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Glossary of Shipping Terms

Understanding shipping costs begins with understanding your carrier’s language. Here are some common terms to help you navigate the parcel and LTL logistics industry.



Additional service charges typically charged by the National Carriers during the billing process. Common examples are “Residential Surcharge”, “Delivery Area Surcharge”, “Fuel Surcharge”, and “Additional Handling Surcharges.”

Actual Weight

Carrier determined weight before rounding up to the nearest whole integer, once rounded up it is referred to as “Billed Weight” Also determined by the carrier calculating Dimensional Weight and rounding up to the nearest whole integer. The carrier will invoice at the greater of the rounded up actual weight and the Dimensional Weight.

Additional Handling

A common accessorial surcharge. UPS and FedEx have 3 different categories based upon Packaging, Dimensions or Weight. Common triggers are: 1) Packages with a single side longer than 48 inches, or a second side that measures greater than 30 inches; 2) Packages with an actual weight of greater than 70 lbs; 3) Packages not fully encased in an outer shipping container made of corrugated materials (cardboard), and/or the outer shipping container is covered in shrink wrap; 4) Packages encased in a soft-sided pack (courier packs, poly bags and bubble mailers) of certain dimensions; 5) Packages that are cylindrical; 6) Packages bound with metal, plastic, cloth bands or other strapping; 7) Packages that could become entangled in or cause damage to other packages or the carrier sortation system. For example, a 36″ x 36″ x 12″ will be charged this fee because of rule #2. Packages that meet more than one of the triggers are only charged one surcharge. For example, rolled carpet that’s 55″ long and wrapped in plastic would be charged because of rules 1, 3, 5 and 7.

Address Correction

An Accessorial Surcharge by the National Carriers. Charges vary depending on service chosen. With USPS, there is no charge for correcting the address of packages, but for letters and Flats there charges may be applied depending on how old the Address Change is and if there is any “Ancillary Endorsement” included.

Air Freight

Cargo that travels via Air.

Air Waybill

A document specific to Air Freight that identifies the consignee, the consignor, destination, estimated weight, Tariff and other ancillary services.

Airport to Airport

Service for Express only covering the transportation from one airport to another. It is the consignor’s responsibility to transport packages to the origin airport and the consignee’s to retrieve them from the destination airport.


The National Carriers generally include an “Automation” discount in their contract rates. Manually written labels are excluded from receiving this built in discount.


Bill of Lading (BOL)

A general weigh bill for ground freight that identifies who the consignee, the consignor, destination, estimated weight, Tariff and other ancillary services.

Billable Weight

Also known as “Billed Weight,” it is the actual weight rounded up to the next whole integer (number).

Bonded Warehouse

A distribution warehouse that includes insurance against theft and damage.

Box Truck

A smaller delivery truck sometimes required due to height or length restrictions. Very common in downtown destinations and high-rise buildings.

Break Bulk

Transporting cargo in separate pieces instead of a container.

Break Bulk Cargo

(see break bulk)

Bulk Cargo

Commodity cargo – such as coal, grain, etc. – transported unpackaged in large quantities.



Aka Freight, can be any form of boxes, large items or palletized shipments.

Cargo Insurance

Specific insurance that protects against loss while in transit.

Cash in Advance

An ancillary service whereby the consignor requires full payment “in cash” for goods prior to shipping.

Cash on Delivery

An ancillary service whereby the consignor requires full payment for goods “in cash” at time of final delivery.

Certificate of Insurance

Proof from an Insurance Carrier that indicates what insurance is in place, limits of coverage and the name of who is insured.

Certificate of Origin

International trade document that certifies goods in a shipment are obtained, produced, manufactured, or processed in a country.


Ancillary charges that are billed after the point of shipping. Examples of common charges include: dimensional charges, incorrect manifested weight, address correction, return fees, and additional handling surcharges.


Refers to the process of recovering costs of either the freight or insured cost of goods relating to a loss or damaged shipment.

Cold Chain

Special freight requirements for food transportation that dictates that all steps in the transportation process will include refrigeration.

