7 Key Freight Shipping Acronyms Explained
Logistics is a big business, full of intricate, intertwining parts that work together to facilitate the movement of goods and services. It also has a vast vocabulary!
The logistics industry encompasses numerous terms and definitions, which can be challenging to grasp for first-time shippers. It’s important to familiarize yourself with these terms to navigate the industry effectively. Here are 7 commonly used freight transportation terms (known by their acronyms) you must know.
Freight Transportation Terms and Shipping Acronyms
1. 3PL: Third-Party Logistics
A third-party logistics company (3PL) is an outsourced organization that provides freight brokerage, warehousing, distribution, and other supply chain services. They act as intermediaries between carriers, shippers, and consumers, coordinating the transportation and delivery of freight efficiently. Businesses that outsource to a 3PL provider do so to streamline operations and reduce costs, allowing them to focus on their core objectives.
2. FTL (or TL): Full Truckload
Full Truckload (FTL or TL) is a shipping option where an entire trailer is dedicated to transporting one customer’s goods from one location to another. The truck is not shared with other customers, so the driver only makes two stops for pickup and delivery. This makes FTL ideal for transporting large, bulk, or oversized shipments. Typically, an FTL trailer load must weigh above 15,000 lbs, although lighter-weight goods can also be transported via FTL if the shipper specifies.
3. LTL: Less-than-truckload
Less-than-truckload (LTL) is another type of shipping option but for smaller shipments. An LTL trailer transports multiple shipments from different customers in the same trailer. This allows customers to share the price of the trailer, reducing shipping costs. LTL shipments must be above 150 lbs, the maximum weight parcel carriers like FedEx or UPS can deliver, and no more than 15,000 lbs.
4. BOL: Bill of Lading
The Bill of Lading (BOL) is a necessary document for freight shipping. It includes details about the carrier and driver, shipping costs, a description of the items being shipped, and the names and addresses of the consignee and shipper. The BOL is crucial as it serves as an invoice and proof of identification. When you’re ready for pickup, remember to provide the carrier with a copy of the BOL, as the driver will only accept your freight with it.
5. NMFC: National Motor Freight Classification
National Motor Freight Classification (NMFC) is a system made of codes created by the National Motor Freight Traffic Association, Inc. (NMFTA) to classify various goods. Carriers use this system to determine what they are transporting, its value, and the shipping costs. NMFC is based on four factors: density, handling, stowability, and liability. Each NMFC code corresponds to one of 18 freight classes (ranging from class 50 to 500) determined by the shipment’s density.
6. FOB: Free On Board
Free on Board (FOB) is where ownership and liability for a shipment are transferred from the shipper to the consignee. This means that at some point during the delivery process, the risk and responsibility for the safety and security of goods switch around, so only one side has to pay for any damages that could happen. The consignee and shipper must agree on a location where FOB occurs, such as at a warehouse, port, or another significant location.
7. FAK: Freight of all Kinds
Freight of all kinds (FAK) is a term used to describe when an LTL carrier assigns a single classification code to freight that would typically be under several NMFC codes. This avoids confusing shippers and carriers with all the NMFC codes they would have to manage. This also helps reduce shipping costs by giving all the shipments one fixed rate.
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