Letâs be honest. The shipping world has more acronyms than a teenagerâs text messages. If youâve ever stared blankly at a logistics contract thinking, âWhat on earth does DDP mean, and is it contagious?â, youâre not alone.
Thatâs why weâre pulling together a monster glossary of common shipping terms youâll actually run into. Weâll cover the must-know logistics lingo, sprinkle in some real-world examples (yes, even that time my package from Japan sat in customs for two weeks), and link you to resources like ecommerce warehousing, pick and pack fulfillment centers, and Shopify fulfillment so you can actually put this knowledge to work.
By the time youâre done here, youâll be able to talk shipping like a pro. Or at least fake it well enough that no one questions you at the next supply chain meeting.
Hereâs the deal: shipping isnât just about slapping a label on a box and hoping for the best. Itâs an entire language. Misunderstand a term, and you could end up paying thousands in unexpected fees, botching delivery promises, or accidentally shipping your goods to Timbuktu instead of Tampa.
Take Incoterms for example. These are international trade rules that dictate who pays for what, who handles risk, and where ownership transfers. Screw up which term you agree to, and suddenly youâre footing the bill for port storage in Shanghai. According to the International Chamber of Commerce, misusing Incoterms is one of the most common causes of costly shipping disputes.
And if youâre running a growing ecommerce brand? Understanding these terms is just as important as nailing your product photography. Otherwise, your warehouse shipping setup wonât matter if your customers never see their order.
Accessorial charges are the âgotchasâ of the freight world. Theyâre the extra fees carriers tack on when shipments require more than a simple pickup and drop-off. Think of them like add-ons in a rideshare app: need a liftgate? Extra. Need inside delivery? Extra. Driver had to wait an hour because your dock wasnât ready? Yep, extra.
Why it matters: For ecommerce businesses scaling beyond parcel shipping, not budgeting for accessorials can destroy your margins. Letâs say you ship pallets of supplements to retailers. The quote looked great, until the truck shows up and realizes thereâs no dock at the delivery site. Boom: liftgate fee plus a redelivery fee if the customer wasnât ready.
Pro tip: Ask carriers for a breakdown of common accessorials they charge, and factor these into your cost per unit. Itâll save you from nasty surprises and awkward calls to customers.
Latin for âaccording to value,â this term usually pops up in customs declarations and tariffs. Import duties are often calculated based on the declared value of goods, and thatâs called the ad valorem rate.
Why it matters: If youâre importing apparel, cosmetics, or electronics, the wrong ad valorem classification could either overcharge you or raise red flags with customs.
Example: A fashion brand shipping $100,000 worth of handbags into the U.S. would pay duties based on that value. Undervalue it and you risk fines. Overvalue it and youâre literally burning money.
Air freight is cargo shipped by airplane instead of ocean, truck, or rail. Itâs the fastest way to move goods internationally, often used for high-value, fragile, or time-sensitive products. Think iPhones, vaccines, or restocking inventory before Black Friday.
Why it matters: Speed comes at a price. Statista reports global air cargo demand continues climbing thanks to ecommerce. But costs are calculated not just by actual weight, but by dimensional weight, so shipping a giant box of pillows might cost more than a pallet of dumbbells.
Real-world example: During the 2021 port congestion crisis, many apparel fulfillment companies pivoted to air freight to ensure fall/winter collections arrived on time. Yes, they paid more, but it prevented out-of-stock disasters that could have cost millions in lost sales.
ATA is the real time a shipment arrives, as opposed to the ETA (estimated time of arrival). In logistics, âestimatedâ often means âwishful thinking,â so ATA is what truly matters.
Anecdote: I once ordered vinyl records from Japan. The ETA said â7 days.â The ATA? 19 days. Customs had a field day. Always ask for both and manage customer expectations accordingly.
ATP refers to inventory thatâs available for new orders after accounting for existing commitments. Itâs what keeps ecommerce businesses from overselling.
Why it matters: If your website shows âin stockâ but your ATP system isnât synced with your ecommerce warehouse, youâre setting yourself up for angry emails and refunds.
