The beaming opportunities in the evergreen international shipping industry induce many people to enter the business. Whether one chooses to open his trading firm, logistics services, or decides to work at the ports, the key thing he must know is the shipping terminologies. Although most of the trading aspirants fail to give this a fair amount of thought while beginning their business venture, one cannot simply ignore it. This is probably the only industry that involves a lot of international participants who speak different languages and follow different laws.

Therefore, to bring uniformity and neutrality in the industry, it is important to have a set of terms that are globally accepted with legal significance. The ICC (International Chamber of Commerce) intervenes to serve this purpose. This organization releases “shipping incoterms” every 10 years which defines certain rules for the shipping process. For a descriptive reference of all the shipping terms, click here to know more.

The relevance of Shipping Terminologies

Can one imagine a world of medical science without all the complex words used to describe ailments and chemicals? Similarly, the trading industry relies largely upon the incoterms and other freight terms for carrying out the business operations. Shipping terminology is used in the trading contract to specify the cost and risk liabilities of both the parties involved in the process. Uses of these terms eliminate the risk of misunderstanding that can put an entire contract at stake. A trader must know the meaning of each term to avoid facing vulnerabilities during the trading process.

Some Commonly Used Terms


There are hundreds of simple yet vivid words in the shipping terminology that serves a predefined instruction. Beginners might find it a bit difficult to get a grasp of it initially, but it is not as difficult as it seems. Here are some of the frequently used words:

  • FCL (Full Container Load) – This refers to the containers which one can book for one particular consignment. FCL containers are comparatively cheaper and efficient as the trader has the authority to own the full capacity. It also avoids wear and tear of cargo during the shipping journey.
  • LCL (Less than Container Load) – LCLs are the second type of containers that include cargo of various importers. In the case of small cargos, traders have to opt for this option which might cost higher at times. Since LCL containers take stoppage at different ports for delivering the consignments, chances of theft or loss of cargo increases in this case.
  • Bill of Lading – Any person in the shipping industry can face issues if he does not know the value and meaning of this bill. Bill of Lading is issued by the shipping line responsible for the transportation of cargo and is handed over to the receiving party. After the cargo is delivered, it can be used as a contract of good carriage as it contains all the minor details of the shipment. Details of the shipper, consignee, cargo, and port of loading are all mentioned in the bill. Damage to this document can incur a loss in the business.
  • Free On Board (FOB) – This term explains the responsibilities between the two parties involved in the trade regarding the shipment. As per this rule, the seller is liable to safely board the cargo from the departing port after which the risk and cost of safe shipment fall upon the buyer.
  • NVOCC – NVOCC stands for Non-Vessel Owning Common Carrier. It explains the business practice of cargo consolidators who buy the shipping space of a vessel from the carrier and then resale it to smaller shippers. The people who follow this policy are also commonly referred to as forwarding agents.
  • Certificate of Origin – This document serves as a legal declaration of the origin of the goods shipped from one country to another. It is a very crucial document as the customs department needs it for applying for duties and exemptions.
  • Vessel Load Free Out – This term is used in the shipping contract specifying that the carrier will bear the cost of loading while the recipient of the cargo will pay for its unloading.

How To Learn Shipping Terms?

Just like the teachers preach in schools, no one should mug-up things just for the sake of learning it. Beginners should pay enough attention to understanding these terms and their uses rather than memorizing the shipping terminology. The purpose of it is to serve as a common medium of communication between two trading parties in the international business. The best way is to read blogs published by reading logistics and shipping companies to keep in touch with the meaning of each term.

Shipping terminology is much more than just a mere glossary in the industry. The heavy use of these terms in the contracts implicates its importance very well. The fresh minds in the global shipping world must take a grasp of these terms before facing any form of inconvenience in the long run.

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