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Learning Logistics Lingo (5.20.24)

3 Minutes Read

The transportation logistics sector is full of two things: activity and acronyms. Here are some of the most common abbreviations that all professionals should know.

Every line of business has its own brand of lingo. Your IT staff hates angry garden salad. Your accounting department needs a clear line between your FCs and your VCs. There’s a lot of transportation and logistics lingo rolling around too, and professionals need to understand some key terminology to operate effectively.

In this blog, we’re going to cover some of the most common and essential terms and abbreviations. You’ll quickly get a grasp of:

  • Accessorial charges and how they can hurt your bottom line

  • The Bill of Lading (BOL) and Proof of Delivery (POD)

  • 3PL, LTL and FTL

Understanding accessorial charges

Transportation logistics can be unpredictable, and your shipping department may have noticed they’re paying more than they bargained for. Accessorial charges are the reason and such costs are rarely fixed — they'll vary from carrier to carrier and, sometimes, they’re beyond anyone’s control. Understanding them in advance goes a long way toward making your logistics spend as cost-effective as possible.

These charges are added to the base shipment cost because they required a little extra effort (or a lot) for the carrier to deliver. For example:

  • A load may require shrink wrapping or special protections.

  • Passage through residential areas will require greater driver care and precision.

  • A fuel surcharge helps carriers account for unpredictable oil prices.

After-hour deliveries, layovers, tolls, additional stops and TONU (Truck Ordered Not Used) are some more examples of a long list of potential extra costs. The shifting nature of these fees can mean significant financial loss over time, so ask carriers for a list of their accessorial charges before committing to a shipment.

Breaking down the bill of lading (BOL)

The BOL is a crucial document to understand, and to get right. Some shippers make the mistake of treating it too lightly — basically, like a freight bill or receipt — when it’s an important legal document designed to protect the sender, the recipient and the logistics provider from culpability for theft, loss, fraud, damages and more.

The BOL is literally the beginning and the end for your shipments because it must be confirmed and signed at departure and on arrival, where the final signature becomes POD (Proof of Delivery). Therefore, the BOL should be an A-to-Z list of relevant information such as:

  • Sender, recipient, and carrier

  • Time and place picked up plus agreed delivery time and location

  • Nature and quantity of goods

  • Special handling instructions and more

It’s the BOL that all parties will turn to if there’s a problem or dispute with a shipment, so it must contain comprehensive and precise details. A BOL must also be carefully read and reread to ensure its accuracy before a shipper parts with their goods. Should anything be overlooked, it may become a costly oversight.

Who generates the BOL? Sometimes, it’s the business sending the goods. Other times — such as when 3PL providers are involved — the 3PL may create the BOL.

3PL, LTL, and FTL

Respectively, those terms stand for Third-Party Logistics (3PL), Less Than Load (LTL) and Full Truck Load (FTL).

3PL providers are outsourced partners who handle companies’ distribution and fulfillment tasks. It can be quite a broad term in practice, but 3PL providers generally take responsibility for transportation, warehousing, and other supply chain functions.

Working with a 3PL provider can be advantageous to shippers who gain access to what is often a significantly sized and well-organized logistics infrastructure, and the savings that come with that. On the downside, if your 3PL performs poorly, that reflects on your business. You also give up a measure of logistical control and may incur steep short-term costs.

LTL refers to a shipment that doesn’t take up a delivery truck’s full capacity and will instead share the journey with shipments from other companies. LTL is often a cost-effective transport option with high-security standards that allow shippers to send goods out more regularly. Cons include longer wait times before your shipments hit the road and even longer delivery times. Check out our blog on LTL for more insight.

FTL is the more exclusive transportation option, giving your goods the whole truck to themselves. The pros of this model have reduced the handling of shipments along the route (thereby reducing the risk of damage, loss or theft), faster delivery and improved cost efficiency on multiple shipments. However, FTL can be more expensive for low volume shipments and FTL carriers may not provide value-added services such as handling services at pickup or delivery points. We’ve already covered how your business can save with FTL shipping.

Let RLG provide more essential lessons

At Resource Logistics Group, it’s our job to clarify the world of transportation logistics so you can simplify your operations. We’ve highlighted some more important lingo in our previous blogs, so read those to learn more about successful RFQs and RFP essentials. Get in touch at the link below to take another step toward mastering transportation logistics.

Resource Logistics Group is an elite agency of logistics advisors who can provide transportation and logistics expertise combined with professional services and state-of-the-art technology. From contract negotiations to easing back-office burdens, we’re your ally in excellence. Connect with us for a free benchmarking analysis.

Steve Huntley