Pro tip: Connect ATP to your Shopify fulfillment system to prevent overselling during peak seasons.
Backorders happen when demand exceeds supply, and customers place orders for out-of-stock items that will ship later. Itâs a double-edged sword: great because people still want your product, but risky if delays stretch too long.
Why it matters: Backorders can damage trust if you donât set clear expectations. Promise 2 weeks and deliver in 6? Expect chargebacks and bad reviews.
Example: Popular fitness brands often use backorders during January spikes. They keep cash flow moving but rely on rock-solid supplier timelines.
The Bill of Lading is the shipping worldâs holy grail. Itâs part receipt, part contract, and part tracking sheet. Issued by the carrier, it confirms goods were loaded and provides legal ownership details.
Why it matters: Without a BOL, your freight may not be released at the destination. Lose it, and youâre basically standing at customs empty-handed.
Example: A U.S. importer moving shoes from Vietnam needs the BOL to clear customs and prove ownership. Without it, the shipment sits in limbo, while storage fees pile up daily.
Break bulk refers to cargo thatâs loaded and unloaded piece by piece, rather than shipped in standardized containers. Think crates, barrels, or oversized machinery.
Modern impact: While containerization has largely replaced break bulk, it still shows up in niche industries like construction or oil and gas. Ecommerce brands usually avoid this unless theyâre shipping giant display furniture or store fixtures.
B2B (business-to-business) supply chains look very different from B2C (business-to-consumer). B2B shipments often involve pallets or bulk freight going to retailers, while B2C shipments are individual parcels going to customersâ doorsteps.
Want a deeper dive? Weâve broken down B2B vs. B2C supply chain differences.
The company physically moving your goods. This could be UPS, FedEx, DHL, Maersk, or even a local courier.
Why it matters: Choosing the right carrier impacts cost, speed, and customer satisfaction. If youâre running subscription box fulfillment, a carrier with reliable last-mile service is essential.
Example: Many DTC beauty brands use USPS for domestic small parcels (cheap, broad reach) but switch to DHL for international orders.
CBM measures the volume of cargo: length Ă width Ă height in meters. Itâs crucial for ocean freight pricing.
Why it matters: Ocean freight is often billed by CBM rather than weight. So, 100 pairs of jeans may cost less to ship than 100 beanbag chairs.
Pro tip: Optimize packaging design to reduce CBM and lower costs.
COD means the recipient pays when the package arrives. Itâs still common in markets where digital payments arenât universal, like parts of India and Southeast Asia.
Why it matters: COD increases delivery risk. Customers sometimes refuse parcels at the door, leaving sellers with return costs and no payment.
The total cost to make, store, and ship each unit. This is your north star for profitability.
Weâve built a cost per unit guide to help you calculate it accurately, including overhead, fulfillment, and hidden fees.
The process of getting goods approved to cross borders. Customs agents inspect paperwork, verify duties, and sometimes hold items for further checks.
Anecdote: My sneakers from Germany sat at customs for 11 days because the HS code was misfiled. Always double-check with your freight forwarder.
With DDP, the seller covers all shipping costs, insurance, and duties until goods arrive at the buyerâs doorstep. Buyers love it. Sellers, not so much.
Full breakdown here: Delivered Duty Paid explained.
Dimensional weight is a pricing tactic carriers use when light packages take up lots of space. Calculated as: (length Ă width Ă height) Ă· divisor.
Why it matters: A box of yoga mats could cost more than expected because theyâre bulky. UPS explains dimensional weight in detail.
Short-haul trucking that moves containers from ports to warehouses or rail yards. Itâs the unsung hero of supply chains. Without drayage, your container stays stuck at the dock while storage fees rack up.
Example: Retailers importing via Ports of LA & Long Beach rely heavily on drayage to keep inventory flowing inland.
Drop shipping is when sellers donât hold inventory themselves. Instead, orders are forwarded to suppliers who ship directly to customers.
Pros: No inventory risk.
Cons: Zero control over fulfillment speed or packaging quality.
The backbone of online retail: storing, picking, packing, and shipping orders. Done right, it delights customers. Done wrong, it tanks reviews.
