Freight Forwarding, Explained
Free, practitioner-written guides to the fundamentals of international shipping — the documents, charges, terms, and deadlines every forwarding desk lives by. No fluff, no gate, no sales pitch.
Parties & Roles
Freight Forwarder
A freight forwarder is a company that arranges international cargo transport on behalf of shippers — booking space with airlines and shipping lines, preparing documentation, coordinating customs clearance, and managing the shipment door to door. Forwarders do not usually own vessels or aircraft; they sell expertise, carrier relationships, and coordination.
NVOCC vs Freight Forwarder
An NVOCC (Non-Vessel Operating Common Carrier) buys ocean capacity from shipping lines and resells it under its own bills of lading, assuming carrier liability without operating vessels. A freight forwarder can act purely as the shipper's agent. The practical difference is who issues the transport document and who carries carrier-grade liability.
Customs Broker vs Freight Forwarder
A customs broker is licensed by a national customs authority (such as US CBP) to file import entries, classify goods, and clear cargo through customs on an importer's behalf. A freight forwarder arranges the physical transport and documentation. Many companies do both, but the licence, liability, and skill set are distinct.
Documentation
HBL vs MBL
A Master Bill of Lading (MBL) is issued by the ocean carrier to the NVOCC or forwarder; a House Bill of Lading (HBL) is issued by the NVOCC or forwarder to the actual shipper. The two documents cover the same cargo at different contract layers — carrier-to-forwarder and forwarder-to-customer.
MAWB vs HAWB
A Master Air Waybill (MAWB) is the airline's transport contract with the freight forwarder or consolidator; a House Air Waybill (HAWB) is the forwarder's contract with the actual shipper. Unlike an ocean bill of lading, an air waybill is never a document of title — cargo releases to the named consignee.
Telex Release
A telex release means the original bill of lading was surrendered to the carrier at origin, so the carrier instructs its destination office to release cargo without presentation of originals. It sits between a full original B/L (maximum control, slowest) and a seaway bill (no originals at all, fastest).
SI Cutoff
The SI (Shipping Instructions) cutoff is the deadline to submit final cargo and party details to the carrier so the bill of lading can be drafted. It is one of four ocean cutoffs — VGM cut, SI cut, CY cut, and DOC cut — and missing any of them delays cargo, documents, or both.
ISF Filing (10+2)
The Importer Security Filing (ISF), or 10+2, is a US Customs and Border Protection requirement for ocean imports: the importer (or their broker/forwarder) must file ten data elements at least 24 hours before the vessel departs the last foreign port, with two further elements filed by the carrier.
Bill of Lading Types
A bill of lading can be issued as a straight (consigned to a named party, non-negotiable), an order (consigned 'to order', negotiable and transferable by endorsement), or a bearer bill. Whether it is negotiable determines if it is a document of title that controls ownership and release of the goods.
Commercial Invoice vs Packing List
The commercial invoice is the seller's bill to the buyer and the primary document customs uses to assess value, duty, and tax. The packing list details how the goods are physically packed — pieces, weights, and dimensions per package — so carriers and customs can verify the shipment without opening every carton.
Certificate of Origin
A certificate of origin (COO) is a document that certifies the country in which goods were manufactured or produced. Customs uses it to apply the correct duty rate, enforce trade measures, and — with a preferential COO under a free-trade agreement — grant reduced or zero duty on qualifying goods.
Incoterms
Incoterms 2020
Incoterms 2020 are eleven standardised trade rules published by the International Chamber of Commerce that define, for each sale, which costs the seller bears, where risk transfers to the buyer, and who handles export and import clearance. They allocate cost and risk — not ownership, payment terms, or who physically books the freight.
CIF vs FOB
Under FOB, the buyer pays and controls ocean freight, with risk transferring when goods are loaded on board at origin. Under CIF, the seller pays ocean freight and minimum-cover insurance to the destination port — but risk still transfers on board at origin. The real difference is who controls the freight, not who carries the risk at sea.
DDP vs DAP
Under DAP (Delivered At Place), the seller delivers goods to the named destination ready for unloading, but the buyer handles import clearance and pays duties and taxes. Under DDP (Delivered Duty Paid), the seller also clears imports and pays the duty — the maximum obligation a seller can take.
Customs & Compliance
HS Codes
An HS (Harmonized System) code is a standardized product classification number maintained by the World Customs Organization. The first six digits are identical worldwide; each country extends them to 8–10 digits for its own tariff. The code determines duty rate, tax, licensing, and preferential-tariff eligibility.
