A guide to help you brush up on your logistics jargon
Table of contents
- Bill of Lading (BOL)
- Blind shipment
- Freight classification
- Freight class
- Third-party logistics providers and brokers
- Less-than truckload (LTL)
- Handling of freight
- Truckload (TL)
- Air freight and rail freight
- Shared truckload (STL)
- Intermodal transportation
- Common air and rail freight equipment
- Concluding thoughts
Within the free market, numerous industries work in synchrony to support and supply one another. Local coffee shops and restaurants, which belong to the hospitality industry, work with grocers and distributors that supply them with goods for the general public to consume.
Companies that provide equipment and machinery for commercial as well as industrial purposes comprise another integral part of the supply chain. Even though these entities may appear to stand alone given a cursory glance, they are all links in the extended supply chain that work in harmony to keep the economic machine humming. In short: they all rely on one another.
Generally, we’re familiar with the concept and function of each entity toward the end of the supply chain; that is to say, those closest to the consumer end. We all know that there’s a loading dock toward the back of the restaurant where someone unloads produce before preparing it for consumption. However, we’re far less familiar with the distribution centers that support delivery services and even less familiar with the entities that support them: the freight-shipping industry.
The freight-shipping industry transports every sort of commodity — including cargo, merchandise, equipment, and material — from one place to another, nationally and internationally. We commonly refer to the commodity as “freight”, and the modes of transport are trucks, trains, airplanes, and ships. The process, while relatively simple, takes place on a vast scale before our eyes each day, necessitating unparalleled cooperation and an equally impressive mode of communication. Below are some of the most common freight-shipping terms and abbreviations, along with descriptions of how each one fits into the larger context of the freight shipping industry.
The shipper is responsible for coordinating the outbound logistics of the freight. The consignee is the person that’s paying for the freight service. A shipper is often the consignee, but not always. Everything involved in getting the freight ready to ship falls under the umbrella of outbound logistics.
“Consignee” refers to the party that will pay for freight shipping. Often, the consignee of a shipment is the shipper.
In the industry, shippers commonly store freight in a warehouse until time of shipment, a practice we refer to as “warehousing”. Typically, this is where shippers package freight and the carrier picks up the shipment. Before the cargo is ready for transport, the shipper must first measure the shipment, determine its freight class, and coordinate for any accessorial.
“Accessorials” are any additional steps the carrier must take once the freight has arrived at its destination. This would include deliveries in gated areas, unloading, and so on.
All of this information determines which type of carrier to choose and appears on the Bill of Lading (BOL), the order, or the shipment contract.
Bill of Lading (BOL)
The BOL is a document that provides the driver and the carrier with all the details they need to process the freight shipment and invoice it properly. It includes the amount of freight and an invoice detailing the contents. It also includes the freight class, the PRO number (or tracking number the shipment receives upon pickup), the name of the shipper and receiver, and any specifics for an accessorial. The accessorial includes any other specifics regarding the freight from pickup through delivery. Once the carrier drops off the freight, the BOL acts as a receipt and a report for the receiver.
A blind shipment occurs when the shipper and the receiver are not aware of one another. In such cases, the BOL lists the party that paid for the shipment as the shipper or receiver of the freight.
“Embargo” generally refers to any event that prevents someone from accepting or handling freight. Typically, embargos come into play due to international conflict, but may also result from weather events — such as floods and tornadoes — and other occurrences, like congested highways. The BOL accounts for all of these exceptions and complications.
The industry determines freight class according to a formula that takes into account many different factors. The size (weight, length, height), density, value, stow-ability, handling, and liability of the freight are the most important factors in determining freight class.
There are 18 different freight classes that range from Class 500 to Class 50. Freight classification is a specialized skill within the industry and is only really relevant if a shipper is considering using a less-than truckload (LTL) carrier. As defined below, LTL carriers specialize in small shipments.
NMFTA and NMFC
The National Motor Freight Traffic Association (NMFTA) defines freight classes and makes them available through the National Motor Freight Classification (NMFC). In other words, the NMFTA created the different classes of freight, and shippers use the NMFC’s standardized formula to assess the class of their freight.
