If you are new to your role in logistics, welcome! We are glad to have another dynamic colleague in our midst. If you’ve been in the industry for a while, we’re happy you are reading this too. This industry is in constant change, and that means continuously learning is the key to success.
This guide will outline some of the most important terms used every day in your job. As a logistics manager, it’s crucial that you know how to communicate effectively and understand all the jargon commonly used. If you talk the talk, you’re one step closer to a successful logistics career.
What is Logistics Management?
Logistics Management focuses on the daily management of moving a product from point A to point B. The main goal is to allocate the right number of resources at the right time to get the job done as efficiently as possible. It also means that the product arrives at the correct destination in proper condition.
Here’s a briefer definition. Logistics management is finding the most efficient ways to move resources and products to a customer. This is important because customers are increasingly demanding faster and more cost-effective solutions.
The transportation & logistics industry is very dynamic and full of industry-specific terms. As a logistics professional, you need to communicate clearly and with authority. If you are not familiar with the terms and jargon commonly used, you may find yourself in a tough position. Miscommunication can result in costly errors. Don’t let this happen to you!
40 Logistics Management Terms You Should Have in Mind:
Here are some basic terms and acronyms that might come in handy when talking with your customers and colleagues. We hope you will bookmark this blog and come back to it as needed.
1. Accessorial Charges: An additional fee for accessorial services such as liftgate service; residential pickup or delivery; delivery to limited access locations such as jails, churches, and schools; and inside delivery.
2. Actual Time of Arrival (ATA): In the logistics industry, this acronym can also be known as the American Trucking Association.
3. Advanced Shipment Notice (ASN): A document that includes information about a pending delivery and notifies all parties when shipping will occur. It provides all the details so everyone will be prepared to receive it.
4. Auditing: The process where final invoices are double-checked to confirm there are no errors in the rate, weight, and accessorial charges.
5. Application Program Interface (API): APIs provide a procedure for automated data exchange between systems, this allows having instant shipping quotes among many other features in logistics.
6. Bonded: A shipment that has arrived in the U.S Customs but has not yet been paid for (taxes and duty issues).
7. Back Order: The term used when there’s an order for a product, but it’s out of stock or still in production.
8. Bill of Lading (BOL): A required legal document that works as a receipt and contract of freight services. It includes all details needed to process the shipment.
9. Carmack Amendment: The Carmack Amendment is a federal statute applied to motor carriers as a uniform system of liability. This law provides certainty to both carrier and shipper. It was created by Congress in 1935. The Carmack Amendment applies to shippers and carriers, with some exceptions, such as farmers, and other categories.
10. Certificate of Insurance (COI): A COI is a certificate of coverage indicating type of coverage limits, business coverage, policy holder’s name, effective date and other details in force on a particular shipment. This certificate is provided to cover loss or damage while the freight is in transit.
11. Consignee: The final recipient of a shipment.
12. Correction Fee: A fee charged when an incorrect BOL is used, either at the point of pick-up or before pick-up.
13. Delivery Order: A document issued by a carrier that orders the release of a shipment and is used as proof of delivery details.
14. Dock Receipt (Warehouse Receipt): Certification designed to provide proof of delivery and freight conditions. This document is brought by the receiving warehouse, it includes name, contact information, consignee’s information, place, date, time, and any special information for the shipment.
15. Proof of Delivery (POD): This is a document issued by the carrier and needs to be signed by the consignee. This file is the confirmation of delivery and good conditions of the freight received. It’s important to highlight that to submit a claim, you need to have both the dock receipt and proof of delivery at hand.
16. Enterprise resource planning (ERP): An integrated system of business applications covering broad and operational end-to-end processes. ERP systems integrate planning, inventory, sales, marketing, finance, and more. It’s often used to administer the operation of a company, so they can have all the information like inventory and production in one place.
17. Estimated Time of Arrival: This is the time when the shipment is expected to arrive at its destination.
18. Transportation Management System (TMS): A logistics platform to help businesses organize all the information in one place, this brings the possibility of planning, executing, and optimizing the logistics and administrative tasks.
19. Electronic Data Interchange (EDI): Is a protocol that allows two systems to connect with each other and exchange data. With the EDI companies can get quotes instantly when linked with partners.
