TRANSPORTATION

NETWORKS
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Common Shipping Terms

The terms that are listed below are the ones that most
commonly cause problems for the newcomer to the trade.

FULL CONTAINER LOAD (FCL)

As the terms implies, this refers to a load will fill a given
container.

LESS THAN CONTAINER LOAD (LCL)

Once again, as the term implies, this is a shipment that will not
fill a container and therefore will require to be consolidated with
other LCLs in order to economically fill a shipping container.
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Common Shipping Terms

HOOK TO HOOK
This term is used by many shipping lines when quoting prices
for break-bulk sea freight. It means that the shipping line’s price
includes loading the goods on to the vessel and unloading the
goods at the destination port. It also includes the cost of
transporting the goods between the origin and destination ports.
It is important to note that this price does not typically include
insurance nor does it include the stevedoring cost at both ports
to attach or detach the cargo from the ship’s lifting gear. In
addition it does not include other port handling costs.

This refers to static cargo that is heavy or bulky and can only be
accepted at the load port and delivered at discharged port.
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Loading/Offloading
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Common Shipping Terms

The terms that are listed below are the ones that most
commonly cause problems for the newcomer to the trade.

FULL LINER TERMS

This means the same as hook to hook.

LINER IN
The shipping line is responsible for the cost of loading the cargo
on board the vessel.

LINER OUT
The shipping line is responsible for the cost of unloading the
cargo at the destination port.
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Common Shipping Terms

FREE IN AND/OR FREE OUT

In effect this is the opposite of hook to hook. Many purchasers
of sea-freight who are new to the industry make the mistake of
interpreting “”free”” as meaning free to them. Whenever the
term “”free”” is used in this context it means free to the
shipping line. Therefore the party purchasing the sea-freight
will be responsible for the cost of loading and unloading the
goods and off the ship.
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Common Shipping Terms

BREAK BULK CARGO

This is a general term for non-containerized loose freight. Out-
of-gauge cargo and heavy-weight items that are unsuitable for
containerization fall into this category. Bulk cargoes such as
crude oil, loose grain or bulk powders, and iron ore would not
be classified as break bulk.
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Common Shipping Terms

WEIGHT OR MEASURE (W/M)
This is a common method used by shipping lines price sea-
freight for break bulk shipments. It is important to understand
that this method considers that one metric tonne is equal to one
cubic metre and that the price quoted applies to the higher of the
two numbers. Rather confusingly this system can also be
referred to as Freight Tonnes or Revenue Tonnes.

For example:
The cargo to be transported by the carrier weights 1,500 metric
tonnes and has a volume of 7,500 cubic metres. The price
quoted is US$75 per weight or measure. Therefore the price will
be calculated by taking the higher number of the weight or
measure and multiplying it by US$75:
7,500 x US$75 = US$562,500
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Common Shipping Terms

STACKABLE CARGO
Another very important note to remember is that not all cargo is stackable. In
other, words it does not lend itself to having cargo loaded on top of it. Therefore
if we continue with the example above and consider how much ship’s volume
capacity is required to carry 7,500 cubic metres we can reasonably assume that
we will require a ship with a volumetric capacity somewhat in excess of 7,500
cubic metres. If a cargo non-stackable it will mean by definition that any space
above it will be lost as loading capacity. In addition to this problem the shape of
the cargo or the contours of the ship may also result in lost loading capacity.
These issues will be dealt with by the shipping company who will prepare a
stowage plan. Some cargo may be suitable for securing on deck exposed to the
weather and seawater.
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Common Shipping Terms

STOWAGE PLAN
This is a plan prepared by a representative of the shipping line
which will clearly show where each item to be loaded will be
placed in the ship’s holds or on the open deck. The plan will be
based on a detailed packing list provided by the consignor.
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Common Shipping Terms

LOST SLOTS
A slot is a term used to describe the space taken up by an ISO
shipping container on a cellular container vessel. If certain types
of specialist container are used to transport the goods such as
flat-racks or open-top containers then there is possibility that the
cargo will protrude outside the normal cubic dimensions of a
standard shipping container. For example a piece of machinery
may fit inside the confines of an open-top container but
protrude through the top of the container. In this case the carrier
will be forced to either load the container on the top of the stack
or lose the potential for loading on top of this particular
container. This will lead to a request from the shipping line for
the consignor to pay for the ‘’lost slots’’. In other words pay for
the slots that cannot be used by the shipping line because the
cargo is protruding into another slot’s space. In some cases
where flat-racks are used the number of slots could be quite
high if the cargo protrudes in several directions.
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Common Shipping Terms

PORT ROTATION
This refers to the order and names of the ports the ship is
planning to call.

TEU
A standard marine shipping container that measures 20 feet
long, 8 feet wide, and 8.6 fee tall and can hold between 9 and 11
pallets in one tier, and up to 28 weight tons, subject to the ocean
weight limits applicable highway axle load limits.

FEU
This stands for a 40 foot equivalent unit and is equal to one
forty foot ISO shipping container.
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When international sea-freight prices are being quoted

anywhere in the world as a matter of custom and practice, as
well as convenience, all prices are generally quoted in US$. In
addition to the basic cost of sea-freight there are a number of
other surcharges that may be applied.

BUNKER ADJUSTMENT FACTOR (BAF)

BAF is a common surcharge applied to sea-freight rates by
shipping lines. It is designed to take account of the variations in
the price of marine fuel in different parts of the world. The BAF
being charged on certain trade routes by the shipping lines
working this route is determined by the liner conference whose
members work on this route. The BAF is changed from time to
time.
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CURRENCY AJDUSTMENT FACTOR (CAF)

CAF is another common surcharge that is applied to take
account of any differences in cost incurred by the shipping line
due to currency exchange fluctuations for services bought by
them in foreign currencies in the execution of their services on
the customer’s behalf. All sea freight rates are generally priced
in US$ but local services purchased by the shipping company
will be in the local currency of the country in which the goods
or services are bought.

The surcharge is designed to compensate the shipping line for

this and usually charged as a percentage of the basic freight
charge.
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PEAK SEASON SURCHARGE (PSS)

PSS is a surcharge that is applied to both airfreight and sea-
freight. Due to the rapid growth in exports from countries such
as China, and the lag in the provision of commensurate
infrastructure to handle this unprecedented and an imbalance in
trade flows means that carriers can apply this surcharge which
customers are forced to pay. The surcharge may be a
considerable uplift on the normal freight rates.
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REPOSITIONING CHARGE

This is a surcharge that is sometimes applied by the shipping line to cover the cost
of returning an empty container to a location where it may be loaded with
revenue-earnings cargo.
The cost of handling, shipping and trucking the empty container is a loss to the
shipping line.

In addition, because an empty container is repositioned by being transported on

one of its ships, there is the lost opportunity cost associated with utilizing this
space.
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WAR RISK SURCHARGE

This surcharge may be applied to any mode of transport in a war zone as well as
an area around the actual war zone. It is applied to take account of the increased
possibility of incidents that could result in the partial or total loss of the
company’’s assets.
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