Examples of Freight Class
- Class 500: For freight that weighs less than one pound per cubic foot (ping pong balls or bags of gold dust). This is the most expensive freight class.
- Class 92.5: For freight with a weight that ranges 10.5-12 pounds per cubic foot (computers, monitors, refrigerators).
- Class 55: For freight that weighs 35-50 pounds per cubic foot (bricks, cement, hardwood flooring).
Third-party logistics providers and brokers
Third-party companies have built an industry of their own, acting as intermediaries between shippers and carriers. Their customers are the shippers themselves, and they profit by managing contracts amongst a network of different carriers. These companies are tapped into a much broader network of carriers than typical shippers have access to, so they can save shippers time and resources by acting as intermediaries.
The larger and more established the shipping company, the less likely it is to use a third party. Larger and more established companies often facilitate this function in house, prioritizing their own carriers.
The shipper handles the outbound logistics of the freight and pairs the shipment with the right carrier for the job. The shipper may use a freight broker to find the carrier.
Types of Carriers:
Less-than Truckload (LTL)
An LTL carrier will haul as many freight orders as it can manage and deliver them in whichever order best suits the journey. LTL carriers essentially carpool freight. Depending on the freight class, LTL is often the cheapest option for shippers. However, this method also tends to have the longest linehaul of all carriers.
A “linehaul” refers to the route of the freight or the “line” of transportation. Since most carriers charge a specific fee per mile of transport, they use linehaul mileage to calculate the rate. The linehaul from Los Angeles to Albuquerque, for instance, is approximately 800 miles.
Considering LTL for freight shipping
A shipper would consider using an LTL carrier for freight that meets the following conditions:
- The load is not large enough to require its own truck.
- The load is not fragile enough to require special handling.
- There’s no time-critical or time-definite restriction on the freight.
- Time-critical: The shipper sets delivery to the earliest possible time to accommodate particular shipping requirements.
- Time-definite: A guarantee that the delivery will occur on a specific day or at a set time of day.
- Transit time: The total amount of time from pickup through delivery.
Linehaul of a LTL
An LTL driver typically collects all freight shipments from a general area and then returns back to a “hub”, or place of business, where he or she unloads all the freight, sorts it by its destination, and loads it once more on to a different truck. We refer to freight that moves within a city as “cartage”.
The transfer of freight from one carrier to another is called an “interline”.
An interline occurs when the initial carrier of a freight shipment transfers the load to another carrier during transit. This can mean a transfer from truck to truck or a transfer from truck to rail. When an LTL driver returns to his or her designated hub, he or she transfers the freight from one carrier to another.
The term “carrier” can get a little confusing. An LTL carrier is a company that offers LTL service. Each truck performing an LTL service is also called a “carrier”.
Common LTL equipment
LTL drivers most commonly transport freight that can fit on pallets, stack, and compress. A driver should also be able to shift LTL freight. Due to the variety of the freight onboard, LTL trucks are usually dry vans. A dry van could be confused with an extra-long semitruck.
Another common type of equipment the industry uses across the board is an air ride. An air ride entails suspension that attaches to all sorts of carriers and is good for less bumpy transit.
Handling of freight
To maximize the space available on an LTL truck, drivers nest or stack different orders of freight inside each other and often secure them in the truck with wooden planks or ropes, a process known as “blocking and bracing freight”.
Bulk freight includes freight such as raw materials, commodities, or unpackaged goods. LTL carriers do not usually carry bulk freight since they specialize in shipments that move around often, which usually requires packaging. However, there are always exceptions.
LTL companies carry all types of freight, including hazardous materials. All employees who handle this type of freight must have a Hazmat Certification.ha
“Hazmat certification” stands for “hazardous material certification”.
A truckload (TL) carrier is a company that offers a pickup and drop-off system for freight that requires its own truck.
A shipper would consider using TL for their freight shipment under the following conditions:
- The load is large enough to require its own truck.
- The load is fragile enough to require special handling.
- Time-sensitive shipment: The shipment has time-critical or time-definite restrictions.
Since there is only one freight shipment on each truck, TL companies can offer services that other carriers cannot.
