Freight Definitions


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Manifest

The word "manifest" is used in all forms of transport and refers to a record of the goods loaded on a particular ship, or aircraft or truck etc. In practice, manifests are prepared for each "unit", so a manifest exists for each Seafreight container (for example) with all of the manifests for all of the containers loaded on a ship, forming the entire manifest for the vessel.Prior to containerisation, Seafreight manifests were very illustrative and would be drawn up as a representation of the vessel's load. They would comprise a "set" for a ship, with each page detailing what was loaded on that "layer" of the vessel, often with cargo drawn on the manifest as a bale or barrel etc to represent the load's shape. Modern transport has no time to do this, so contemporary manifests are normally computer generated print outs of numbers.

Classically, the manifest will name the ship/aircraft and the "master" transport document number. This is the document given by the carrier to the party booking the space. If the load is made up of smaller loads, this division will be controlled under a "house" document and the manifest will itemise the contents of each house transaction, by the house reference.Each line will contain a reference to the marks and numbers, the quantity and type of package, the weight and volume of the packages and a brief description of the goods. Essentially, this is a summary of the key points covered by the transport document.

The completed manifest is handed in to customs at the place of departure and at the place of arrival. This handing over is referred to a "lodging", and so a manifest is "lodged" with customs. The import customs authority use the manifest to control customs entries submitted to them and to alert them to cargo that has arrived for which no entry has been received etc. Once all of the cargo on the manifest is accounted for by way of entries submitted, it is said to be "acquitted".

Center Mounted

When cargo is loaded onto a road vehicle, many safety measures have to be taken with regard to the distribution of the cargo's weight on the vehicle. A major consideration within this broad subject is the carrying capacity of the vehicle and the vital need to stay within that limit.

The weight capacity of the vehicle is in two parts. Firstly there is the maximum permissible load. This is the total weight that the vehicle is fit and registered to pull. This will include the weight of the vehicle itself and some trailers are made in a "skeletal" form to reduce this figure so as to increase the vehicle's cargo carrying capacity.This maximum carrying or pulling capacity however can not be exceeded and the Carrier who unwittingly overloads can expect to be fined heavily. A carrier who overloads knowingly is undertaking a criminal act.

The second load limitation is with regard to the vehicle's axle. An axle has a load limitation too, as an aspect of the larger vehicle limit. A vehicle may have a carrying capacity of 20,000kgs, with no more than 12,000ks loaded over any one axle. A container of 15,000kgs is within the capacity of the vehicle, but it cannot be loaded over a single axle. In such cases, the container will be "center-mounted", meaning that a 6-meter container would be placed in the center of a 12-meter trailer. The total weight of 15,000 kgs is within the vehicle's range and the container is spread over both axles meaning that (provided the weight is evenly distributed in the container) no one axle bears more than 7500 kgs.While this solves the weight problem, it clearly reduces the capacity of the trailer, which can carry only one container and it creates a problem discharging the cargo also: The doors of the container when the container is center-mounted are now 3 meters in from the end of the trailer, preventing a "flush" discharge onto a loading bay.

The alternative solution is to use a vehicle with a double axle configuration, which increases the payload allowed over the axles and allows for the movement of heavy cargo (hence the need for vehicles with multiple axles, and the low bed design

Tailboard (or Tailgate) Inspection

Cargo moving overland often does so in vehicles the trailer of which is referred to as being a "drop-side", meaning it has sides that are adjustable and work a bit like flaps that can be fixed into place or dropped. The rear "flap" is known as the tailboard or tailgate. The advantage of such a vehicle comes in loading and securing cargo.

Traditionally, when cargo was inspected by customs and excise it could involve a full examination - meaning that all cargo was removed from the vehicle and examined, possibly with each package opened etc, - or it could be a lesser exam. The lesser examinations sometimes meant that the vehicles tailboard was dropped and customs looked at the first few packages on the vehicle, with their work being confined to roughly a general count and an assessment of outward appearances. Samples, if drawn, would be unpacked and repacked on the tailboard.

The expression for this (a "tailboard inspection") has carried over into general transport to mean a "minor" customs examination. So goods can be said to have undergone a tailboard inspection, even when the vehicle or device has no tailboard to it.

Blank Endorsed

In trade, the insurance contract and the contract of carriage (if it is a Bill of Lading) have the need to be transferable. Note that this is often referred to as being "negotiable", which is incorrect. A negotiable document and a transferable one share many similarities, but they are distinctly different at law. A transferable Bill is consigned "to order", meaning that no consignee is named, but that the Carrier will take a specific "order" as to who they are to release the cargo to.