Collect Shipment

Indicates the charge for shipping to be billed back to the consignee. Often used for inbound freight of goods where the merchant wishes to pay for the freight using their negotiated contract rates.

Commercial Invoice

A specific invoice used to document cost and type of goods for international shipments.

Common Carrier

Trucking company used for the transportation of Cargo


To send goods by public carrier; deliver something to a receiver’s custody.


The receiver of goods; the entity who is financially responsible for the receipt of a shipment.

Container Yard

Carrier designated location at port areas for receiving, storing and delivering loaded containers as well as for empty container pick up.

Contract Carrier

A business that works with a select group of shippers to goods between locations serviced by the contract carriers.

Country of Origin

The country from which a shipment originates or is shipped.

Cross Docking or Cross Dock

The practice of unloading shipments from an inbound trailer or car and loading same shipments on outbound trailers with little or no storage in between.


Place where officials check goods entering a country

Customs Broker

Private entities that are licensed and empowered to help importers and exporters meet a country’s import and export requirements.

CWT (Hundredweight)

A pricing mechanism used by UPS for rating multi-piece shipments destined for the same address. Pricing is by weight rather than by piece. Ideal for multi-piece shipments weighing between 100 and 500 lbs.



Harm to a shipment – it can either be visible upon receipt or concealed (not realized until the item is out of its packaging).

Dangerous Goods

A substance or material which has been determined to be capable of posing a risk to health, safety and property when shipped and that may require special handling or shipping requirements.

Declared Value

The value of the shipment “declared” at the point of shipping that is in excess of the carrier’s limit of liability.

Dedicated Contract Carriage

Having a third party manage operational activities of trucks on your behalf.

Delivery Area Surcharge

An ancillary surcharge (aka “DAS”) for deliveries outside higher density areas (i.e. industrial park) and major metropolitan areas.


Fees paid for delays in loading or unloading cargo.


General term to describe a package’s weight to volume characteristics.

Dimensional Weight

The actual “Billed Weight” determined by multiplying the length times the height times the depth and divided by the Dimensional (Dim) factor. The result is then rounded up to the next whole integer. For example, a box that measures 20 x 12 x 6 has a volume of 1440 cubic inches. The dimensional factor is 139 so the dimensional weight is 1440/139 = 11 lbs (10.35 is rounded up to 11). If the actual weight of the box is less than 11 pounds, this dimensional weight will be used for billing purposes.


Include the Length (L), Width (W), and Depth (D) that are used in determining dimensional based charges.

Distribution Center

Large warehouse equipped to distribute goods for one or many merchants.

Domestic Shipping

Is where the origination and destination country are the same.

Door to Airport

Service for Express that covers the transportation from the consignor to the destination Airport. It is the consignee’s responsibility to retrieve packages from the destination airport.

Door to Door

Full service transportation from origination point to destination that may include many stops, transfers, customs etc.

Drop Shipping

A service performed by one vendor for another, when the merchant does not have the item(s) in stock and has them shipped to the consignee, typically with the freight prepaid.


Is an item specific charge imposed by a country for goods during the Customs Brokerage process.


Early Termination

An event triggered by cancelling a contract prior to its negotiated term. It usually triggers a potential fee that can be imposed by the carrier. Early termination fees are one of the “Gotchas” to look out for in carrier negotiation.

Earned Discount

This is a discount percentage that the customer will earn at a specified gross revenue amount. The revenue amount is a rolling average of transportation charges exclusive of service fees and surcharges. Earned discounts apply to the base rate specified for each service in effect on the date of shipment.

Electronic Data Interchange (EDI)

A form of data transfer that has a detailed file format structure to facilitate communications between parties of a transaction.

Export License

Permission to conduct a certain type of export


Goods that are prepared and transported outside the country of origin

Extended Area Surcharge

An ancillary surcharge (DAS Ext) for deliveries outside major metropolitan areas.


Flat Rate

A pre-negotiated rate that includes all charges

Freight Class

A standardized classification system for commodities transported via LTL carrier. NMFC is the standardized, accepted classification system. Freight class is based on four characteristics: Stowability, Liability, Ease of handling and Density.

