There are many specific terms and abbreviations in the transportation industry and freight shipping, in particular. For people who are new to this area and know little to nothing about shipping, these terms are often confusing and difficult to understand. Freight shipping is a complex subject, and you should understand the main principles of international transportation to get a grasp on the meaning of some terms.
There are many acronyms that seem confusing, so many people have a hard time trying to understand which terms are actually useful and important, and which are insignificant. In this article, we decided to provide you with a list of the most important terms in freight shipping so that you can focus on the crucial information without wasting your time trying to memorize something irrelevant.
Why Do We Need Abbreviations
First, it’s easy to confuse such things as logistics, transportation, and freight forwarding. These terms might be used in different contexts while mainly meaning the same things. Why do we even need so many terms when talking about such a simple subject as transportation? The truth is that transportation isn’t simple, even if you know something about this industry. If you’re new to it, it gets even more difficult to understand the difference between some terms.
Nathan Ross, a linguist, educator, Ph.D. at San Jose State University and contributor at LegitWritingServices says: “Abbreviations and other terms are used for many reasons, and the main reason is that they help cover a big spectrum of meanings. They serve as a tool that helps establish standard terms that can be used in different parts of the world and with different languages. However, these terms can also create difficulties when communicating with other areas of the business world.”
The Language of Freight Shipping Is Difficult
The main challenge is not that this industry has its own language or that it uses many abbreviations. The problem is that the industry needs to have constant communication with other sectors. Sellers and buyers of different products, as well as banks, governments, and many other people who participate in international activities are involved in the communication with the transportation industry.
It’s impossible for people from the transportation industry to expect everyone else to understand all the terms and expressions. Moreover, when talking to people from the outside of this area, the success of the conversation depends on an understanding of all the aspects of each particular operation. Therefore, there’s no surprise that specific terminology often makes people feel frustrated.
Ineffective communication makes people spend more time trying to figure out important issues. As a result, many problems that require immediate action remain unsolved. Unfortunately, poor service and an inability to fulfill promises are common issues in freight shipping and international transportation, in general. One of the main reasons for such a situation is ineffective communication. Therefore, complex terms and abbreviations have a negative impact on the reputation of logistics and transportation, in general.
The Most Important Freight Shipping Acronyms
1. NMFC (National Motor Freight Classification)
NMFC is a very common acronym that stands for National Motor Freight Classification. This classification system includes categories of freight created by the National Motor Freight Traffic Association (NMFTA). Different types of freight have different NMFC codes. These codes determine shipping charges. There are 18 freight classes in total. Class 50 is the least expensive, and class 500 is the most expensive of them. Shippers should accurately determine the class of their freight to avoid any adjustments.
2. EDI (Electronic Data Interchange)
Electronic Data Interchange is a complex term but it can be explained in a simple way. Simply put, EDI is a business-to-business system that connects computers to enable companies to exchange the necessary documents quickly. For example, in freight shipping, businesses often exchange tracking information, invoices, and bills of lading. Thanks to EDI, carriers can get notifications about pickup requests and invoice details.
3. BOL (Bill Of Lading)
This acronym refers to the legally binding and mandatory paperwork that provides the trucking company and its drivers with the necessary information so that they can process the shipment. The Bill of Lading is basically an invoicing receipt in freight shipping. It includes a lot of important information, such as the freight class, shipping address, description of products, packaging type, etc. Companies should make sure that their BOL is accurate because it’s one of the most important documents in freight shipping. If your BOL contains errors, you may have to deal with delays, additional charges, and other problems.
4. DV (Declared Value)
As we’ve already mentioned above, the class of freight determines shipping charges. However, shipping charges also depend on many other factors, including DV, the declared value of your shipment. This is a value reported by the shipper which not only influences the shipping charges but also helps limit carrier liability for loss and damage.
5. FOB (Free On Board)
This is a designation that indicates that the ownership of products and liability is transferred from a seller to a buyer. This designation often includes a physical location so that it will be easy to determine which party is supposed to pay freight charges. It also helps understand at what point the shipment has passed from the seller to the buyer.
We hope that these acronyms will help you better understand the freight shipping terminology so that you won’t get confused when dealing with transportation documentation. Although people who are new to the transportation industry often have problems with some terms and acronyms, the main thing is to understand the main steps of the shipping process.