See our ecommerce fulfillment guide.
EDI is the digital transfer of documents like invoices, purchase orders, and BOLs between companies. Itâs not flashy, but without it, retailers and suppliers would still be faxing each other in 2025.
Shipping that cuts in line. Customers pay more for guaranteed faster delivery.
Learn what it really costs here.
Fun fact: Capgemini reports 5% of last-mile deliveries fail on the first attempt. Offering accurate expedited options can help avoid wasted runs.
An Incoterm that defines when responsibility shifts from seller to buyer. Example: âFOB Shanghaiâ means the seller covers costs until goods are loaded onto the ship in Shanghai.
FTL shipping means your freight fills an entire truck. Best for big, heavy shipments.
Example: A pick and pack fulfillment center sending a full truck of holiday orders to an Amazon facility would book FTL instead of LTL.
A fulfillment center is a specialized warehouse that handles ecommerce storage, picking, packing, and shipping. Itâs the modern replacement for âjust a warehouse.â
Check the differences between fulfillment centers and warehouses.
Gross weight is the total weight of a shipment, including the goods themselves, the packaging, and even the pallet theyâre stacked on. Itâs the âeverything in the box (and under it)â number.
Why it matters: Carriers charge based on weight or dimensional weight (whichever is higher), so underestimating gross weight leads to billing surprises.
Example: A supplement brand shipping protein tubs may think a pallet weighs 1,000 lbs, but once shrink wrap and the pallet itself are added, itâs 1,100 lbs. That extra 100 lbs can tip you into a higher pricing bracket.
Pro tip: Always weigh freight after itâs fully packaged. Carriers will, and their scales win arguments.
Ground shipping is transportation by truck or van instead of air or ocean. Itâs the workhorse of domestic ecommerce.
Why it matters: Itâs cheaper than air freight but slower, with transit times varying from 1â7 days in the U.S.
Real-world example: Subscription box fulfillment companies often rely on UPS or FedEx ground services for affordability. Customers might wait a few extra days, but businesses save big on costs.
Fun fact: Ground shipping is where dimensional weight often stings. That oversized box of yoga mats? More expensive than youâd guess.
HS codes are standardized six-digit codes used to classify products for customs. Every item crossing borders needs one.
Why it matters: Misclassify goods and youâll face customs delays, fines, or higher duties.
Example: A fashion brand shipping leather handbags canât just write âbags.â Customs wants HS Code 420221. Label it wrong, and your handbags might sit in a warehouse collecting dust, and fees.
Anecdote: I once saw a shipment of sneakers mislabeled under âfootwear, protective.â Customs flagged it, thinking they were steel-toe boots. Cue a two-week delay.
A distribution model where goods flow through central hubs before being delivered to their final destination (the spokes).
Why it matters: It allows carriers to consolidate shipments and lower costs. But it can add transit time.
Example: A parcel from New York to Boston might first travel through a hub in New Jersey before heading back up. Customers see âwhy is my package going the wrong way?â on tracking. Thatâs hub-and-spoke in action.
For ecommerce: Efficient hub networks are what make last-mile delivery affordable at scale.
Incoterms (International Commercial Terms) are standardized trade terms that define who pays for what, who bears risk, and where ownership of goods transfers.
Why it matters: Misunderstanding Incoterms can mean paying thousands in unexpected costs. According to the International Chamber of Commerce, misapplied Incoterms are one of the top causes of cross-border disputes.
Example: âFOB Shanghaiâ vs. âCIF Los Angelesâ changes everything. In the first, the buyer pays once goods are on the ship in Shanghai. In the second, the seller covers costs until goods arrive in LA.
Shipping insurance covers goods against loss or damage in transit.
Why it matters: Freight gets lost, damaged, or stolen. Without insurance, you eat the cost.
Example: A jewelry company shipping $50,000 in gold chains wonât risk uninsured freight. Carriers typically only cover $0.60 per pound unless you purchase additional coverage.
Pro tip: Donât assume carrier liability = insurance. Itâs not.
Inventory management is tracking stock levels, locations, and movements across warehouses.
