eCommerce Shipping

Understanding The Basic Shipping Terms

  May 14, 2024  

Whether you are an online buyer or an eCommerce seller new to the world of shipping, understanding the basic shipping terms is crucial. If you’re a buyer, you must know exactly where your product is and how to track it. For buyers, it’s not just about sending products; it’s about ensuring they reach their destination efficiently and effectively. The blog will help you comprehend the jargon to optimise your shipping processes and connect better with your sellers.

The Basic Terms

Shipping

Shipping refers to the process of transporting goods from one location to another. It’s the critical bridge between selling and receiving if you are into online shopping or selling. 

Freight 

This term refers to the actual goods being transported. Depending on the volume, freight can be classified into less-than-truckload (LTL) or full-truckload (FTL).

Logistics 

This involves the planning, execution, and control of transporting goods. A good logistics partner ensures that your freight arrives in the same condition it was sent and on time.

Fulfillment 

The complete process from the point of sales to delivery to the customer. This includes inventory management, picking, packing, shipping, and handling returns.

Shipping Aggregators

Shipping Aggregators or Courier Aggregators are those companies that have tie-ups with multiple courier partners. Aggregators like RapidShyp provide tech-enabled platform to sort the shipping processes through features like multi-channel integration, courier recommendation engine, API integration, etc.

Bill of Lading (BOL) 

A legal document between the shipper and carrier detailing the type, quantity, and destination of the goods being carried. Bill of lading was once valid only for shipments shipped via sea but is now also used for other freight shipping methods.

Tax Invoice

The tax invoice is issued by the buyer to the seller for the supply of goods. It is issued before the goods are loaded onto the transport vehicle. A shipping aggregator can help sellers create tax invoices for their sellers.

Tracking Number 

A unique identifier is provided by the shipping carrier to keep track of your shipment’s status.

Insurance 

Shipping insurance protects sellers against damage or loss during transportation. Always ensure your goods are covered; it gives you and your customer peace of mind.

Backorder

An order placed for an item that is out of stock and hence cannot be completed until the product in demand is back in stock is termed backorder. A business might run out of a specific inventory item; when this happens, they order more from their manufacturer or supplier. 

Batch Fulfillment

Batch fulfillment is also called batch picking, and it is a method that includes fulfilling a large number of orders that are all placed simultaneously. For this type of fulfillment, a picker picks up enough inventory to complete multiple similar orders in one trip through the warehouse.

Generate Pickup

Once the order is set for shipping on a designated day, the next step involves selecting the courier service responsible for delivering the order. It’s important to schedule pickups before 1:00 PM, Monday through Saturday. Please note that pickups are not scheduled on Sundays.

Missing Orders

Sometimes, orders fail to process in the initial stages within the shipping and logistics company. Common causes for these missing orders include incomplete checkouts and payment failures.

Blind Shipping or Dropshipping

Dropshipping is a method that ships orders from the manufacturer directly to the consumer, also known as blind shipping. It is termed blind shopping, as the supplier’s identity will remain anonymous. Hence, consumers assume that it came directly from the merchant. 

Bulk Cargo

Cargo shipped loosely, unpacked, and in large quantities is termed bulk cargo. Such cargo is directly poured into the container and shipped.

Bonded Warehouse

A building or secure location containing and storing all dutiable cargo is known as a bonded warehouse. Private enterprises manage these.

Backhaul

Returning a transport vehicle from its original destination to its real point of departure is termed backhaul.

Dimensional Weight

A weight estimated by calculating from the volumetric dimensions of a package using the longest point on all sides is known as dimensional weight. It can be used to determine the cost of shipping a package.

DDP Shipping

Delivery Duty Paid shipping is simply an agreement between the buyer and seller. This places all the burden and risk associated with shipping freight on the seller until the buyer receives it. Although the DDP shipping process can be employed on any order, it is generally used for national shipments. 