The need for transferability arises out of common practice and practical application, when the Bill of Lading is treated as a document of title (again, the Bill of Lading is not actually a document of title, but it is treated as one).When A sells the cargo to B, A's entitlement to the cargo has to be transferred to B too. This symbolically happens when the Bill of Lading passes from A to B. B might then sell the cargo to C, and again the Bill passes in exchange.

This sequence is controlled by endorsement. As stated, on the front of the Bill the word "order" is shown in the consignee panel. On the reverse of the Bill, A "orders" the Carrier to release to B by stamping and signing the reverse and naming B. When B sells to C, B repeats the process, stamping and signing (to prove who they are and that they have the capacity to issue the order) the reverse and naming C. This process can continue for as long as there is space on the bill. This is termed "endorsed in full". However, the last party to the process has to stamp and sign the back of the bill to prove their identity but they will not endorse entitlement over to a further party. They themselves wish to take control. This is "endorsed in blank" or blank endorsed as it is more commonly called.

This makes the bill a bearer document and whoever holds the document holds the right and responsibilities enacted by or through the document.By blank endorsing the insurance contract, the same effect is achieved so that whoever holds the contract has the right to claim under the contract. This is useful when several parties may - at varying times during transit - acquire interests in the cargo.

Demurrage

In sea freight, the word demurrage is used in two manners. One relates to charges that arise as a consequence of a delay to a chartered ship, the other relates to charges that arise as a consequence to a delay in returning equipment - normally containers or trailers.

When a vessel is chartered, the agreement - the charter party (refer definition 84) - will allow a period for loading and discharge. This period is often in "working days" to exclude Saturdays, Sundays and holidays although sometimes it is just straight calendar days. If the vessel is not loaded or discharged by the end of this period, a demurrage charge is raised per calendar day thereafter (note that it is per calendar day i.e. Saturdays, Sundays and holidays are now charged for). Sometimes, the charter agreement will specify a maximum demurrage period and a heavier penalty applies if this period is also exceeded. A vessel incurring demurrage charges is said to be "on demurrage".

The concept of demurrage and the word itself have been transferred to containerisation. When a full container is delivered to the Seller (for loading) or the Buyer (for discharging), they will have to complete their task within a set period. These are fairly narrow bands (expressed in hours rather than days) closely defined by the stack dates (see definition 126, tomorrow) for the ship. If the period is exceeded, then a demurrage charge (normally raised "per day or part") is levied. Particularly for imports, the demurrage charges raised are normally very high. This is to discourage the use of containers as "cheap warehouses" where it is perhaps more cost-effective for the Buyer to leave the cargo on demurrage than unpack the cargo and incur storage charges.

It is common that the placing of containers involves the uncoupling of the delivering truck-tractor (definition 134) from the trailer. The truck-tractor then goes off on other work, leaving the trailer and container for later collection. This being the case, there are then additional demurrage charges to be paid on the trailer that is detained as part of the delay in loading/discharging the container.

Box Rate(s)

There are two basic ways cargo can move by sea. It will move either in a container or not in a container. If it is containerised, then the ocean freight rate can be given in one of several ways, one of which being a Box Rate.

This is a systems of tiers where a Carrier will post a range of (say) three or more possible rates on the route in question, with the Full Container's total weight or cargo class (not strictly commodity) determining which of the "box rate" options will be applicable to that specific Full Container.

This system has certain administrative advantages for the Carrier, but even if two containers of different cargo weigh the same, there is an element of prejudice still, as the value of the cargo may be greater in one container than in another. The cargo with the higher value could, in percentage terms, bear a greater burden of the freight costs, thus allowing for a reduced tariff to apply to lower value cargo.

Charter Party
This is a common expression used in Sea freight. The hiring of a vessel or ship is referred to as a 'charter'. So, when a vessel is 'chartered', it means that the shipowner has hired it out to a second party (the ship itself would be referred to as being 'on charter' and so forth). The terms and conditions of the charter, that is to say the contractual terms and conditions of hire, are documented in a contract called a 'charter party'. Note that the expression is sometimes written as one word (charterparty). In times past, the terms and conditions of the arrangement would have been uniquely drawn up on a document (the French word for which is taken from the Latin expression 'carta'). This document when signed by the shipowner and the hirer would then be torn in two, with each keeping one piece. The French expression for this being 'a part' (on the side). So, from "carta a part", the expression developed into an Anglicised form - "charter party". These days, the underlying contracts are normally standard formats with established conditions for the trade, cargo type, trade route or vessel type employed. As the terms and conditions of carriage are recorded on a document (the charter party) separate from the transport document, the transport document looses one of its traditional attributes (that of being 'evidence' of the contract of carriage). So, if a documentary credit was involved, the bank may call for both the charter party and the transport document or at the very least require the transport document to make reference to the charter party.
Arbitration

The Buyer and Seller obviously intend that the Contract should be met, that performance should be complete and to both parties satisfaction. In drafting the International Sales Contract every attempt must be made to eliminate the possibility of legal disputes arising as to its performance.

