Jargon and Incoterms for Freight Forwarding
Like any industry, freight forwarding is ripe with terms, phrases, and abbreviations that have accumulated over the years. For those in the industry, these terms act as speedy signifiers of the details around a shipment, whether that’s size, destination, or transport type. For those not in the know, they can act as a sizeable roadblock of gibberish that’s difficult to decipher.
At Allegro Freight Forwarding, we aim to make the shipping journey as simple as possible for our clients. To do so, this article will highlight and translate jargon and incoterms used for freight forwarding into plain speak, ensuring you’re in the best position for local and international shipping.
Common Jargon Used in Shipping
To begin, we’ll introduce you to some common terms you may have come across while planning your shipping route. These include terms related to the documents you need to provide, and the persons involved in the process.
People and Organisations
Authorised Economic Operator (AEO)
An AEO is a company accredited for being a trusted trader who provides reliable customs documentation. This status is recognised around the world, making it easier to identify reliable routes for your cargo.
Fiscal Representative
A Fiscal Representative is the one who pays VAT and duty at your shipment’s destination, making it easier to ship from the UK into other countries.
Documents and Information
Customs Clearance Information (CCI)
To enable customs clearance forms to be completed, certain information needs to be provided, known collectively as CCI. This can be handled by you, or more likely by your designated shipper or freight forwarder.
Export Accompanying Document (EAD)
Alongside any export from a given customs territory, there must be an EAD. In Europe, this can also be known as EX or EX1. This can be the responsibility of various parties, determined by the incoterms and details of your shipment.
EORI Number
An Economic Operators Registration and Identification (EORI) Number beginning with GB is required since Brexit in order to trade between the UK and the EU. For VAT-registered businesses, you will receive this number from HMRC.
Exit Summary Declaration (EXS)
The EXS notifies the export border of your shipment, giving relevant authorities like HMRC and customs control time to determine what level of checks your goods require.
Goods Vehicle Movement Service (GVMS)
This is a software which collates the details of your shipment together into a single digital footprint, smoothing the transition of goods from one country to another. As an output, it creates a Goods Movement Reference (GMR) Number.
GMR Number
The GMR Number is created by the GVMS, and will be requested by a clearance agent to provide the information required for your shipment to pass through onto a ferry.
Letter of Appointment
A Letter of Appointment gives someone the authority to act on your behalf when handling customs, acting as your Customs Agent (known as Direct or Indirect Representative in the EU). This agent acts in your name, meaning you need to pick someone you can trust to ensure there are no errors.
You can appoint a specified Customs Broker or Specialised Agent to act on your behalf – or work with your freight forwarder for a comprehensive solution.
Master Reference Number (MRN)
The MRN, sometimes known as a Movement Reference Number, is automatically allocated by the EU’s customs office. It can be used to process and validate:
- Digital customs declarations
- EXS notifications
- Re-export declarations and notifications
T1 Transit Document
This document is used to transport goods across borders, from one customs office to another. The primary use for a T1 is to carry non-EU goods into the EU or vice-versa. The procedure involving this document is carried out by customs at the start of the journey.
Not sure what documents you need for your freight? Get in touch today >
Freight Forwarding Incoterms
Incoterms are three letter abbreviations, used to accurately describe shipment information without the need for lengthy wording. They create an internationally recognised language of common terms for use in shipping.
There are eleven officially defined incoterms from the Incoterms® 2020 related to freight forwarding, split into those that apply to any kind of freight, and those that only apply to sea freight. There are also additional incoterms that you may have come across as well.
General Incoterms
- EXW: Ex-Works
- FCA: Free Carrier
- CPT: Carriage Paid To
- CIP: Carriage and Insurance Paid to
- DAP: Delivered At Place
- DPU:Delivered at Place Unloaded
- DDP: Delivered Duty Paid
Additional incoterms include:
- LTL: Less-than Trailer Load
- FTL: Full Trailer Load
These terms typically apply to road freight, and are the general counterpart to the sea freight-specific LCL and FCL terms.
Sea Freight Incoterms
- FAS: Free Alongside Ship
- FOB: Free On Board
- CFR: Cost and Freight
- CIF: Cost Insurance and Freight
Other incoterms for sea freight include:
- LCL: Less-than container load
- FCL: Full container load
These terms refer to how much of the container your goods take up, effectively determining whether it is grouped or express.
Learn more about the difference between LCL and FCL shipping >
Make Shipping Simpler with Allegro Freight Forwarding
Understanding these incoterms and the common jargon used in freight forwarding puts you in the best position, helping ensure your shipments reach their destination in the time and condition you expect. Don’t want to keep track of all these terms yourself? Then we have the solution.
Working with a reliable shipping partner lets you cut through the noise, leaving the complex terminology in the hands of the professionals and enabling you to get on with what matters most – growing your business and improving your offerings. At Allegro Freight Forwarding, we provide shipping support for businesses big and small, on a global scale. To find out more, get in touch today!