Freight Collect

Freight shiments that require the consignee to pay for the cost of transportation.

Freight Forwarder

A broker that arranges all legs of a shipment between multiple carriers.


A specialized (tariff) class that is customized to accommodate the typical mix of freight and classes that exist within a single shipment. Aka “FAK”

Fuel Surcharge

An ancillary charge to compensate the carrier for the fluctuations in the cost of fuel.



A dimensional measurement around the middle of a package. The shortest measurement possible is used. It is commonly added to the “Length” to determine L+G (length plus girth) to determine if a shipment is oversized.

Grace Period

New contracts that have volume based discounts often include a “Grace Period” whereby the volume used to determine the bonus discount portion is waived for a stated period of time.

Gross Weight

The total rounded up weight of all items in a shipment

Guaranteed Service Refund

Contractual guarantee of service performance based upon the specific class of service and the Carrier’s stated delivery day and time threshold. Aka “GSR”.


Hazardous Materials

Goods that are restricted from normal transportation. Aka “Hazmat”, these goods must be specially documented prior to shipment and identified with special labels that indicate what type of hazardous materials are included.


The height of a shipment is determined by measuring the vertical distance with the largest side of the package on the bottom.

Hub and Spoke

The type of carrier distribution model where freight does not move point to point but rather to a “hub” whereby the freight is sorted prior to the next leg of its journey.



Goods that are prepared and shipped from a country that is different from the country of origin.


Using more than one carrier on a shipment


Using more than one type of transportation on a shipment, like loading trailers onto a railroad car.



Grouping separate but related items into a single shipment.



Documentation on a package that has shipper and consignee information along with a tracking number and delivery instructions.


Loading a trailer or container (or other shippign vessel) with cargo.

Large Package Surcharge (Oversize)

Surcharge assessed for packages that exceed 96 inches in length or 130 inches in length plus girth. FedEx calls this an Oversize charge.

Last Mile

Another name for delivery to the end user.


The largest dimension of a package is the length.

Less Than Truckload (LTL)

Common Carrier where the Consignee can ship a single large box or pallet without contracting the entire volume of the Truck (Truckload – aka TL.)

Loading Dock

Allows for the easy loading and unloading of freight. A surcharge is commonly added to shipments that do not include a dock at both origin and destination.



List of all goods, typically ordered by Bill of Lading, that are loaded into a container.

Minimum Charge

The lowest amount one can be charged on a shipment. This varies by service.

Minimum Commitment

Language inserted into an agreement that states an acceptable amount of shipments. Falling below that number can give the carrier the right to fine you.

Money Back Guarantee

Contractual guarantee that states that a shipper may file for refunds in the event of a service failure. A service failure occurs when a package is delivered 60 seconds or more after the published delivery commitment time for the selected service and destination.

MWT (Multiweight)

A program that groups shipments going to the same destination together to get a better rate for the shipper.


Net Weight

Actual weight of a product without its packaging and or container.


Overage, Short and Damaged (O, S & D)

A report listing items that were over delivered (too many items delivered,) short delivered (not enough of an item delivered) and damaged on a shipment.

Oversize (Large Package Surcharge)

Surcharge assessed for packages that exceed 96 inches in length or 130 inches in length plus girth. UPS calls this a Large Package Surcharge.



The materials that surround the item being shipped.

Packing List

Documentation of the contents of a shipment.


Flat structure with top and bottom decks used to support goods that can be lifted by a forklift, pallet jack or other lifting devices.

Parcel (small package)

Another name for a package shipped via UPS, USPS, FedEx or other similar carriers.

Payment Terms

Most common are Prepaid, Collect, or Third Party. They determine who is paying for a given shipment.

Peak Season

Period of time typically starting on Black Friday and continuing through Christmas where carriers are at their busiest.

