The ABCs of supply chain: Your go-to glossary of logistics terminology

Bookmark this glossary of logistics terminology to feel better equipped to make decisions that make customers happy and support your business’s bottom line.

The logistics industry can feel like an alphabet soup of acronyms. Especially when you’re moving between different specialties, like trucking and importing, for example, logistics terminology is highly specific and can be a little confusing to keep track of.

To make sure you’re always fluent in the language of logistics, bookmark this guide. By knowing these key definitions, any logistics pro is better equipped to make decisions that support your customers and your business’s bottom line.

We’ll start with a list of the most common logistics industry terms. Then you’ll find sections for important logistics terms in transportation, 3PL and warehousing, and trade.

General Logistics Terms

Anti-competitive activity

Anti-competitive behavior is an important concept in logistics for many reasons. It includes dumping (when a country or company sells products at a loss to drive away competitors), price fixing (when companies agree to set higher prices together to prevent competition from lowering prices), and government subsidies (that allow a company or industry to operate at a loss, preventing competitors from entering the market). Several government agencies discussed in this article regulate anti-competitive activity in the logistics industry.

API - Application Program Interface

APIs are critical to automating information exchange, which is transforming the logistics industry. APIs provide a structure for data exchange between systems. For example, a fulfillment center that automatically updates an ecommerce store’s inventory uses an API to exchange inventory information.

B/L or BOL - Bill of Lading

A document issued to a shipper which contains details about the method and destination of a shipment, plus basic information about the contents. A BOL can act as a receipt for the cargo and can be used as proof of ownership or authority to pickup and deliver.

CFR - Code of Federal Regulations

The US government’s comprehensive list of laws and rules. The CFR is divided into 50 chapters (or “titles”) that represent broad areas of federal regulation. Title 49 deals with transportation.

Cradle the Grave

Model of operations where operators or agents own all communications related to a shipment.

DimWt - Dimensional Weight

Also called “volumetric weight,” DimWt is a measurement of weight that is estimated based on a package’s length, width, and height.

EDI - Electronic Data Interchange

The electronic exchange of information that was transmitted on paper in the past. The UN has developed EDI standards known as EDIFACT (Electronic Data Interchange for Administration, Commerce, and Transport), which provide a standard set of syntax rules to structure data.

ERP - Enterprise Resource Planning

ERP generally refers to the software- and tech-assisted integrated management of business processes. Resources and commitments are tracked to more efficiently allocate resources and meet obligations. Adoption of logistics-specifics ERP software is becoming more common as automation makes it easier to track physical goods in real time across multiple locations.

FMCSA - Federal Motor Carrier Safety Administration

FMCSA regulates safety in trucking in the United States, including safe working hours and conditions for truck drivers.

GRI - General Rate Increase

An amount by which ocean carriers increase their base rates due to increased demand.

HAWB - House Air Waybill

A receipt issued by a freight forwarder for goods. It differs from an AirWay Bill in that the freight forwarder does not own or operate the aircraft.

HazMat - Hazardous Materials

Any item or chemical which, when being transported or moved in commerce, is a risk to public safety or the environment, and is regulated as such under its Pipeline and Hazardous Materials Safety Administration regulations (49 CFR 100-199).

INCO - International Commercial Terms

The INCO, or Incoterms, are published by the International Chamber of Commerce; they define the rights and responsibilities of each party to a sales contract. They clarify when the legal possession of goods transfers from buyer to seller.

Supply Chain

Supply Chain refers to the steps in the life cycle of a product’s design, manufacture, transport and sale. These might be factories, freight forwarders, customs brokers, fulfillment warehouses or trucking companies.

Transportation Terms

ACAS - Air Cargo Advanced Screening

ACAS requires that information on a shipment’s contents be filed with US Customs before being shipped by air from foreign locations.

AOBRD - Automatic On-board Recording Device

A device on a vehicle that tracks driving time based on Federal Motor Carrier Safety standards.

AWB - Air Waybill

A document issued by an airline or freight forwarder when goods are shipped by air.

CMV - Commercial Motor Vehicle

Defined by FMCSA as any vehicle that transports goods or passengers for payment. CMV’s are subject to registration and inspection requirements and there are detailed regulations for CMV drivers.

ELD - An Electronic Logging Device

An ELD shares some functionality with an AOBRD, but a change in FMCSA rules will require all commercial vehicles to have a registered ELD by December 16, 2019.

