Logistics Glossary: The Terms You Need to Know Cold
Logistics is full of acronyms and specific terms that can easily confuse the average person. With the advent of modern technologies, new terms and expressions. This often leads to situations where two people interpret the same term differently.
So let’s take a look at some of the most well-known logistics terms. We have prepared a comprehensive logistics glossary for you, which will help you navigate and understand the basic abbreviations and terminology used in the industry.
Do you know exactly what TMS, CMR, freight procurement, or spot freight mean?
1. Who is involved in the logistics process?
Shipper – the party ordering transportation
A company that needs to transport its goods and orders transportation from carriers or freight forwarders. The shipper decides on the choice of carrier, price, and terms of transport.
Carrier
A company that physically performs the transport using its own or leased vehicles. The carrier assumes responsibility for delivering the shipment according to the agreed-upon terms.
Freight forwarder
A company that organizes transport between the shipper and the carrier. It does not necessarily own vehicles, as its primary role is to find a suitable carrier, negotiate the price, and coordinate the shipment.
2. How Do We Procure Transportation in Logistics?
Spot shipment – spot transportation
A one-time shipment procured based on current needs and market conditions. The price is typically negotiated separately for each specific shipment.
Contract shipment – contract transportation
Transportation carried out under a long-term agreement with a carrier. The price, route, capacity, and other terms are specified in the contract for a specific period.
Freight procurement – purchasing transportation
The process of selecting carriers, obtaining price quotes, and negotiating commercial terms. It includes spot shipments, tenders, contract rates, and carrier evaluation.
3. Price Quotes and Carrier Selection
RFQ – Request for Quotation
A request for a price quote sent by the shipper to one or more carriers. An RFQ is primarily used when the shipment parameters are known and price and availability are the deciding factors.
Tender – Selection Process
A structured process in which carriers submit prices and terms for specific routes or volumes. A tender is typically used for longer-term contracts or a larger number of shipments.
Carrier allocation
The decision regarding which carrier will be assigned a specific shipment or a certain share of shipments. The selection takes into account price, available capacity, reliability, and quality of service.
Rate management
Tracking and monitoring of both spot and contract shipping rates. It helps the company track the validity of rates, compare quotes, and apply the correct price for a specific route.
4. Routes, Capacity, and Transit Time
Lane – shipping route
A specific connection between the loading and unloading locations, such as Bratislava–Hamburg. A single lane may have its own carriers, prices, volumes, and contractual terms.
Capacity – Transport Capacity
The availability of vehicles, drivers, or cargo space to carry out the shipment. A shortage of capacity can result in higher prices, longer wait times, or difficulty finding a carrier.
ETA – Estimated Time of Arrival
The estimated time of arrival of a vehicle or shipment at its destination. The ETA may change during transit due to traffic, weather, or delays at the loading site.
Transit time – transit time
The time required to move a shipment from the point of origin to the point of delivery. It does not always include the entire time from order creation, but primarily the transport itself.
5. Logistics Systems
TMS – Transportation Management System
Software designed for planning, managing, and evaluating transportation. It may include orders, route planning, communication with carriers, tracking, and reporting.
ERP – Enterprise Resource Planning
A central enterprise system that integrates areas such as finance, production, warehousing, purchasing, and sales. In logistics, orders or data are often sent from the ERP to the TMS and other systems.
6. Shipping Documents
POD – Proof of Delivery
A document confirming that the shipment has been delivered to the recipient. It may include a signature, date, time of delivery, or information about damaged or missing goods.
CMR – International Consignment Note
The basic shipping document used in international road freight transport. It contains information about the shipper, consignee, carrier, shipment, and terms of transport.
7. Performance and Logistics Metrics
KPI – Key Performance Indicator
A key metric used by a company to measure the performance of logistics processes or carriers. A KPI can track cost, delivery time, number of complaints, response time, or reliability.
OTIF – On Time In Full
A metric that measures whether a shipment was delivered on time and in full. It is not enough to simply meet the deadline—the customer must also receive all the goods ordered.
Understanding logistics terms is a good start. Having your entire logistics process under control is even better. With 4Shipper, you’ll get an overview of shipments, prices, carriers, and communication, all in one place. Contact us and see how you can simplify your logistics processes and save tens of thousands of EUR annually.