Peak Surcharges

Fees applied to shipments that occur during peak season. These are in addition to the regular accessorials that the shipment receives and include the following: Additional Handling, Unauthorized Package (Over Maximum Limits), and Oversize (Large Package) surcharges (FedEx and UPS). UPS has a peak residential surcharge as well.

Pickup Fee

Surcharge assessed for regularly scheduled pickup services – typically reduced if a certain weekly revenue threshold is met.

Portfolio Tier Incentive

This is a discount percentage that the customer will earn at a specified gross revenue amount to be applied to the base transportation rate specified for each service in effect on the date of shipment. The revenue amount is a rolling average of transportation charges exclusive of service fees and surcharges.

Prepaid Shipping

The shipper pays for the transportation of a shipment.

Proof of Delivery

Documentation that a shipment arrived at its destination.


Residential Surcharge

A fee applied to any shipments that are delivered to a residence, including a business operating out of a home that does not have a public entrance.


(See reverse logistics)

Reverse Logistics

Process of moving goods from their final point to the point of origin either for reuse or disposal.


Service Guide

A book that contains an overview of services along with list rates plus descriptions and details on accessorials. It can also have terms and conditions.

Shipment Types

Ways to transport your freight.


The entity where a shipment starts its path.

Shipping Charge Correction

Billing adjustments made by UPS after a shipment’s original bill. It corrects any errors found – in the shipper’s or the carrier’s favor.

Signature Options

FedEx has three types of signatures: Indirect – anyone near the address can sign (neighbors, building managers, etc.) Direct – Someone at the delivery address must sign. Adult – Someone over 21 at the delivery address must sign. UPS only has Direct and Adult.


A subset of pallets that is cheaper and easier to drag and does not have a bottom deck. Often used as foundation for heavy machinery.


FedEx-branded service where FedEx picks up a package and injects it into the postal system. The USPS handles the final mile of delivery. Slower and less expensive than ground.

Supply Chain

All processes and resources that are needed to make and deliver a product to the end user.

Surcharge (in shipping)

Any fee added beyond the base transportation costs. Most common types are for fuel and for delivery to a residence.


UPS-branded service where UPS picks up the package and injects it into the postal system. The USPS handles the final mile of delivery. Slower and less expensive than ground.



Tax applied to import or export shipments.


A length of time, usually 12 months, that all or part of any contract is valid.


Processing point for carriers. Shipments are sorted and prepared for delivery or transferred to another carrier location.


Formally ending an agreement

Third Party Billing

The company responsible for paying is neither the shipper nor the consignee.

Third Party Billing Surcharge

A surcharge applied to shipments where the bill-to account is neither the shipper nor the consignee. It is typically a percentage of the shipment cost (excluding duties/taxes/clearance costs).

Third Party Logistics Provider (3PL)

An outside party that companies hire to outsource distribution and fulfillment operations.

Tracking Number

Unique number assigned to a shipment and used primarily to follow its location between origin and destination.

Transportation Charge

The cost of a shipment from point A to point B after discounts. It does not include a fuel surcharge or any other accessorials.


A shipment where the entire load is contracted to a single customer. The truck does not have to be filled to capacity.


Value Added Services

Extra services offered by the carriers outside of their normal transportation work. Some examples include packaging, kitting, and order fulfillment.

Value Added Tax (VAT)

Consumption tax levied as value is added in each stage of the supply chain.



Document issued by a carrier giving details and instructions relating to the shipment of a consignment of goods.


Weight (either in lbs. or kgs depending on country.)


Side-to-side measurement.



For domestic – a distance-based way to determine the base rate for shipment. They are zip code specific and the lower the zone, the closer the zip codes are and the lower the base rate. For international, countries are grouped into zones, typically by region. It allows the carriers to offer the same base rate instead of creating different rates for each country. Domestic zone differences can vary by service but, generally speaking, the distance in miles from origin to destination for each zone is as follows: Zone 2: 0-150 miles; Zone 3: 151-300 miles; Zone 4: 301-600 miles; Zone 5: 601-1000 miles; Zone 6: 1,001-1,400 miles; Zone 7: 1,401-1,800 miles; Zone 8: 1,801 and above.