20. Freight Forwarder: A company in charge of providing logistics services and working as an intermediary between the shipper and the carrier. It is typically used on international shipments.
21. INCOTERMS: A set of 11 internationally recognized rules which define the responsibilities of sellers and buyers. These rules ensure that everyone speaks the same language, help to smooth export transactions, and avoid costly mistakes.
22. Intermodal: The process of a shipment being moved by different types of equipment.
23. Just in Time (JIT): An inventory method to deliver parts and supplies to have the necessary amount of product at the right place and time. This helps to achieve efficiency and save resources.
24. Laid-Down Cost: The sum of the cost of a product plus its transportation expenses.
25. Less than Container Load (LCL): A shipment that is not big enough to fill a container and requires help from other customers to fill that container.
26. Less than Truckload (LTL): A mode of transportation that moves small and medium freight or freight that doesn’t require an entire trailer. To learn more about LTL, click here to download The Ultimate Guide to LTL Shipping.
27. National Motor Freight Classification (NMFC): A tariff containing classifications of commodities, descriptions, and rules for domestic transportation by carriers. These standards are provided by the National Motor Freight Traffic Association and maintained by the Freight Classification Development Council. It groups commodities into 1 of 18 classes, from lower class 50 to higher 500. These classes verify the density, handling, liability, and stowability of freight, among others.
28. Over, Short, and Damaged (OS&D): A report created at the warehouse when a shipment is received with fewer items than what is indicated in the documentation or if the products are damaged. This report is followed by a claim against the carrier.
29. Packing Slip: The document that contains a list of items in a package. The information could include weights, dimensions, SKU numbers, and numbers of units so that the receiver has a complete list of the shipment. A packing slip and packing checklist are the same documents.
30. Pick-up Attempt: A fee charged when a carrier is not able to successfully pick up a load and has already dedicated time and resources in this process.
31. Purchase Order (PO): A commercial document issued by a buyer to place an order and schedule delivery. This document includes a description of products purchased, delivery date, location, and billing address.
32. Radio frequency identification RFID: A tagging system that allows users to identify and track inventory by transferring data. This technology is powered by wireless non-contact use of radio frequency waves.
33. Reconsignment: An extra service that happens when an order already in transit is requested to be re-directed from one delivery place to another. The charge is based on the distance between the original location to the new one. It is important to double-check the shipping information before tendering an order to avoid unnecessary costs.
34. Redelivery Service: Actions taken when no one is available to receive and accept the delivery, the necessary equipment isn’t on site, or the shipment is rejected by the receiver or any other situations that can occur so that a carrier is forced to take back the freight and redo the job. Redelivery charges are one of the priciest accessorial fees because the carrier will spend more time redoing the job and this must be compensated.
35. Reefer: This is the term for refrigerated trucks that can keep the temperature-controlled for the transportation of sensitive freight such as medicine, meat, vegetables, fruits and others.
36. Shipper: A person or business in charge of supplying the product or is the owner of products shipped. The shipper is responsible for the transportation of goods and commodities.
37. Sorting and/or Segregating: When the carrier is required to palletize, sort and/or segregate a shipment or when the driver is required to perform additional handling to complete the delivery such as removal of pieces from pallet, placement of pieces in racks or shelves, transfer of pieces from one pallet to another. For this added labor, a carrier will charge an additional fee to the final invoice.
38. Stock Kept Unit (SKU): A scannable bar code, often seen on products or labels in retail stores. This integrates all information related to the product. The code is an alphanumeric combination of 8 or more characters.
39. Traceability: The act of tracing and verifying the history, location, and current status of a shipment during the shipping process.
40. Warehouse Management System (WMS): The software and processes that assist in managing warehouse processes and activities, including picking, receiving, shipping, and inventory cycle counts. It also allows for real-time data transfer.
And that’s all for today!
These are not the only terms available in the supply chain, logistics, and transportation world. Look out for acronyms and industry slang, among other shortcuts in communicating. Keep learning the ins and outs of the industry to have more knowledge and a better understanding so you can ship your freight efficiently.
We hope this glossary is helpful to you, and we will make sure to keep adding new terms to our dictionary so you can be up to date.