TL carriers can cater to the fragility of freight. If the freight requires a lot of space, air conditioning, bubble wrap, and so on, a TL carrier can accommodate it.s
Seal or no-touch service
“No-touch” means no one handles the freight (once it’s on the truck) until it has reached its final destination.’ TL carriers can also provide a “sealed trailer” by placing a seal over the doors (once the freight is onboard) as a guarantee that no one will handle the shipment until the end of the linehaul.
Linehaul of a TL
TL shipping usually involves a direct linehaul. This means that the freight travels directly from Point A to Point B. If a shipper is in a time-sensitive situation, TL service can guarantee the fastest route.
Common TL equipment
Not all TL freight can fit through double doors or load from the back of a truck. There is a variety of equipment that meets the needs of this sort of freight.
- Reefer: A “reefer” is the industry’s term for a refrigerated truck. If the carrier must keep freight (like food) cool during transit, the company will use a reefer.
- Flatbed: A “flatbed” is a flat and open-bed trailer that attaches to the head of a truck. The industry most commonly uses a flatbed for shipping large manufacturing and construction equipment that must load from the side or from up above.
- Step deck or drop deck: These look similar to a flatbed except that their beds (or decks) are closer to the ground. By being lower to the ground, these decks give more room for taller freight. Step decks and drop decks prove handy for compliance with regulations that dictate allowed truck heights.
- Container: A “container” refers to a large storage unit, like the ones you see stacked on cargo ships. They look like truck trailers (the body of a truck) with no wheels. They’re best for cargo that travels truck-rail-truck or requires more than two modes of transportation.
Air freight and rail freight
A shipper would consider using air freight or rail freight for orders that travel cross-country or internationally. Most freight shipments that move by ocean, air, or rail are part of intermodal shipping that involves LTL or a TL service to deliver the cargo to the next mode of transportation.
A freight mode that enables several shippers to share trailer space in one multi-stop full truckload.
Use shared truckload when your freight is:
- Time-sensitive or fragile
- Up to 44 linear feet of trailer space, four to 24 pallets, and less than 36,000 pounds
- Too large for LTL, but too small to fill a whole trailer
Intermodal transportation occurs when freight moves with two or more modes of transportation. Typically, it refers to truck-rail-truck shipments, but may also include truck-to-air or truck-to-boat shipping.
For example: An LTL carrier drops off some freight at a warehouse. That warehouse was waiting for this freight to send the complete order to Montreal. Now that the warehouse has its full order, a TL carrier picks up the completed shipment and loads it into a container. The TL carrier then drives the container to a train station for loading onto the train.
Common air and rail freight equipment
A “container” refers to a large storage unit, like the ones you see stacked on cargo ships. They look like truck trailers (the body of a truck) with no wheels.
This is a rail shipping term that refers to a frame with wheels on which a container mounts for over-the-road transport.You could compare it to a flatbed trailer that attaches to a truck, except this one attaches to a train.
A rail shipping term that refers to a frame with wheels and locking devices to secure a container during shipping.
The receiver is responsible for all inbound logistics of freight. Receivers act as the counterpart to shippers on the other end of the supply chain. In many cases, the receiver is a local distribution center that services the businesses in a particular area from day to day, but may also be an individual company. Receivers inspect shipments and add them to inventory, completing the freight-shipping, barring the event of a backhaul.
A “backhaul” refers to re-loading new freight onto the same truck that recently delivered an order. This new haul loads and then travels back to the previous load’s origin; in other words, a backhaul takes a new shipment from Point B to Point A. Often, carriers will offer a discounted rate for backhauling in order to avoid an empty trailer. Not only is this process time-efficient, it’s also a financial win for all parties since the carrier recoups travel costs on an otherwise empty haul and shippers save on costs for these particular loads.
While the concept of freight-shipping itself — moving large shipments of goods from point A to point B — may not be particularly complicated, the logistics of doing so most certainly are. Those who wish to utilize such services must become familiar with the various functions of freight shipping and the associated terminology in order to manage the process efficiently and keep business moving.
For a complete list of terms, check out our Freight Dictionary.