FAA - Federal Aviation Administration

The FAA regulates civil aviation, including flight traffic and aircraft safety regulations. The FAA also develops programs to improve the efficiency and security of air traffic with technology.

FCL - Full-Container Load

A full shipping container, regardless of size, consigned to a single party.

FMC - Federal Maritime Commission

The FMC protects the public from unfair and deceptive trade practices by regulating ocean shipping rates, licensing carriers, providing dispute resolution services, and maintaining ocean freight rate databases.

IATA - International Air Transport Association

The IATA issues rules and guidance for transporting goods by air internationally.

LTL - Less-than Truckload

A common logistics acronym that refers to shipments smaller than a whole truck load, from single boxes through multi-pallet shipments.

MAWB - Master Air Waybill

The main airway bill issued for receipt of goods from an airline. The MAWB may cover several HAWBs (House Airway Bills) issued by a freight forwarder.

NVOCC - Non-Vessel Operating Common Carrier

A shipping company or freight forwarder that has the ability to issue house bills of lading but does not actually own the vessels that transport the goods.

SCAC - Standard Carrier Alpha Code

The SCAC is a code used to identify transportation companies. It was developed by The National Motor Freight Traffic Association in the 1960s to help computerize road transport companies’ records and data.

TEU - Twenty-Foot Equivalent Unit

Cargo capacity is often described in terms of 20-foot shipping containers for measuring ships, ports, and trade data. While cargo is often shipped in larger containers, TEU is the standard base measurement for cargo.

TMS - Transportation Management System

A subset of supply chain management that often connects an ERP with legacy transportation management systems. Software offerings range from traditional license purchases to SaaS or cloud-based options, and combinations of the two.

3PL & Warehousing Terms

3PL - 3rd Party Logistics

Providers of outsourced services like warehousing, distribution, and fulfillment; increasingly common in the logistics industry as businesses specialize their core functions and turn to 3PL vendors for more efficient product handling.

ABC - Activity-based Costing

A costing method where overhead costs are distributed across tasks and considered a direct cost.

CFS - Container Freight Station

A warehouse where freight shipments are consolidated or subdivided between segments of the supply chain. They are generally located near a port and are often Customs-bonded. Shipments are handled in CFS’s prior to import, which is important for LCL/LTL shipments (jump down below for LCL & LTL definitions).

DP - Demand Planning

Demand planning is forecasting demand for a particular service or product so that it can be manufactured and delivered when a customer needs it. It allows lower lead times and a better use of resources.

EAM - Enterprise Asset Management

At a large scale, technology makes it possible to keep track of the location, journey, and destination of huge numbers of goods. Enterprise resource management involves gathering and manipulating data to track and plan assets across huge organizations and networks.

FIRMS Code - Facilities Information and Resources Management System Code

A FIRMS code is a four-digit code assigned by US Customs to Container Freight Stations, Bonded Warehouses, or Foreign Trade Zones. This code identifies the warehouse in AMS (Automated Manifest System) transmissions.

FTZ - Free Trade Zone and Foreign Trade Zone

FTZs are a geographic area, warehouse or factory where goods may be delivered, stored, handled, manufactured, or reconfigured, and then re-exported without customs duty. Goods that undergo a tariff change while in the FTZ can be imported into the domestic market at the new tariff rate.

OS&D - Over, Short, and Damaged

When goods are received damaged or in quantities smaller or larger than expected, the receiver can file an OS&D report.

RFID - Radio Frequency Identification

Radio-frequency identification uses electromagnetic fields to track tags placed on objects. The tags contain stored information that can be used to identify what has been tagged.

RL - Reverse Logistics

Reverse logistics is the handling of goods that are moving backwards on the normal supply chain. This can include everything from recycling to customer returns.

UPC - Uniform Product Code

Standardized global identifiers that allow products to be tracked through the supply chain across buyer and seller accounting and distribution systems.

WMS - Warehouse Management System

Software applications that allow for the automation and optimization of warehouse, distribution, and fulfillment logistics.

Trade Terms

ABI - Automated Broker Interface

A system that allows brokers and other qualified participants to automatically file import data with US Customs.

ACE - Automated Commercial Environment

A new system being implemented by Customs to track and control the imports and exports across US borders.

ACS - Automated Commercial System

A tool used by Customs to monitor goods as they’re imported into the US.