Why it matters: Without accurate inventory, you risk overselling or dead stock.
Real-world example: A cosmetics brand launches a TikTok campaign. Inventory sells out in days, but the system doesnât update in real time. Hundreds of oversold orders lead to refunds, angry customers, and lost trust.
Deep dive: Check our inventory vs stock breakdown for more.
JIT is an inventory strategy where goods arrive only when needed, minimizing storage costs.
Why it matters: Great for cash flow, risky if supply chains hiccup.
Example: Automotive companies pioneered JIT to reduce warehouse costs. But when COVID-19 hit, many factories shut down because a single missing part stalled production.
Ecommerce angle: A pick and pack fulfillment center can support JIT by receiving supplier shipments daily. But any delays? Your customers get âout of stockâ messages instead of products.
Kitting means bundling products together into ready-to-ship sets. Think gift boxes, subscription kits, or âbuy one, get oneâ promos.
Why it matters: It increases perceived value and simplifies the customer experience.
Example: A wellness brand bundles protein powder, a shaker bottle, and vitamins into a fitness kit. Instead of shipping three items separately, kitting and fulfillment services prep them as one.
Pro tip: Efficient kitting can reduce picking errors and speed up order cycle time.
The final stretch of delivery from a local hub to the customerâs doorstep. Itâs often the most expensive and unpredictable leg.
Why it matters: Capgemini found that 5% of last-mile deliveries fail on the first attempt. Failed deliveries = wasted costs and unhappy customers.
Example: A fashion brand ships to downtown apartments. If customers arenât home, packages get returned or stolen. Solutions include lockers, same-day scheduling, or premium white glove delivery.
LTL freight combines shipments from multiple shippers into one truck. Itâs like ride-sharing for cargo.
Why it matters: Perfect for mid-sized ecommerce brands shipping pallets but not full trucks. Costs are shared, but transit is slower since trucks make multiple stops.
Cross-reference: See our parcel vs. LTL vs. FTL guide.
A liftgate is a hydraulic platform attached to the back of trucks, allowing heavy freight to be raised/lowered where no dock is available.
Why it matters: Essential for deliveries to retail shops, residential buildings, or any site without a loading dock. And yes, it comes with accessorial charges.
The smallest number of units a supplier will sell per order.
Why it matters: MOQs protect suppliers from small, unprofitable runs but can strain cash flow for startups.
Example: A T-shirt supplier requires an MOQ of 500 units per style. Thatâs great if youâre scaling, but tough for a brand testing new designs.
More detail: See our minimum order quantity guide.
A manifest is a detailed list of cargo on a shipment. Think of it as the guest list for freight.
Why it matters: Customs and carriers use manifests to track, verify, and clear shipments. Any errors can delay release.
Example: If a manifest lists 1,000 units of cosmetics but inspectors find 1,200, the entire shipment might be flagged.
NAFTA (North American Free Trade Agreement) was replaced in 2020 by the USMCA (United States-Mexico-Canada Agreement). Both regulate trade across North America, reducing tariffs and simplifying customs paperwork.
Why it matters: Ecommerce brands sourcing products from Mexico or Canada benefit from lower duties, if paperwork is correct.
Example: An apparel brand manufacturing in Mexico can ship to U.S. warehouses faster and cheaper under USMCA, provided HS codes and certificates of origin are filed correctly.
Pro tip: If youâre scaling fashion fulfillment, partner with a 3PL that understands USMCA compliance to avoid customs headaches.
An NVOCC is a freight forwarder that issues its own Bill of Lading (BOL) but doesnât operate ships. They buy space from carriers and resell it to shippers.
Why it matters: NVOCCs often negotiate better rates than individual businesses could, making them valuable for small to mid-sized importers.
Example: A startup importing subscription box goods from China may work with an NVOCC for better pricing and support navigating customs.
Ocean freight is the backbone of international trade. Goods shipped via sea take weeks, not days, but the cost per unit is much lower than air freight.
Why it matters: If your product isnât time-sensitive, ocean freight keeps costs down.
