Air Freight Glossary: Key Terms You Need To Know
Navigating the world of air freight can feel like learning a new language. There are so many industry-specific terms and acronyms that it's easy to get lost. That's why we've put together this comprehensive air freight glossary to help you understand the key terms and concepts. Whether you're a seasoned logistics professional or just starting out, this guide will provide you with the knowledge you need to navigate the complexities of air freight with confidence. This glossary aims to simplify the jargon, providing clear and concise definitions that allow businesses and individuals to better understand and manage their air cargo shipments. From understanding different types of air waybills to grasping the intricacies of incoterms, this resource is designed to be your go-to guide for all things air freight.
A
Air Waybill (AWB): Guys, the Air Waybill (AWB) is like the bill of lading, but for air shipments. It's a super important document that serves as a receipt for the shipment issued by the airline or its authorized agent. It contains all the details about the shipment, like the origin, destination, weight, dimensions, and any special instructions. The AWB is non-negotiable, meaning it doesn't represent ownership of the goods but acts as a contract of carriage. Always double-check the AWB for accuracy to avoid any hiccups down the line! An AWB also includes tracking information, allowing shippers and recipients to monitor the progress of their air cargo. It confirms the acceptance of goods for transport and outlines the terms and conditions of the shipment. Key elements include the AWB number, shipper and consignee details, declared value for carriage, and a description of the goods. Different types of AWBs exist, such as master AWBs (issued by the airline) and house AWBs (issued by freight forwarders).
ATA (Actual Time of Arrival): Keep an eye on the ATA, or Actual Time of Arrival! It tells you precisely when the aircraft touched down at the destination airport. This is crucial for coordinating the next steps in the supply chain, like arranging for customs clearance and final delivery. Knowing the ATA helps in streamlining logistics and minimizing delays, ensuring that goods are moved efficiently from the airport to their final destination. Real-time tracking systems often provide updates on the ATA, allowing stakeholders to stay informed. The accuracy of the ATA is vital for planning and scheduling, particularly for time-sensitive shipments.
ATD (Actual Time of Departure): Similar to ATA, the ATD or Actual Time of Departure indicates the exact time the aircraft left its origin airport. This information is key for tracking the progress of your shipment and estimating its arrival time. Monitoring the ATD allows you to anticipate any potential delays and adjust your plans accordingly. Like the ATA, the ATD is often available through tracking systems and airline updates. This data point is essential for maintaining visibility over the shipment's journey and coordinating subsequent logistics activities.
Airline Code: Every airline has a unique airline code, usually a two or three-letter identifier. This code is used to identify the airline on air waybills, flight schedules, and other shipping documents. Knowing the airline code helps in quickly identifying the carrier responsible for the shipment and accessing relevant information about the flight. These codes are standardized by the International Air Transport Association (IATA) and are crucial for accurate communication and tracking within the air freight industry.
B
Beneficiary: The beneficiary is the person or company who will receive the payment from a letter of credit. In air freight, this is typically the seller or exporter of the goods. The beneficiary must comply with all the terms and conditions of the letter of credit to ensure payment. Understanding the role of the beneficiary is crucial for managing financial transactions and ensuring that payments are processed correctly and efficiently.
Bonded Warehouse: A bonded warehouse is a secure facility approved by customs authorities for storing goods that have not yet cleared customs. This allows importers to store goods without paying duties and taxes until they are ready to be released into the market. Bonded warehouses are particularly useful for businesses that import goods in bulk and need a place to store them temporarily. These warehouses offer secure storage and help in managing cash flow by deferring duty payments. They are subject to strict regulations and oversight by customs authorities.
Bill of Lading (B/L): While primarily used in sea freight, it's good to know what a Bill of Lading (B/L) is. It's a document issued by a carrier to acknowledge receipt of a shipment of goods. It serves as a receipt, a contract of carriage, and a document of title. In air freight, the Air Waybill (AWB) serves a similar purpose but is non-negotiable.
C
Cargo Insurance: Cargo insurance is a must-have to protect your shipment against loss or damage during transit. It covers risks such as theft, damage, or loss due to accidents or natural disasters. The cost of cargo insurance depends on the value of the goods, the origin and destination, and the type of coverage. Investing in cargo insurance provides peace of mind and protects against potential financial losses. Different types of cargo insurance policies are available, offering varying levels of coverage to suit different needs.
Consignee: The consignee is the person or company to whom the shipment is addressed and who is responsible for receiving the goods at the destination. The consignee is typically the buyer or importer of the goods. It's crucial to provide accurate consignee information on the air waybill to ensure smooth delivery. The consignee is responsible for customs clearance and any applicable duties and taxes.
Consignor: The consignor is the person or company who is sending the shipment. They are responsible for preparing the goods for shipment and providing the necessary documentation. The consignor is typically the seller or exporter of the goods. Accurate consignor information is essential for proper tracking and handling of the shipment. The consignor must ensure that the goods are properly packaged and labeled for air transport.
