13 Logistics Terms that Exporters Must Know
Cooperating with shippers is inevitable as an exporter. To ensure smooth delivery, exporters need to know several terms regarding logistics and shipping. Good communication with the sender will minimize the occurrence of losses or errors in the goods delivery process. The following are logistics terms that you must know as an exporter.
1. Incoterms (International Commercial Terms)
Incoterms are a set of international standard terms that explain the responsibilities of sellers and buyers in terms of costs, risks and document management when shipping goods.
Some of them are:
- FOB (Free On Board)
- CIF (Cost, Insurance and Freight)
- EXW (Ex Works)
- DDP (Delivered Duty Paid)
Incoterms are important because they determine who is responsible for the goods at each point of the journey. If you choose wrongly, it can cause big losses.
2. FOB – Free On Board
FOB means the seller is responsible until the goods are loaded onto the ship at the port of origin, but after that, the risks and costs move to the buyer. For example: If shipping is from Tanjung Priok Port to Hamburg, then after the goods board the ship, responsibility moves to the buyer.
3. CIF – Cost, Insurance and Freight
CIF means the seller covers shipping costs and insurance to the port of destination. But once the goods reach the port of destination, the risk remains from boarding the ship. For example: your company sends coffee to Chile. Ship costs and insurance are borne by your company, but once the coffee is loaded onto the ship, the risk of damage is borne by the buyer.
4. EXW – Ex Works
EXW means the seller only provides goods at their location (warehouse/factory). So, all logistics and document processes are borne by the buyer. Generally used when the buyer has full experience and control. For example: A buyer from Australia buys coffee from Boyolali using the EXW scheme. He takes care of the collection himself from your warehouse and the entire export process.
5. DDP – Delivered Duty Paid
DDP means the seller is responsible until the goods arrive at the buyer's destination address, including all taxes & import duties. This system is very beneficial for buyers, but sellers must really understand the import procedures of the destination country. For example: For first-time buyers in the Philippines, you can offer DDP shipping so they can simply receive the goods without the hassle of clearing customs.
6. Freight Forwarder
Freight Forwarder is a logistics intermediary company that helps organize the delivery of export goods. Some of the things they commonly handle are:
- Booking ships/planes
- Export documents (such as PEB – Goods Export Notification, Bill of Lading, etc.)
- Coordination with customs
For example: JNE Logistics, Kuehne+Nagel, DHL Global Forwarding.
7. Shipping Line
Shipping line is a shipping company that operates container ships. They issue important documents such as B/L – Bill of Lading. For example: Maersk Line, CMA CGM, MSC, Evergreen.
8. Container (Container)
Containers are standard containers for transporting goods across countries. Containers usually have the following general sizes:
- 20 ft (TEU – Twenty-foot Equivalent Unit)
- 40 ft (FEU – Forty-foot Equivalent Unit)
Containers are used to ensure safety & efficiency when loading and unloading goods.
9. LCL – Less than Container Load
Is a term used when the volume of goods is not enough to fill one container. If this happens, usually the goods will be combined with another shipper in one container. Costs are calculated based on volume (CBM – Cubic Meter units). Suitable for beginners who send small quantities.
10. FCL – Full Container Load
This is a condition where one container is filled by only one exporter. The advantages are safer & faster delivery because there is no need for a consolidation process, as well as more efficient costs for large volumes.
11. B/L – Bill of Lading
Bill of Lading is an official document from the shipping line which states that the goods have been loaded onto the ship. Functions as:
- Proof of ownership of goods
- Proof of carriage contract
- Used to pick up goods at the destination port
This document can be made inoriginal form (must be sent via post) or telex release (electronic).
12. AWB – Air Waybill
AWB is equivalent to Bill of Lading but for shipping by air. This document is usually issued by the airline or air freight forwarder. Not negotiated like B/L, but still important as proof of delivery.
13. Shipping Instruction
Documents/forms from the exporter to the freight forwarder or shipping line. This document usually contains detailed information on goods, incoterms, port of destination, and other special requests. Without this, forwarders cannot book ships/aircraft.
Why is understanding these terms important for logistics purposes?
1. Prevent Losses Due to Misunderstanding of Responsibilities and Risks
If you don't understand the difference between terms such as FOB (Free On Board), CIF (Cost, Insurance and Freight), or EXW (Ex Works), your company could assume costs and risks that would otherwise be borne by the buyer. Example: You think the buyer will cover the insurance, even though you are using the CIF scheme — if the goods are damaged, the insurance claim will be your company's responsibility.
2. Ensuring the Export Process Runs Smoothly & Efficiently
Understanding terms such as LCL (Less than Container Load), FCL (Full Container Load), PEB (Export Goods Notification), and B/L (Bill of Lading) will help your company avoid delays, rejection of goods, or administrative problems at the port. Example: If you don't know that the PEB application must be made before stuffing the container, the export process could be delayed and cause additional costs.
3. Increasing International Buyer's Professionalism and Confidence
By understanding terms such as Incoterms, TEU/FEU, and Shipping Instruction, your company will appear as a competent and professional exporter in the eyes of overseas partners. This will strengthen bargaining power in negotiations and increase the opportunity for repeat orders. Example: Buyers from Germany feel more confident and comfortable working together because you use the right terms and can explain the logistics process clearly.
Those are 13 logistics terms that are important for exporters to know. Understanding these terms will make it easier for you as an exporter to communicate with the sender. This can minimize the occurrence of errors or losses. Want to send products overseas as soon as possible? You can use repack.id to help you send goods abroad quickly, precisely and safely. Contact the contact person on the website repack.id now to send your product abroad!