However disputes can and do arise and - short of abandoning the Contract - both parties may wish to settle their dispute in one of two ways: They could go to court or they could try some other dispute resolution mechanism that does not involve a formal court action.International disputes over matters related to the International Contract are frequently settled by way of Arbitration. This is a binding method of dispute settlement. An arbitral decision (or award) is binding by virtue of the original agreement (in the sales contract) between the parties to submit to arbitration.

There are at least three options as to the rules of arbitration in the event of a dispute settlement going this far:

  • To use the arbitration act or law of a given country.
  • To use the UN Commission on International Trade Law (UNCITRAL) Arbitration Rules.
  • The use of the ICC Court of Arbitration Rules (amended).

The institutional arbitration offered by UNICITRAL or the ICC may offer the safest course in many international cases. The Contract would have to indicate the system of arbitration, the language that the arbitration will be conducted in, the number of arbitrators to be appointed and the place where the arbitration shall be heard etc.

Shipper's Certificate

This is a reference to a declaration made on an airwaybill by the named shipper.

Moving hazardous or harmful substances is a danger in any form of transport, but in airfreight the consequences of disaster can be substantial in terms of loss of life and limb etc. In every transaction by air the shipper is required to declare (certify) that all hazardous or harmful substances that may comprise all or part of the cargo have been declared as such. Generally the full statement is for the shipper to confirm that all the information on the airwaybill is correct but the pre-printed wording on the airwaybill (under which the shipper signs) then goes on to make a specific reference to the shipper's compliance with the applicable hazardous goods regulations.

These regulations are strict and strictly imposed and there are exceptionally high penalties to pay if the shipper declares incorrectly in this respect.

Combined Transport
Describes a move involving one or more actual Carriers, using different modes of transport from each other BUT only if these modes are a road and rail combination - although sometimes inland-waterway transactions are also acceptable. It is a common requirement that Combined Transport applies only if the cargo is unitised (containerised, palletised etc).Depending on the applicable definition (as there are several) Combined Transport may involve a variable liability on one principle Carrier as in Intermodal carriage or it may have no bearing on liabilities whatsoever.
Unimodal
Describes a move involving one or more actual Carriers, but only one type of transport. For example a seafreight "port-to-port" move involving transshipment where two (or more) shipping lines may be involved but only seafreight carriage is undertaken. This may involve one Carrier taking full liability and responsibility to the extent of their own contract's terms and conditions. However, it may (as in through bills of lading) only involve each Carrier taking liability for their own "leg" of the journey, and only to the extent of each of their separate contract's liabilities, which may vary from Carrier to Carrier.
Intermodal

Describes a move involving two or more actual Carriers, using different modes of transport from each other. For example (just as above) a seafreight "door-to-door" move involving road or rail carriage to and from the port.

However, although one Carrier takes overall responsibility they are liable only to the extent of the contract's terms and conditions as employed by the Carrier who had physical control of the cargo at the time of the loss or damage etc.

Multimodal
Describes a move involving two or more actual Carriers, using different modes of transport from each other. For example a seafreight "door-to-door" move involving road or rail carriage to and from the port.
Free on Aircraft (FOA)

A great deal of confusion surrounds the use of FOB (Free on Board). Not only is it an old term, but it has proven 'fluid' and over the years has changed its definition. As countries began to legislate definitions to assist their traders, FOB got caught in the process as - dependant on when the legislation was passed - countries often legislated definitions that were at odds with other country's definitions and so on. In the 1980 version of Incoterms, the ICC sought to resolve the problem by reducing FOB to its basic original definition - but the problem was then, what to do about road freight Railfreight and Airfreight who had absorbed FOB (incorrectly) and would now be left without access to the term?

Their initial solution was to create FOB-like terms for the different types of transport . Thus FOT (Free On Truck - for Roadfreight) FOR (Free On Rail - For Railfreight) and FOA (Free on Aircraft - for airfreight). While the intention was - as always - good, the application was not, and many problems arose from this (Not least of which was seafreight being saddled with FOB which itself was less and less applicable even in the maritime environment which created it).

So, in the 1990 revision, FOT/R and FOA were dropped in favour of the more practical FCA. To continue to use FOA (or any other discarded incoterm) is to take an unnecessary risk. The definition is no longer supported by the ICC, who have 'moved on' and the buyer and seller could achieve the same ends within the recognised term FCA which is supported.If you must use FOA, bear this in mind and perhaps obtain a copy of incoterms 1980 to be sure you can still achieve the physical and documentary demands laid down, although this is not necessarily going to be enough in the event of a dispute.