Customs Clearance: Customs clearance is the process of getting your shipment approved by customs authorities to enter or exit a country. This involves submitting the required documentation, paying any applicable duties and taxes, and complying with all relevant regulations. Customs clearance can be complex and time-consuming, so it's often best to work with a customs broker. Efficient customs clearance is crucial for avoiding delays and ensuring timely delivery of goods. The requirements for customs clearance vary depending on the country and the type of goods being shipped.
Customs Broker: A customs broker is a licensed professional who assists importers and exporters with customs clearance procedures. They have expertise in customs regulations and can help ensure that your shipment complies with all requirements. Using a customs broker can save time and money by avoiding costly mistakes and delays. A good customs broker can also provide valuable advice on import and export regulations.
Chargeable Weight: The chargeable weight is the weight used to calculate the air freight charges. It's either the gross weight of the shipment or the volumetric weight, whichever is greater. Understanding chargeable weight is essential for estimating air freight costs accurately. Chargeable weight ensures that airlines are compensated fairly for the space occupied by the shipment. Always calculate both the gross weight and volumetric weight to determine the chargeable weight.
D
Dangerous Goods (DG): Dangerous Goods (DG) are materials or items with hazardous properties that, if not properly controlled, present a potential hazard to human health and safety, infrastructure, and/or the means of transport. Dangerous Goods are classified according to the UN classification. The transport of Dangerous Goods by air is strictly regulated by IATA (International Air Transport Association) and must be declared and packaged according to specific guidelines. Failure to comply with these regulations can result in fines and penalties. Proper training and certification are required for handling and shipping Dangerous Goods.
Declared Value for Carriage: The declared value for carriage is the value of the goods declared by the shipper for the purpose of determining liability in case of loss or damage. This value is used to calculate the air freight charges and the amount of insurance coverage. It's important to declare an accurate value to ensure adequate compensation in the event of a claim. The declared value for carriage should reflect the actual value of the goods being shipped.
Delivery Duty Paid (DDP): Delivery Duty Paid (DDP) is an Incoterm that means the seller is responsible for all costs and risks associated with delivering the goods to the buyer's specified location, including duties, taxes, and customs clearance. This term places the maximum obligation on the seller. DDP simplifies the import process for the buyer, as they do not have to handle customs clearance or pay any import duties.
Delivery Duty Unpaid (DDU): Delivery Duty Unpaid (DDU), now replaced by Delivery at Place (DAP) in Incoterms 2020, meant that the seller was responsible for delivering the goods to the buyer's specified location, but the buyer was responsible for paying duties, taxes, and customs clearance. While DDU is no longer officially used, it's still sometimes encountered. Be aware of the current Incoterms and use DAP instead.
E
ETA (Estimated Time of Arrival): The ETA is the estimated time the aircraft is expected to arrive at the destination airport. This is an estimate and can change due to various factors such as weather conditions, air traffic, and other unforeseen circumstances. Monitoring the ETA helps in planning for the arrival of the shipment and coordinating subsequent logistics activities. Real-time tracking systems often provide updates on the ETA.
ETD (Estimated Time of Departure): Similar to ETA, the ETD is the estimated time the aircraft is expected to depart from the origin airport. This is also an estimate and can change. Knowing the ETD helps in tracking the progress of the shipment and anticipating any potential delays. Keeping an eye on the ETD and ETA can really help you stay in the loop.
Export License: An export license is a government document that authorizes the export of specific goods to certain countries. Export licenses are required for goods that are subject to export controls, such as military equipment, sensitive technology, and certain agricultural products. Obtaining an export license can be a complex process and requires careful attention to detail. Failure to obtain the necessary export license can result in fines and penalties.
F
Freight Forwarder: A freight forwarder is a company that arranges the transportation of goods on behalf of shippers. They act as intermediaries between shippers and carriers, coordinating all aspects of the shipment, including booking cargo space, preparing documentation, and arranging for customs clearance. Using a freight forwarder can simplify the shipping process and save time and money. A good freight forwarder has extensive knowledge of air freight regulations and procedures.
Free on Board (FOB): Free on Board (FOB) is an Incoterm that means the seller is responsible for delivering the goods to the port of shipment and loading them onto the vessel. The buyer assumes responsibility for the goods once they are loaded on board. FOB is commonly used in international trade. Understanding FOB terms is crucial for determining who is responsible for costs and risks at each stage of the shipment.
G
Gross Weight: The gross weight is the total weight of the shipment, including the weight of the goods, packaging, and any pallets or containers. The gross weight is used to calculate the air freight charges and to determine the maximum weight that can be loaded onto an aircraft. Accurate gross weight information is essential for safe and efficient air transport.
