessorial charges are the extra fees incurred when the carrier performs additional services or uses special equipment to complete a delivery, or when unexpected or planned delays detain the carrier or require redelivery of the shipment. Common types of accessorial charges are for reclassification, reweigh and inspection; liftgate use; load/unload fee; inside and limited-access delivery; residential and after-hour delivery; and so on. Accessorial charges are often added to an invoice after the shipment is made.
Bill of lading (BOL): Used for LTL and FTL freight shipments, a Bill of Lading is the shipment invoice, or receipt, that serves as a contract between the carrier and the shipper. It includes the shipper's name and contact info, the consignee's name and contact info, details about the shipment (description, classification, dimensions and weight, etc.), and instructions for pickup and delivery.
Blind shipment: A blind shipment is a logistics practice used by LTL shippers for confidentiality purposes, in which the identity and address of the shipper or consignee (or both) are hidden from the other party. Typically, three separate Bills of Lading are created and disbursed — one for the shipper upon pickup; a second for the consignee upon delivery; and a third for the carrier with all the information included when the shipment is booked. Due to the special handling involved, a carrier may charge additional fees for this service.
Carrier's limit of liability (also see shipment insurance): In a freight shipping transaction, carrier liability is the monetary limit the carrier is responsible for if a shipment is lost, damaged or delayed. The maximum stated amount is commonly based on the freight's class, size, condition and packaging. The commodity's retail value is not part of the calculation.
Consignee: In a shipping transaction, the consignee is the party financially responsible for the goods received. Usually, but not always, the consignee is the same person as the receiver.
Dimensional weight: Used for calculating the cost of shipping parcel or freight, the dimensional weight is the amount of space a shipment takes up in relation to its weight. Dimensional weight = length x width x height / 139. To help reduce the cost of your shipment, it's important to use the proper size box or container to pack your items, and avoid creating unused (or empty space) that will unnecessarily increase the cost of shipping.
Dry van: A dry van is enclosed trailer that protects cargo from outside elements. It comes in various sizes but can be no longer than 53 feet. While the trailer is enclosed, it is not temperature controlled.
Flatbed: Typically used for large, long, bulky and oversized cargo, a flatbed truck has no walls and is open to the environment. The standard lengths are between 48' and 53' long.
Freight: A shipment that weighs more than 150 lbs., is larger than 108 inches, or is 165 inches in length and girth, combined.
Full truckload (FTL): The type of freight shipping service for cargo that take up the full space in a truck, either because of its size and/or weight or because the shipper selects direct, single-shipment service.
Less than truckload (LTL): The type of freight shipping service for shipments that do not take up the full space in a cargo truck.
National Motor Freight Classification (NMFC): Every commodity shipped via LTL is grouped by the National Motor Freight Transportation Association into one of 18 categories. Within those categories, the commodity is assigned a standard freight code called the National Motor Freight Classification (NMFC). This code, based on the product's "transportability," is used by carriers to determine the shipment's price. Transportability considers the commodity's density and value, ease of handling, stowability and liability of theft or damage. The lower the class, the lower the pricing; the higher the class, the higher the price. The NMFC also establishes minimum packaging requirements, claim and settlement processing, and the Uniform Straight Bill of Lading.
Partial TL: A shipment that is bigger than less than truckload and smaller than a full truckload is considered partial truckload. It's usually at least 5,000 lbs. or uses six pallets. Because a partial TL shipment is transported by itself in a full trailer, it does not require a freight class to secure a rate.
Reefer: A reefer is an enclosed refrigerated truck that helps protect perishable goods and other temperature-sensitive shipments from outside elements.
Shipment insurance (also see carrier liability): The amount of compensation paid by the insurer to cover all or part of the cost of a shipment in case of loss, damage or delay. The monetary limit is based on the retail value of the goods being shipped, above and beyond the amount covered by the carriers limit of liability.
Transportation management system (TMS): A TMS is an all-in-one logistics platform that is used to streamline and simplify the daily operations of supply chain management.
Volume LTL: Generally, volume LTL is a shipment that is at least 5,000 lbs., takes up at least 20% space in the truck, or uses six or more pallets — however, this is just a size determiner. Pallets are not required for volume shipments. Volume LTL shipping is typically less costly than standard LTL as the carrier charges a reduced rate for the unused portion of the cargo space. It's an attractive pricing practice for shippers whose cargo is not time-sensitive and who are able to wait for volume pricing.
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