How to use this glossary
Logistics has its own vocabulary, and some words mean slightly different things in different companies or countries. The definitions below are general and plain. Where a term has a fuller article elsewhere on this site, the wording is kept brief. The terms are grouped by theme rather than alphabetically, since related words are easier to learn together.
People and parties
Shipper. The party sending the goods. Often the seller or manufacturer, though it can be another party that arranges the shipment.
Consignee. The party named to receive the goods.
Carrier. A company that physically moves the goods, such as a trucking firm, shipping line or airline.
Freight forwarder. An intermediary that arranges transport and related services for shippers, often across several modes or borders. Their role is covered under freight forwarders.
Third-party logistics provider (3PL). A company hired to handle some or all of another business’s logistics, such as warehousing or transport. See third-party logistics for more.
Customs broker. A licensed professional or firm that prepares and submits import or export paperwork for customs authorities. Licensing rules vary by country.
Goods and units
SKU (stock keeping unit). A code a business assigns to each distinct product variant. A shirt in blue and size medium would have a different SKU from the same shirt in red.
Pallet. A flat platform, usually wood or plastic, on which goods are stacked so they can be lifted by forklift. Standard sizes differ by region.
Unit load. A group of items handled as one, such as boxes stacked and wrapped on a pallet.
Container. A large, standardized steel box used to carry goods by ship, rail or truck. Containers are central to intermodal transport.
Case, carton, each. Common names for levels of packaging. An “each” is a single item; a case or carton holds several; a pallet holds many cases.
Consignment. A shipment of goods sent to one consignee under one set of documents. The word also has a separate meaning in retail, where goods are held by a seller without being paid for until sold; context tells you which is meant.
Movement and transport
Inbound and outbound. Goods coming into a business versus going out of it.
Line haul. The long-distance portion of a journey, as opposed to local pickup and delivery.
First mile and last mile. The first leg picks goods up from the origin; the final leg brings them to the end recipient. Last-mile delivery is a common term in online retail.
Full truckload (FTL) and less-than-truckload (LTL). Shipments that fill a whole trailer versus those that share trailer space with other shippers’ goods. See truckload shipping and LTL shipping.
Intermodal. Using more than one mode of transport for a single journey, typically with the goods staying in the same container.
Freight consolidation. Combining several smaller shipments into one larger one to reduce cost per unit.
Cross-docking. Moving goods directly from an arriving vehicle to a departing one with little or no storage in between.
Drayage. A short truck move, often between a port or rail terminal and a nearby warehouse.
Storage and inventory
Warehouse and distribution center. Both are buildings for holding goods. A distribution center usually emphasizes quick movement of goods to customers or stores rather than long-term storage.
Inventory. Goods held for sale or use.
Stockout. A situation where an item is wanted but not available.
Backorder. An order for an item that is out of stock, to be filled when supply arrives.
Safety stock. Extra inventory kept as a cushion against uncertainty in demand or supply.
Put-away. Moving received goods to their storage locations.
Picking. Collecting items from storage to fill an order.
Slotting. Deciding where each product should be stored in a warehouse.
Time and service terms
Lead time. The time between placing an order and receiving the goods. A detailed explanation is in lead times.
Transit time. The time goods spend traveling.
Dwell time. The time a vehicle, container or shipment sits waiting, for example at a dock or terminal, without moving. Long dwell time usually signals a delay or a bottleneck.
ETA and ETD. Estimated time of arrival and estimated time of departure.
Service level. A target for how reliably customers’ needs are met, such as the percentage of orders delivered on time. See service levels.
Peak season. A period of unusually high volume, such as the weeks before major shopping holidays.
Documents and trade
Bill of lading. The main transport document, acting as a receipt and a record of the carrier’s contract. The wider set of paperwork is explained under shipping documents.
Packing list. A list of what is in each package, typically without prices.
Incoterms. A set of standard trade terms published by the International Chamber of Commerce that describe who handles what in an international sale. Incoterms rules are explained separately.
Customs duty. A tax charged on certain imported goods. Details are under import duties.
Harmonized System (HS) code. A standardized numeric code used worldwide to classify traded goods.
Measurement terms
Gross weight and net weight. Gross weight includes packaging; net weight is the goods alone.
Dimensional weight. A pricing method some carriers use that accounts for the space a package takes up, not just its actual weight. Light but bulky packages may be charged by size instead of weight. Carriers define their own formulas.
KPI. Key performance indicator, a number used to track how well something is performing. Several are described in logistics KPIs.
Throughput. The amount of goods processed in a given period.
Handy abbreviations
- WMS: warehouse management system, software to run a warehouse.
- TMS: transportation management system, software to plan and manage transport.
- ERP: enterprise resource planning, software that connects a company’s main business functions.
- POD: proof of delivery.
- B2B and B2C: business to business, and business to consumer.
A note on shifting meanings
Terms are sometimes used loosely. “Logistics” and “supply chain” are often interchanged in casual speech, though they are not quite the same thing. If a word seems to be used differently by two people, ask what they mean. In contracts and quotes, always rely on the written definition rather than assumed meaning.