9 confusing terms in ocean container shipping

Navigating the world of ocean container shipping requires a specialized vocabulary. In this article, we’re breaking down nine of the most perplexing terms to help you become a master of shipping terminology.

TEU (Twenty-foot Equivalent Unit)

A TEU is a standard measure used to describe the capacity of container ships and terminals. It represents the volume of a standard 20-foot long container. The term can be confusing because containers come in various sizes, but TEUs provide a consistent measurement for comparison.

Bill of Lading (B/L)

A Bill of Lading is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being shipped. It serves as a shipment receipt and a document of title.

Demurrage

Demurrage refers to the charges levied by a shipping line when a container is not moved out of the port or terminal within the allotted free time. This term can be confusing because it involves specific timelines and varies by port and shipping line, leading to unexpected costs if not properly managed.

Freight Forwarder

A freight forwarder acts as an intermediary between a shipper and various transportation services, managing the logistics of moving goods. They do not move the goods themselves but arrange for the cargo's journey. They often provide other services as well, such as acting as a customs broker.

Container Freight Station (CFS)

A CFS is a facility where cargo is consolidated into or deconsolidated from containers before or after ocean transport.

Incoterms (International Commercial Terms)

Incoterms are a set of international rules defining the responsibilities of buyers and sellers in the delivery of goods. Terms like FOB (Free on Board) and CIF (Cost, Insurance, and Freight) specify who pays for and manages each part of the shipping process. Their detailed nature and legal implications of each term can make them difficult to interpret correctly.

Customs Broker

A customs broker is a licensed individual or company that assists importers and exporters in meeting federal requirements governing imports and exports. The broker’s role involves handling documentation, duties, and taxes, which can be complex and daunting for those unfamiliar with customs procedures.

VGM (Verified Gross Mass)

VGM refers to the total weight of a shipping container, including its contents, which must be verified before loading onto a vessel. This requirement stems from the SOLAS (Safety of Life at Sea) regulations to prevent accidents caused by overweight containers.

Transshipment

Transshipments involve transferring containers from one vessel to another during their journey to the final destination. This often occurs at intermediate ports. The complexity of transshipment lies in the coordination required to ensure timely transfers, the risk of delays, and potential additional costs. Understanding when and why transshipment is used, and its impact on shipping schedules and logistics is important for supply chain and logistics professionals.

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