AD - Anti-dumping

A tariff placed on a specific product, or group of products, in response to anti-competitive behavior by a foreign country. Recent examples of products with anti-dumping tariffs include types of cast iron from China, certain decorative ribbons from India, and steel rebar from Poland.

AMS - Automated Manifest System

An electronic information transmission system run by US Customs & Border Patrol. Air and ocean freight shipments must be filed in the system with details about the shipment’s contents.

CBP - U.S. Customs and Border Protection

The US CBP is responsible for oversight of people and goods crossing US borders.

C/I or CI - Commercial Invoice

The final bill for charges due on a shipment of goods. CIs are used to clear Customs by providing the total cost on which duties will be assessed.

C/O or COO - Certificate of Origin

A statement that tells where goods were manufactured; C/Os are used when applying for duty-free entry on imports from countries which US has trade agreements with.

CIF - Cost, Insurance, and Freight

CIF means that a seller is providing the goods, their transportation, and insurance for the cost paid by the buyer. Other costs, including import and local delivery, are the responsibility of the buyer. Those who imports goods from China are often familiar with this term. New importers should use caution, as foreign manufacturers may give the impression that CIF includes all costs.

COGS - Cost of Goods Sold

The direct costs of manufacturing a product, not to be confused with overhead, marketing, or logistics costs.

CPSC - Consumer Protection & Safety Commission

A US government agency that regulates product safety. The agency provides tools so companies can find out which CPSC requirements affect their products.

C-TPAT - Customs-Trade Partnership Against Terrorism

A logistics security program run by CBP. Companies that meet program requirements for anti-terrorism measures can opt to be certified as low risk, which comes with shorter customs clearance times and fewer cargo inspections.

CVD - Countervailing Duties

Taxes placed on imported products based on World Trade Organization rules to reduce the impacts of foreign government subsidies.

DAD - Delivery Authorization Declaration (Customs)

DAD is Customs Form 3461, which is required for goods to be removed from a Customs-bonded facility.

FCPA - Foreign Corrupt Practices Act

A US law that requires accounting transparency and prevents US nationals from bribing foreign officials.

FTC - Federal Trade Commission

The FTC regulates trade to prevent anti-competitive or deceptive advertising practices. Packaging for most consumer products is regulated by the FTC.

FOB - Free on Board

An INCOterm that means the cost paid by the buyer includes the product, cost of delivery to the export warehouse, and export costs. Transportation, insurance, import, and delivery charges are the responsibility of the buyer.

FSIS - Food Safety Inspection Service

The United States Department of Agriculture provides the The Food Safety and Inspection Service, which is responsible for ensuring that the United States' commercial supply of meat, poultry, and egg products is safe, wholesome, and correctly labeled and packaged.

GATT - General Agreement on Tariffs and Trade

An attempt by many countries around the world to create a legal framework to eliminate barriers to trade and commerce by reducing tariffs. GATT was started in 1948 and led to the creation of the World Trade Organization in 1995.

ISF - Importer Security Filing

An electronic document that must be filed before a vessel or aircraft departs. It lists information about the shipment. Failure to file correctly can result in a $5,000 fine. It is also called 10+2 because there are ten pieces of information needed from the importer or supplier and two from the carrier.

MID - Manufacturer Identification Code

A unique number issued by CBP to each manufacturer of goods imported into the United States. This number is used by Customs for electronically processing customs forms.

MPF - Merchandise Processing Fee

A fee charged by customs (0.3464% of the cargo’s value) for most goods imported into the US. This fee is charged regardless of the duty rate of the goods.

VAT - Value-Added Tax

A type of tax used by many countries outside the US. Taxes are assessed on sales of most goods and services within a country and on some imports. VAT is paid by the seller to the government. Some people favor VAT as a way to make taxation reflect spending. Others object to VAT as a system that taxes the lowest-earning buyers proportionately higher than wealthier buyers.

WTO - World Trade Organization

In 1995, the WTO replaced GATT as the intergovernmental organization that handles trade between nations. It oversees and implements international economic agreements and handles disputes.

“Trade isn't about goods. Trade is about information. Goods sit in the warehouse until information moves them.”

― CJ Cherryh

Information is key when you’re supporting customers and making important business decisions. We hope this guide to logistics terminology can help you feel prepared to do your best work.

Source: https://front.com/blog/logistics-terminology

Writer: Andersen Yu