I
Incoterms: Incoterms (International Commercial Terms) are a set of standardized trade terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international trade transactions, including who is responsible for costs, risks, and documentation. Understanding Incoterms is essential for avoiding misunderstandings and disputes in international trade. Incoterms are regularly updated, so it's important to stay current with the latest version.
IATA (International Air Transport Association): IATA is the trade association for the world's airlines. It sets standards for air transport, including safety, security, and efficiency. IATA also provides training and certification for air freight professionals. IATA plays a crucial role in promoting safe and efficient air transport worldwide.
K
Know Your Customer (KYC): Know Your Customer (KYC) is the process of verifying the identity of your customers to prevent fraud and money laundering. In air freight, KYC is important for ensuring the security of the supply chain and complying with regulations. KYC procedures typically involve collecting and verifying customer information, such as their name, address, and business registration details. Implementing robust KYC procedures helps in mitigating risks and maintaining the integrity of the air freight industry.
L
Letter of Credit (L/C): A letter of credit (L/C) is a financial instrument issued by a bank that guarantees payment to the seller, provided that the seller complies with all the terms and conditions of the L/C. Letters of credit are commonly used in international trade to reduce the risk of non-payment. The L/C provides security for both the buyer and the seller. Understanding how letters of credit work is essential for managing financial transactions in international trade.
M
Master Air Waybill (MAWB): The Master Air Waybill (MAWB) is the main air waybill issued by the airline. It covers a shipment containing multiple house air waybills. The MAWB consolidates all the individual shipments under one document. Freight forwarders use MAWBs to consolidate shipments from multiple customers. The MAWB simplifies the tracking and handling of consolidated shipments.
N
Net Weight: The net weight is the weight of the goods alone, without any packaging. The net weight is used for customs declarations and for calculating duties and taxes. Accurate net weight information is essential for complying with regulations.
O
Origin: The origin is the location where the shipment begins its journey. This is typically the seller's warehouse or factory. The origin is an important piece of information for tracking the shipment and for determining transportation costs.
P
Packing List: A packing list is a document that lists the contents of each package in a shipment. It includes details such as the quantity, description, and weight of each item. A packing list is useful for verifying the contents of the shipment and for customs clearance. Accurate packing lists help in streamlining the inspection process.
Pro Forma Invoice: A pro forma invoice is a preliminary invoice provided by the seller to the buyer before the shipment is sent. It includes details such as the price, quantity, and description of the goods. A pro forma invoice is used for obtaining import permits and for arranging financing.
Q
Quarantine: Quarantine is the isolation of goods to prevent the spread of pests or diseases. Quarantine measures are often required for agricultural products and other goods that may pose a risk to public health or the environment. Complying with quarantine regulations is essential for avoiding delays and penalties.
R
Restricted Articles: Restricted articles are items that are subject to special regulations or restrictions due to their potential hazards. These may include dangerous goods, certain agricultural products, and items that are subject to export controls. Handling restricted articles requires careful attention to detail and compliance with all applicable regulations.
S
Shipper: The shipper is the person or company who is sending the shipment. They are responsible for preparing the goods for shipment and providing the necessary documentation. The shipper is typically the seller or exporter of the goods.
Standard Industrial Classification (SIC) Code: A Standard Industrial Classification (SIC) Code is a system for classifying industries by a four-digit code. Understanding SIC codes can help classify the products you import. This classification helps freight forwarders understand any special requirements for handling or transporting your goods.
T
Tare Weight: Tare weight is the weight of an empty container or packaging. Knowing the tare weight is essential for accurately determining the net weight of the goods being shipped. Tare weight is subtracted from the gross weight to calculate the net weight.
Transit Time: Transit time is the time it takes for a shipment to travel from the origin to the destination. Transit time depends on various factors, such as the distance, the mode of transport, and the efficiency of the logistics network. Accurate transit time estimates are crucial for planning and managing the supply chain.
U
Unit Load Device (ULD): A Unit Load Device (ULD) is a container or pallet used to consolidate smaller items into a single unit for air transport. ULDs help to streamline the loading and unloading of cargo and to protect the goods from damage. Different types of ULDs are available, each designed for specific types of cargo.
V
Valuation Charge: A valuation charge is a fee charged by the carrier for assuming liability for the value of the goods. The valuation charge is typically based on the declared value for carriage. Understanding valuation charges is important for estimating the total cost of air freight.
W
Wharfage: Wharfage is a fee charged for the use of a wharf or pier. Wharfage is typically charged by port authorities. Understanding wharfage charges is important for estimating the total cost of shipping goods through a port.
This air freight glossary provides a comprehensive overview of the key terms and concepts you need to know to navigate the world of air freight successfully. By understanding these terms, you can communicate more effectively with logistics professionals, make informed decisions about your shipments, and avoid costly mistakes. Keep this glossary handy as a reference guide, and you'll be well-equipped to handle all your air freight needs. Whether you are shipping dangerous goods or just a small parcel, understanding the jargon can significantly impact your efficiency and cost management.