Basic Logistics terminology

If you are a developer and not having logistics domain knowledge, here are some basic terms that are used in a typical OTM Implementation projects that you might need to understand:

Supplier: Supplier/Seller is a party who will receive the Purchase Order from your company(Buyer) and either manufactures the items or procures from another third party vendor and ships them to your company warehouse. 

INCOTERMS: These are terms between buyer and seller of goods that specify -  at what shipping point(location) buyer would take the responsibility of the goods(freight) from the supplier. For example term 'FOB'(Free on Board) refers to Buyer taking responsibility once the Seller loads the items into the truck/vessel shipment arranged by the Buyer.

Carrier: Carrier is the service provider(SP) for freight movement from one location to another. These are transportation service companies that typically own transportation equipment like trucks, cargo planes, vessel ships, etc. Each carrier has four letter SCAC code (Standard Carrier Alpha Code) that is used on all the shipping documents.

Bill of Lading (BOL): BOL is a document issued by carrier to the party from whom goods are picked up. This is like a receipt issued by carrier stating they received the goods for transport. Carrier will then be responsible to ship the goods to the destination location specified by receiving party.

Consignee: Consignee is the party receiving the freight.

3PL: Third Party Logistics(3PL) company is a party to which transportation services are outsourced by the Buyer. Buyer sends a purchase order(PO) to Supplier and approved PO to 3PL company. 3PL company then co-ordinates with Supplier in collecting the goods, consolidating them with other freight(if any), negotiate cheaper rates with carriers, and ships them to Buyer. Once shipment is delivered, 3PL company would send freight invoice  to Buyer and Buyer will settle the amount with the 3PL and 3PL would send payments to carriers who provided the services.

Inbound Shipping: This refers to movement of goods from suppliers to company maintained warehouses.

Outbound Shipping: This refers to movement of goods from company maintained warehouses to customers or another warehouse.

Carton : Carton is a cardboard box where you place the individual items for shipping

Pallet/THU : Pallet or Transportation Handling Unit is the flat wooden structure you see in any warehouse where the cartons/items are placed and moved from one point to another point within the warehouse. They are also loaded/unloaded directly from a truck.

SKU: Stock Keeping Unit refers to individual items that go in boxes(Cartons).

NFMC: National Motor Freight Classification codes are assigned to items being transported to estimate accurate freight costs across the industry.

Shipping Container: Container is the large re-usable steel box that you see on the trailer of a truck which holds all the cartons/pallets. Intermodal freight containers are the boxes with standard dimensions defined by international standard ISO 6346. Term 'Intermodal' means that same container sealed at source location can go on various transport modes like OCEAN VESSEL, TRUCK, RAIL, etc before it reaches destination location.

TEU/FEU: Twenty-foot Equivalent Unit, Forty-foot  equivalent units are used to measure vessel load or capacity in units of containers. For example a 3PL company might request an OCEAN carrier to reserve 2000 TEU space on their next voyage/vessel.

Reefer:  A refrigerated container that might be required to transport perishable goods like food and beverages, medicine, etc. These Reefer equipments or containers are classified by temperature ranges.

TL/FTL: Truck Load or Full Truck Load is when carrier arranges complete truck for a single customer from one point to another. TL shipments are charged usually by distance and size of the equipment.

LTL: Less than Truck Load is when carrier reserves only partial space/weight in the truck for each customer based on the freight that needs to be shipped for each customer. Customers will be charged by weigh/volume for these LTL shipments.

PARCEL: Parcel is transport mode typically used for boxes that weigh less than 150 LB. They are shipped individually and tracked with Tracking Number provided by the carrier on receiving the package. Example : UPS and FedX packages.

Pro Number:  Progressive number is assigned to TL/LTL shipments for tracking purpose. It is similar to UPS/FedX tracking number.

DRAYAGE: Drayage refers to movement of freight over short distances like port to truck pickup location, etc. Drayage freight charges are usually paid in local currency.

Demurrage/Detention: These are penalty charges levied by Carrier on the consignee for holding the transportation equipments(containers, trailers, etc) at the Carrier facility longer than negotiated time period.

Stopoff Charges: These charges are levied by carrier on the shipper if they request to unload/load the freight at various stops(locations) between source and destination locations.

Diversion : Diversion refers to changing the destination location by the shipper/3PL company while freight is in-transit. They will notify the carrier prior to arrival of freight at the destination location.

Loading Dock : These are doors in the warehouse that would align with back door of the trucks so that items can be loaded/unloaded from the staging area(near the docks).

Yard: Yard is a parking area for containers in the warehouse with rows and columns(slots). Containers coming from a port to warehouse might be initially parked in the "Yard Slot" and later moved to the "Dock door" based on availability of the "Dock door" or resources for loading/unloading the items.

CY/CY: Move type Container Yard to Container Yard

FCR: Forwarder's Cargo Receipt: Document issues by freight forwarder to shipper upon receipt of cargo.  This is also referred to Forwarder's Certificate of Receipt.