Shipping terminologies: Their usage & significance in international trade

Shipping goods seems cakewalk, right? You have to pack the product and then send it across, to the buyer. However, did you know there are various types of jargons associated with shipments? COD, CYCY, FCL, and LCL. For an unversed ear, these may seem just reams of gobbledygook. However, to international shippers, it is a different story altogether. The wide variety of shipping terms associated with the process of moving various products through a supply chain may seem overwhelming. Nevertheless, mastering the different shipping terms is imperative to ensure that your goods are shipped on time as well as in good shape.

Shipping goods globally is far more multifaceted and convoluted than directly transporting an object from point A to point B. There is an assortment of regulations and procedures in place to assure the goods are carefully delivered to the final destination point. Keeping track of shipping terms is vital as these terminologies play a significant role for everyone associated with the shipping process. By knowing the relevant shipping terms, you can evade any confusions and differences, and also minimize the errors in the supply chain.

That’s why given below is an exhaustive glossary of 8 international shipping terms:

  1. Bill of Lading

Bill of Lading, which is a legal document, is dispensed by a carrier to a shipper which includes shipment specifications such as the nature of goods, freight rate, quantity, and the destination point. It delineates the agreement between the parties involved and helps ensure that the exporters receive their payment while the importers receive their products. This also functions as a shipment receipt.

  1. COD- Change Of Destination

Consider a situation where your goods have already been loaded onto a container ship and shipped towards the destination. You discern that for some reason, you need to change the delivery point! This is when you request for a COD- a Change Of Destination. This request inquires the container ship to discharge your freight and transport them to the alternative destination than what was formerly booked.

  1. CYCY- Container Yard to Container Yard

CYCY is acronymous to Container Yard To Container Yard. This is a port facility where containers are filed before loading them onto a ship or after they are discharged from a container ship. The shipping term CYCY demonstrates that the reliability of the carrier starts (port of loading), and then ends (port of discharge) at the container yard.

  1. DM- Demurrage

This is a fee which the container lines impose when the imported goods aren’t picked on time. Once the containers are discharged, there comes a free period for storing them in the port, provided by the container line. Ensure that you pick up your boxes before this free period ends. Otherwise, you will be charged for the total number of days your containers were left in the port. Apart from this, you can also be charged for demurrage fees in case you have containers that cannot be shipped by the container line for a reason such as customs problems. Then you will be charged for the number of days these boxes are required to be stored in the port.

  1. DT- Detention

Detention is a fee that you are required to pay in case the imported containers picked up were not returned to the shipping line on time. You are then required to pay for the additional days taken to return the containers. You may be additionally charged for demurrage fees in case these boxes cannot be shipped out by the container line because they were not returned on time. You will then be required to pay for the additional days for which these containers were in your possession.

  1. FCL- Full Container Load

FCL is acronymous to Full Container Load. This shipping term implies that you have enough goods to fill an entire container. In general, an FCL attracts lower freight rates in comparison to an equivalent weight of loose/ breakbulk cargo. It is also known as the Full Trailer Load (FTL).

  1. Incoterms- International Commercial Terms

While buying or selling, importing or exporting goods, these goods require to be moved from their source point to the destination point. The stablest way to accomplish this is to negotiate at the selling point as to how it can be achieved. However, for both the parties to know and accept the requisites, they have to express in the same dialect to agree on what shipping terms implicate. Incoterms, short for International Commercial Terms, is a series of pre-set commercial shipping terms promulgated by the International Chamber of Commerce (ICC). These terminologies are intended to communicate the tasks, risks, costs correlated with the transportation and delivery of shipping products.

  1. LCL- Less than Container Load

LCL is acronymous to Less than Container Loads. This shipping term means that you do not have enough products to stuff the entirety of a container. Hence, your individual consignment is merged and shipped with other shipments in the same box. At the destination port, these consignments are separated and allocated back as former individual consignments. LCL is advantageous for small or mid-sized businesses that do not have substantial quantities of goods but cannot afford to lose out on delivery deadlines. It often provides for savings on shipping costs as they dispatch the cargoes at lower rates. Sharing space also makes this an eco-friendly alternative.