Deadfreight
This is an amount paid to the Shipping Line, for cargo withdrawn by the shipper or cancelled by the shipper (and so not loaded) that the Carrier was advised would be loaded under a contract of Carriage. The amount claimed by the Carrier is the full freight less any lifting charges either not included in the freight or accepted as not incurred (although this deduction - if included in the original freight rate - is at the discretion of the Carrier). Effectively, once the contract is in place (and this is at the very moment of the verbal offer and acceptance, regardless of if a tangible document has been issued), the cargo must be shipped. If the shipper fails to load or cancels the booking, the Carrier can demand the full freight anyway - this is even true if they then rebook the space for use by another shipper. It is uncommon to come across this condition in a service which runs on a regular and frequent basis - this does not mean to say that the Carrier in such a service does not have the right to claim Deadfreight, but rather that they waive the right for commercial reasons. It is a more common risk and a regularly imposed penalty in less frequent or charter arrangements.
Rate Class

On an IATA Airwaybill, in the main body where the details of the cargo and its weights and rates are given, there is a column marked "rate class". This is normally the third column. Here an alpha indicator is inserted (this it to say a letter of the alphabet) which relates to the type of tariff that the freight has been charged out onThis column may indicate any one of several alpha codes for the type of rate applied to the cargo. The commonest amongst these codes are:

  • C - indicating a specific commodity rate: This means that the rate applied is lower than the standard rate as the cargo is of a specific recognised commodity.
  • M - indicating a minimum freight charge. This means that calculation of weight multiplied by the rate yields an amount lower than the airline are prepared to operate for. Bear in mind that there must be an administrative element to all charges and the cost of "opening a file" can be quite high - and it would apply equally to 1kg as it would to 1000kilos.
  • N - indicating the Carrier's Normal (N for Normal) rate for cargo with a chargeable mass of 45kgs or less. This means that the total mass for billing is below the airlines "breakpoint" of 45kgs - a separate rate (see Q below) is applied to cargo over this figure. This single breakpoint is common with airlines and should be contrasted with the multiple breakpoints offered by consolidators and forwarders.
  • P - indicating that a small package rate has been applied
  • Q - indicating the Carrier's rate for cargo with a chargeable mass of over 45kgs (Q for Quantity). This means that the total mass for billing is above the airlines "breakpoint" of 45kgs - a separate rate (see N above) is applied to cargo over this figure.
  • X - used to indicate that the cargo is loaded in a Unit Load Device - an air container.
Terminal Handling Charge (THC)
This term is used in Containerised Seafreight to describe the charges raised by the Port of Arrival or Discharge to lift the container onto or off the vessel. The cost normally embraces movement within the harbour to get the container to or from the 'stack'. The 'stack' is literally the place where the containers are stacked during their period in the harbour and it is common for different vessels to involve different stacks. It is not common for the THC at origin or destination to be included in the actual ocean freight charges, although it might be possible to arrange this. The reason for this is that Ocean Freight is generally charged out in US $ whereas the THC would be cost incurred in a local currency - which may be weaker than the dollar. To pay the THC as part of the freight could, therefore, actually increase the cost of that event.
Freight
  1. as an expression used to indicate the actual cost of movement. This would be in the context of a "freight rate", but you will be asked, "how much freight did you pay?" which could actually be the total of all transport costs from A to B, whether called freight-rates or not.
  2. as the actual action of movement. This would be in the question "how do you want to freight this?" e.g. air or sea or land.
  3. used to describe the actual cargo itself. As in "I'm sorry, but we cannot find your freight!" or in the expression Freight Forwarder.
  4. (To) Freight is used to indicate that the charges are to be shown on a given document. For example, to freight a bill of lading is to endorse it with the prepaid and/or collect charges due.
Ground Freight
  • B-train- 2-20ft. trailers being pulled by one tractor
  • LTL- Less than a truckload
  • FTL - Full truckload
  • CWT - Per hundred pounds
  • PUP- 20ft. trailer
  • T/L - Trailer Load
  • Dimensional Freight- Subject to 10# per cubic ft.
Ocean Freight
  • CBM- Cubic meter
  • CFT- Cubic foot
  • THC- Terminal handling charges
  • FCL- Full container load (20 or 40 feet)
  • LCL- Less than container load. LCL is based on cubic meters.( To calculate) (L' x W" x H) ÷ 1728 = Cubic feet. Cubic feet x .02832 = Cubic meter
Air Freight
  • FSC- Fuel surcharge, applicable only at certain times
  • Interline- One airline to another
  • ULD - Unit load device, an airline container
  • SCR- Specific commodity rate
  • GCR- General commodity rate
  • MAWB- Master air waybill, freight forwarder to freight forwarder air waybill
  • HAWB- House air waybill, shipper to consignee air waybill
  • IATA- Governing body for international air transportation