AMS vs ISF
AMS (Automated Manifest System) is the cargo manifest the ocean carrier transmits to US Customs 24 hours before loading at the origin port. ISF (Importer Security Filing, or 10+2) is the security data the importer files 24 hours before the vessel departs. Different filers, different data, different deadlines — for the same shipment.
EORI & Importer of Record
An EORI (Economic Operators Registration and Identification) number is a unique ID that businesses need to clear customs in the EU or UK. The importer of record (IOR) is the party legally responsible for a customs entry — its accuracy, duties, and compliance — regardless of who physically owns or ships the goods.
Bonded Warehouse
A bonded warehouse is a secure facility, authorised and supervised by customs, where imported goods can be stored with duty and import tax suspended until the goods are withdrawn for home use. If the goods are re-exported instead, the duty is generally never paid at all.
Pricing & Charges
Chargeable Weight
Chargeable weight is the weight an air shipment is actually priced on: the greater of its gross (scale) weight and its volumetric weight, calculated as length × width × height in centimetres divided by 6,000 per piece. Light, bulky cargo pays on volume; dense cargo pays on the scale.
CBM & Revenue Ton
CBM (cubic metre) measures cargo volume: length × width × height in metres, summed across pieces. Ocean LCL freight is charged per revenue ton — 'weight or measure' (W/M) — meaning the greater of the cargo's weight in metric tonnes or its volume in CBM, with one CBM equated to 1,000 kg.
Demurrage vs Detention
Demurrage is charged when a container stays inside the terminal beyond its free time; detention is charged when the container is kept outside the terminal (at the consignee's premises or in transit) beyond the equipment free time. Together they are 'D&D' — among the most contested charges in ocean freight.
BAF, CAF & Freight Surcharges
Ocean freight surcharges are additional charges layered on top of the base rate. The common ones: BAF (Bunker Adjustment Factor, for fuel), CAF (Currency Adjustment Factor, for FX swings), GRI (General Rate Increase), PSS (Peak Season Surcharge), plus port-, security-, and equipment-related fees. Together they can exceed the base freight itself.
Prepaid vs Collect
'Freight prepaid' means the shipper pays the main freight charge, billed at or before departure. 'Freight collect' means the consignee pays it, billed at destination. The term appears on the bill of lading and must line up with the shipment's Incoterms — a mismatch between the two is a classic source of billing disputes.
Terminal Handling Charges (THC)
Terminal Handling Charges (THC) are fees the port terminal levies for moving a container through the facility — unloading from or loading to the vessel, yard movement, and gate handling. They apply at both origin and destination, are set locally per port, and are usually quoted separately from the ocean freight.
Freight All Kinds (FAK)
Freight All Kinds (FAK) is a rate that applies to a container of mixed or unspecified commodities at a single blended price, regardless of what's inside. It simplifies pricing for consolidated and varied cargo, trading the precision of commodity-specific rates for the convenience of one number.
Operations
FCL vs LCL
FCL (Full Container Load) means your cargo has a container to itself, moving sealed from origin to destination. LCL (Less than Container Load) means your cargo shares a container with other shippers' goods, consolidated at a CFS warehouse at origin and deconsolidated at destination.
TEU vs FEU
A TEU (Twenty-foot Equivalent Unit) is the capacity of one standard 20-foot container; an FEU (Forty-foot Equivalent Unit) equals two TEU. TEU is the industry's unit of account for vessel capacity, port throughput, and trade volumes, while actual bookings specify real equipment: 20'GP, 40'GP, 40'HC.
Transshipment & Rollover
Transshipment is the planned transfer of cargo from one vessel to another at an intermediate hub port en route to its destination. Rollover is the unplanned bumping of a container to a later sailing — usually from overbooking or a missed connection. One is a routing design; the other is a disruption.
Reefer Shipping
A reefer (refrigerated container) is an insulated shipping container with an integral refrigeration unit that maintains a set temperature throughout transit. Reefers move perishable and temperature-sensitive cargo — food, pharmaceuticals, chemicals — under continuous cold-chain control from origin to destination.
Dangerous Goods Classes
Dangerous goods are classified into nine UN hazard classes based on the primary risk they pose — from explosives (Class 1) to miscellaneous hazards (Class 9). The class, UN number, and packing group determine how cargo must be packed, labelled, documented, segregated, and whether a given vessel or aircraft will carry it.
CY vs CFS
CY (Container Yard) is the terminal area where full containers are received and delivered as sealed units; CFS (Container Freight Station) is the warehouse where LCL cargo from multiple shippers is consolidated into, or stripped out of, a container. A booking's CY/CFS terms describe where the carrier's responsibility begins and ends.
Written by the team at Zavin — the AI operating system for freight forwarders. If you'd rather have software that already knows all of this, see AI for freight forwarders or the platform overview.