Ex-works

Ex-works (EXW) is also an agreement between the buyer and seller. The arrangement says the purchased items are to be dropped off at a specific location, upon which the buyer bears the liability and responsibility for the goods. However, the seller is not responsible for loading goods into the buyer’s method of transportation.

Free on Board

Free on Board is an applicable agreement for freights shipped via sea. Here, the seller must transport items to the buyer’s location and assume the fee incurred. The seller is also responsible for all the damages and other issues during shipping.

Freight Forwarder

This is an intermediate service between a freight shipping company and a merchant to arrange different elements of the freight shipping process. These include mode of transportation, freight rate negotiation, packing, etc.

Last-mile delivery

The last step of the delivery process involves moving a parcel from the transportation hub to the hands of the customer or any retail owner.

Benefits Of Using Shipping Terms

  1. Trading nationally or domestically is made more accessible when using these cargo shipping terms. 
  2. As long as sellers, freight companies, and buyers understand what these terms are, what they represent, and how to use them correctly, exporting goods and trading on a broader scale is a simple and straightforward process. 
  3. From the distribution center to the shipping recipient, disputes and disruptions to the supply chain can be avoided when using shipping terms correctly. 
  4. The key to a successful business is a steady flow of cash, stock ready to ship, and excellent customer service.
  5. By using well-known terms when exporting goods and trading nationally, there is no room left for error or confusion about each party’s role, responsibility, and management.
  6. So when sending goods from one destination to another, whether it’s within the same city or thousands of miles overseas, shipping terms can give all parties involved complete peace of mind.

Abbreviations Every Shipping Company Must Know 

  1. COD 

Cash on delivery is a type of transaction where the recipient pays for the product purchased at the time of delivery rather than using an online mode. A label can be printed on the top of the product package, or the courier person has the receipt. This label includes information related to the supplier, receiver, and itemised list of products and mentions the amount to be collected. It includes other details like AWB number, weight, and product dimensions.

  1. RTO

Return to Origin contains the sender’s address. If there is a discrepancy related to the product or order placement, the product can be returned to the point of origin, i.e., the merchant’s address.

  1. FCA

Free Carriers denotes that the seller is responsible for completing the delivery of certain products. They can either deliver the products directly to the customers or to a carrier nominated by the customer. In this case, the seller is responsible for transporting cargo until the delivery destination is finalised. 

  1.  CFR 

Cost and Freight means that the seller is responsible for delivering the items to the destination port only. By “port”, we mean the port where the buyer resides. Organising the freight transport is also the buyer’s responsibility. CFR also states that the customer must bear the insurance cost of the items in case the goods are lost or damaged. 

  1. CPT 

Carriage Paid to (CPT) means that a seller is responsible for arranging the transport for the goods and delivering them to the destination. In this case, the seller must pay for the clearance and freight costs.

  1. DDP

DDP stands for Delivery Duty Paid which means the seller is responsible for delivering the goods to a pre-decided place. This place resides in the buyer’s country and clears the exports during departure. Any types of risks associated with the goods are also borne by the seller in the case of DDP. DDP is one of those shipping terms where the maximum responsibility of shipping is on the buyers and not on the sellers. 

  1. FOB

The next name on our list is Free on Board (FOB). You can use this shipping term when the seller is responsible for delivering cargo to the port and loading it onboard. Once the loading activities are complete, the risks of the goods are passed on from the seller to the buyer. Everything is the buyer’s responsibility until the goods are delivered from this point onwards. 

Having a thorough understanding of the most commonly used terms will help you avoid mistakes and read the fine print better.

Remember the shipping jargon so that you can immediately resolve any issues arising from your placed order and keep track of your orders. 

RapidShyp is an eCommerce shipping aggregator that offers an automated shipping solution to businesses of all sizes. At economical rates, you can ship to 26,000+ pin codes in India.

Pragya Gupta is a content marketer with over 7 years of experience in writing, content strategy, and PR. At RapidShyp, she’s involved in research, editing, and writing for the blogs, reports, shipping encyclopedia and other brand assets.

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