Example: Furniture brands rely heavily on ocean freight since products are bulky and margins canât absorb air rates.
Anecdote: One DTC brand I worked with imported surfboards. Shipping by air cost more than the boards themselves. Ocean freight saved the business, even if customers had to wait.
Order cycle time measures how long it takes from when a customer places an order until itâs delivered.
Why it matters: Faster cycle times = happier customers. Slow cycle times = cart abandonment and bad reviews.
Example: Amazon Primeâs 2-day standard has raised customer expectations across the board. If your order fulfillment process takes 7 days, youâre losing conversions.
Pro tip: Audit your cycle time at each step, picking, packing, carrier pickup, transit, to find bottlenecks.
A pallet is a flat platform (wood, plastic, or metal) used to stack and transport goods.
Why it matters: Pallets keep freight stable and make loading/unloading easier with forklifts.
Example: A beauty brand shipping 2,000 lipstick units to Sephora packs them on a pallet to avoid carton damage.
Pro tip: Standard pallets are 48â x 40â in the U.S., but international pallet sizes vary. Always check before shipping abroad.
Pick and pack is the process of selecting items from inventory and packing them for shipping. Itâs the bread and butter of fulfillment.
Why it matters: Efficient picking reduces labor costs and speeds up shipping.
Deep dive: See our pick and pack fulfillment guide.
Example: A pick and pack warehouse handling 10,000 SKUs needs optimized pick lists and bin organization. Otherwise, workers waste hours hunting for products.
A port of entry is the location where goods officially enter a country and clear customs.
Why it matters: Ports can get congested, delaying shipments.
Example: The Ports of Los Angeles and Long Beach handle 40% of U.S. container imports. If congestion builds, ecommerce brands face stockouts and angry customers.
A quota is a government-imposed limit on how much of a specific product can be imported or exported during a set period.
Why it matters: Quotas protect domestic industries but can limit ecommerce scaling.
Example: If the U.S. sets a quota on textile imports, a fashion brand may face delays or increased costs once the cap is reached.
A reefer container is a refrigerated shipping container used for perishable goods like food, pharmaceuticals, or flowers.
Why it matters: Without reefers, global supply chains for temperature-sensitive products wouldnât exist.
Example: A supplement company shipping probiotics relies on reefers to maintain efficacy during transit.
Pro tip: Reefer capacity is limited. Book early during summer or holidays.
Also called reverse logistics, returns management is how businesses handle customer returns.
Why it matters: According to the National Retail Federation, 20% of online orders are returned. Poor returns processes kill profitability.
Example: Subscription box fulfillment companies with easy return labels retain more customers long-term.
A SKU is a unique code used to identify products in inventory.
Why it matters: Accurate SKUs prevent picking errors and overselling.
Example: A T-shirt in red, size medium, might be SKU: TEE-RED-M.
Pro tip: Keep SKUs simple and consistent across systems.
Specialized logistics for subscription boxes, which often require kitting, customization, and timed delivery.
Why it matters: Subscription customers expect reliability. One late or incorrect box = churn.
Learn more: Subscription box fulfillment.
The entire flow from raw materials to customer delivery.
Why it matters: Weak supply chains = delays, shortages, and lost revenue.
Check our breakdown of supply chain formulas.
A tariff is a tax on imported goods, usually to protect domestic industries.
Why it matters: Tariffs increase costs for import-heavy ecommerce brands.
Example: During the U.S.-China trade war, tariffs on apparel raised costs for DTC fashion brands. Many shifted sourcing to Vietnam.
A tracking number is the lifeline customers obsessively refresh until their order arrives.
Why it matters: Real-time tracking boosts trust and reduces support tickets.
Pro tip: Integrate branded tracking pages with your Shopify fulfillment setup for a better customer experience.
Transit time is how long a shipment takes to travel from origin to destination.
Why it matters: Delayed transit times can cause stockouts or missed delivery promises.
Example: Amazon trains customers to expect 2-day delivery. Competing with that means streamlining last-mile delivery.
The âbig threeâ U.S. parcel carriers dominate domestic shipping, but each has quirks.
