Understanding logistics terminology and abbreviations is super important. Why?

Well, do you sometimes feel like your logistics partner is talking mumbo jumbo? You’re not alone, the technical terminology and abbreviations used in the freight world can take a little while to get your head around. There are so many different modes of transportation and methods of moving goods, with almost all different sectors speaking their own language it can feel like.

So, let’s take it back to basics. When you understand these essential logistics terms it can be hugely beneficial for better communication with your transportation partner and to have an overall better understanding of your entire logistics process.

Essential Logistics Terminology & Abbreviations

You will most likely have heard almost all of these logistics terminology and phrases at some point if you’re already familiar with the transportation world. However, if you’re new to everything logistics then we’re here to briefly explain what each of these terms means…

3PL – Third Party Logistics 🚚

A 3PL is a logistics company that you can outsource your entire logistics solutions to. Including, warehousing, distribution, transportation and freight forwarding. You might outsource to a 3PL when your logistics becomes too much for you to handle in-house or so you can put all of your focus into different areas of your business.

Freight Broker 💻

Freight brokers are the middle man between shippers and carriers. They have a great network of reliable and trusted carriers and work to find the best possible fit for the particular freight their shipper has. They hold all of the knowledge to find them the best quotes and specialized equipment where needed.

White Glove 🧤

A White glove option in transportation is a premium service, primarily focused on customer satisfaction and going that extra mile. It involves extra services throughout the entire shipping process including, packaging, loading, unloading, installation and removal of packaging, etc. It’s there when you need that extra special touch for your freight.

Reverse Logistics ♻️

Reverse logistics refers to the removal of goods from an end user and back through the supply chain, either to the retailer or manufacturer depending on why it’s being reversed. Goods are usually returned for the sake of disposal, reuse or for recycling.

JIT – Just-in-Time ⏰

Just-in-time delivery is an exceptional service offered by some specialist logistics companies. It’s the process of delivering parts, or inventory and as the name implies, just-in-time. So,  when the manufacturer or shipper needs them instead of them having to keep an inventory in a warehouse or in their own facilities. This saves huge amounts on warehousing costs and upfront costs to buy materials that may not be needed for a long time.

KPIs – Key Performance Indicators 📈

You might already be familiar with this abbreviation as it’s used in all different industries. Almost every business has KPIs. But, in the transportation world KPIs are used to evaluate the efficiency and effectiveness of an entire logistics operation. They help to cut costs and improve customer satisfaction. Logistics KPIs could include, on-time delivery, transportation costs and inventory turnover for 3PLs.

Supply Chain ⛓

This one is short and sweet to explain, unlike an actual supply chain 😅. So, a supply chain is a network of different companies that all have different roles. But, work together with the same overall aim of the production and delivery of a product. Usually a supply chain is made up of producers, warehouses, transportation, distribution centres and retailers. It’s called a supply chain because the process is like a chain reaction.

Carrier 🚚

A carrier is a company or individual that can legally transport freight from one point to another. This covers air, land and sea. They transport goods on behalf of a shipper.

Shipper & Consignee 👱‍♂️

A shipper is a person or business that has cargo that needs shipping from point A to point B and might seek partnership with logistics professionals . Whereas, a consignee is the individual receiver of the freight, they’re responsible for inspecting and the sign off of the shipment at the time of delivery.

BOL – Bill of Lading 🧾

A BOL is a legal document issued by a carrier to a shipper for each shipment. It requires the shipper to outline the type of freight, quantity of freight and destination they’re being shipped to. This same document then doubles up as a receipt when the carrier has completed the delivery of goods. BOL’s used to be used almost exclusively for sea freight, however now all modes of transport utilize a BOL.

Drayage 🌊

This term is used to describe a specialized truck moving containerized freight. Drayage carriers usually only move the containerized freight over short distances from sea ports and airports to strategically placed facilities or their final destination which usually only makes up just a small part of a much longer shipping process.

Multimodal 🚚✈️🚝🛳

Multimodal combines multiple different modes of transportation under one single contract and with one carrier. This one carrier takes the sole responsibility of the cargo and ensures the door to door delivery, even if multiple carriers are used along the journey. As they take full responsibility, if there are any issues you can be assured that they will rectify them.

Intermodal 🚚✈️🚝🛳

Intermodal is very similar to multimodal above. It’s the movement of cargo using multiple methods of transportation. However, the main difference is that there isn’t one logistics partner organizing everything. It requires communication with each transportation provider at the different legs of the journey and each one will have their own separate contracts. Meaning if you’re left with damaged or delayed cargo it might be harder to pinpoint which company inflicted the damage/delay and difficult to get them to take responsibility.

Transloading 🪝

Transloading is the loading of cargo from one mode of transport to the next while en route to its’ final destination. This usually takes place in a facility that is equipped with aids to help handle heavy cargo containers. For example, unloading freight from a rail car and loading it into a truck ready for the last leg of its’ journey or sometimes multiple trucks for national and/or regional distribution.

ELD – Electronic Logging Device 🥱

The number one function of an ELD is to track the number of hours a truck driver is operating their vehicle. It’s important that these are closely monitored to meet mandatory rest periods set out by FMCSA (Federal Motor Carrier Safety Administration) to increase driver and other road users’ safety.

Conclusion 🤔

We hope we’ve eliminated some confusion around some of our go-to logistics terminology phrases and jargon in the logistics world. There’s still a ton more terms and abbreviations that we use day-to-day. Which we’ll be sure to share and combat the misunderstandings of in another blog coming soon! We hope this helped 😄

 

Need help with any of your specialized shipments?

At PEI we’re experts in dealing with specialized freight and can handle yours with any custom requirements.