Why it matters: Picking the wrong carrier can wipe out margins. A Shopify fulfillment store shipping lightweight accessories may save money with USPS, while heavy subscription boxes are cheaper via UPS or FedEx ground.
A unit load is when goods are grouped together (on pallets, shrink-wrapped, etc.) so they can be moved as one.
Why it matters: Unitizing reduces handling costs and damage risk.
Example: Instead of loading 100 boxes individually, a brand stacks them on a pallet to form one unit load.
Value-added services (VAS) are extra offerings provided by logistics companies, such as custom packaging, white glove delivery, kitting, or branded inserts.
Why it matters: These small touches create customer loyalty and differentiate your brand.
Example: An apparel brand adds handwritten thank-you cards inside orders, handled by their 3PL. Customers love it, reviews improve, and churn drops.
Another way of saying dimensional weight, calculated based on the space a package takes up rather than its actual weight.
A waybill is a document issued by a carrier with shipment details like sender, recipient, and contents. Unlike a Bill of Lading, itâs not a contract of ownership.
Why it matters: Without a waybill, carriers donât know what theyâre transporting.
A warehouse is a building used for storage. But in ecommerce, warehouses are evolving into multi-functional spaces.
Why it matters: Not all warehouses are created equal. Some are traditional storage facilities, others are ecommerce warehouses, and some double as fulfillment centers.
Example: A DTC skincare brand uses a 3PLâs warehouse to store inventory close to customers in California, reducing delivery times.
Warehouse shipping is the process of distributing goods from a warehouse directly to customers or retailers.
Learn more: warehouse shipping locations.
Cross-docking means unloading goods from inbound trucks and loading them directly onto outbound trucks with little to no storage time.
Why it matters: Reduces storage costs and speeds up supply chains.
Example: Grocery suppliers use cross-docking to keep produce fresh, moving it from farm shipments straight onto local delivery trucks.
In logistics, yield measures how efficiently a transport operation generates profit compared to its costs.
Why it matters: Low yield can signal inefficient routes, underutilized trucks, or poor pricing strategies.
Example: A carrier running half-empty trucks between Chicago and Dallas might lower yield unless shipments are consolidated.
The process of managing trailers, trucks, and containers in a warehouse yard.
Why it matters: Inefficient yards cause bottlenecks.
Example: A warehouse with 50 inbound trailers needs proper yard scheduling to avoid costly driver wait times.
Zone pricing means shipping rates vary depending on geographic âzones.â The farther away the delivery, the higher the cost.
Why it matters: Carriers like USPS set rates by zones, so shipping coast-to-coast costs more than local deliveries.
Example: A New York DTC brand offering âfree shippingâ must factor in higher costs for Zone 8 (California) orders.
Similar to zone pricing, zonal delivery optimizes inventory by storing products in multiple warehouses closer to customers.
Why it matters: Reduces shipping costs and speeds up delivery.
Example: Ecommerce fulfillment providers often recommend splitting stock across East and West Coast facilities to improve zonal delivery.
The top terms include BOL (Bill of Lading), FOB (Free on Board), DDP (Delivered Duty Paid), SKU (Stock Keeping Unit), and LTL (Less Than Truckload). These impact costs, risk, and customer expectations.
FOB transfers risk and cost once goods are loaded at the origin port, while DDP makes the seller responsible all the way through to the buyerâs door. Buyers prefer DDP, sellers prefer FOB.
Dimensional weight means carriers charge for space, not just weight. Bulky but light items like pillows can cost more to ship than expected. Carriers like UPS apply dimensional weight on most packages.
A warehouse primarily stores goods, while a fulfillment center also handles picking, packing, and shipping. More details here: fulfillment centers vs warehouses.
Weâve gone AâZ on common shipping terms, layered in examples, jokes, and a few war stories from customs desks and delayed ports. We hit everything from accessorial charges to zone pricing, because shipping jargon shouldnât be a secret code only freight brokers understand.
Hereâs the takeaway: knowing these terms helps you protect your margins, negotiate smarter, and keep customers happy.
Ready to skip the jargon and focus on growth? Get started with ShipBots today. â
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