Ocean Shipping Industry Terminology

AIS (Automatic Identification System)

A VHF/satellite-based transponder system that broadcasts a ship’s identity, position, course, speed, and status for safety and tracking. Widely used for collision avoidance, port operations, and supply chain visibility.

Check the AIS feed to see if the vessel has cleared the pilot station. - AIS gaps are common off the West African coast; we’ll use satellite AIS to fill them. - Our ETA model ingests AIS position, speed, and course data.

All-In Freight Rate

A single price that includes the base ocean freight plus standard surcharges (for example BAF, CAF, THC), often excluding accessorials like customs, storage, or special handling.

We quoted an all-in rate of $1,950 per FEU from Ningbo to Long Beach. - Let’s move to all-in pricing to reduce disputes over BAF and THC. - The tender requires an all-in ocean rate valid for 90 days.

Alliance (Vessel Sharing Alliance)

A cooperative agreement among liner carriers to share vessel slots and coordinate networks and schedules, improving capacity utilization and port coverage (for example 2M, Ocean Alliance, THE Alliance).

Through the alliance, we can offer a weekly call at Savannah without deploying another ship. - The alliance’s network realignment will affect our transit times to USEC. - Slot allocations within the VSA were rebalanced this quarter.

BAF (Bunker Adjustment Factor)

A surcharge that compensates carriers for fluctuations in marine fuel prices, typically adjusted by formula and published periodically.

The carrier announced a higher BAF for Q4 due to rising VLSFO prices. - Our contract pegs BAF to the Rotterdam index with monthly reset. - BAF is a separate line item on the ocean quote.

Ballast Water Management Convention (BWMC)

An IMO treaty to prevent invasive species spread via ballast water. Requires approved treatment systems, ballast management plans, and record-keeping that meet specific discharge standards.

We retrofitted a ballast water treatment system to meet BWMC D-2 standards. - PSC inspected our ballast logs for BWMC compliance in Hamburg. - The charterer prefers ships with BWMC-approved systems onboard.

BCO (Beneficial Cargo Owner)

The ultimate owner of the cargo (for example retailer or manufacturer), distinct from intermediaries like freight forwarders or NVOCCs.

Tier-1 BCOs are negotiating MQC-based long-term contracts. - As a BCO, they prefer direct contracts with carriers instead of NVOs. - BCO forecasts guide our capacity planning.

Bill of Lading (B/L)

The core contract of carriage, receipt for goods, and (when negotiable) a document of title. Types include original B/L, telex release, and seawaybill.

Please surrender the original B/L to release the cargo at destination. - We issued a switch B/L in Singapore to change the shipper name. - The consignee requested a telex release instead of paper B/Ls.

BIMCO

Baltic and International Maritime Council, an industry body that issues widely used standard contracts and clauses (for example GENCON, NYPE, SUPPLYTIME) and guidance for shipping.

We’re using BIMCO’s GENCON form for this voyage charter. - Insert the BIMCO Force Majeure clause in the C/P. - BIMCO published new emissions clauses this year.

Breakbulk

Non-containerized, unitized cargo (for example steel, timber, project cargo) handled individually or on pallets, often using cranes or heavy-lift gear.

We’ll ship the steel coils as breakbulk on a multipurpose vessel. - The breakbulk call requires ship’s gear due to no shore crane. - There’s a breakbulk handling surcharge at this terminal.

Bunker Fuel

Fuel used by ships, including HSFO, VLSFO, and MGO. Managed via bunkering ports, quality testing, and often hedged due to price volatility.

We bunkered 1,500 mt of VLSFO at Fujairah. - The fuel team hedged part of our bunker exposure. - The charter includes a bunker escalation clause.

Cabotage

Domestic coastal shipping restricted to national-flag vessels in many countries. Influences fleet deployment, costs, and route planning.

The Jones Act restricts cabotage to US-built, US-flagged, US-crewed vessels. - A temporary cabotage waiver was issued during the emergency. - Cabotage rules vary widely by country.

CAF (Currency Adjustment Factor)

A surcharge used to offset currency exchange fluctuations between carriers’ cost bases and the freight’s billing currency.

CAF for Asia–Europe trades will increase next month. - Our all-in rate includes CAF to minimize currency risk. - CAF is tied to the carrier’s published index.

Charter Party (C/P)

The contract between shipowner and charterer that sets terms for a time, voyage, or bareboat charter, including laytime, freight, liabilities, and exceptions.

We fixed the ship on a GENCON voyage C/P. - The C/P laycan is 1–3 October with SHEX terms. - Review the demurrage clause in the C/P before signing.

COA (Contract of Affreightment)

A contract committing a carrier to move a series of cargoes over time on agreed terms, without specifying a particular vessel for each voyage.

We signed a 3-year COA for monthly coal shipments. - The COA specifies a volume commitment instead of named vessels. - Rates under the COA float with an agreed index.

Cold Ironing (Shore Power)

Supplying electrical power from the shore to a vessel at berth so onboard generators can be shut down, reducing emissions and noise.

The port provides shore power so vessels can shut down auxiliaries at berth. - Cold ironing reduced NOx and PM during the call. - We budgeted capex to make our ships shore-power ready.

Container Yard (CY)

The terminal area where containers are stored, staged, and handed off between ship, rail, and truck. CY terms define where the carrier’s responsibility begins/ends.

The CY cutoff is 17:00 tomorrow. - High yard density at the CY is driving longer truck turn times. - It’s a CY-to-CY shipment under the bill.

Dangerous Goods (DG; IMDG Code)

Hazardous materials carried by sea, regulated by the IMO’s IMDG Code with strict classification, packaging, labeling, segregation, and documentation rules.

The shipper misdeclared DG Class 3; we must re-stow. - Follow IMDG segregation for oxidizers and flammables. - Ensure the DG note matches the UN numbers on the B/L.

Deadweight Tonnage (DWT)

A ship’s carrying capacity in metric tons, including cargo, fuel, freshwater, and provisions, measured as the difference between lightship and loaded displacement.

The handymax is 52,000 DWT. - DWT limits how much cargo, fuel, and stores a ship can safely carry. - We’re trading at a light draft, below full DWT.

Demurrage

A charge for exceeding allowed free time. In liner shipping, it applies to containers remaining in the terminal; in charters, it applies when loading/unloading exceeds agreed laytime.

We incurred five days of import demurrage at $175 per day. - Vessel demurrage applies if laytime is exceeded under the C/P. - Tight chassis supply caused demurrage at the destination terminal.

Detention

A charge for holding a carrier’s empty or full container outside the terminal beyond the allotted free time. Complementary to demurrage.

Detention starts after the free days once the container gates out. - We negotiated additional detention free time with the carrier. - Long-haul drayage increased detention charges this month.

ECA (Emission Control Area)

Designated sea areas with stricter air emission limits (for example sulfur and NOx). Ships comply by burning low-sulfur fuels or using equivalent abatement.

Switch to 0.10% sulfur fuel when entering the North American ECA. - We avoid open-loop scrubbers inside ECAs where restricted. - The ECA transition adds fuel changeover procedures to the SMS.

EEXI (Energy Efficiency Existing Ship Index)

An IMO design-efficiency standard for existing ships, effective 2023, requiring vessels to meet target carbon intensity baselines, often via technical/operational modifications.

We implemented engine power limitation to meet EEXI. - The class society issued our EEXI Technical File. - EEXI compliance drove propeller and hull upgrades.

Electronic Bill of Lading (eBL)

A digital alternative to a paper B/L that enables secure, instantaneous transfer of title and instructions, reducing cycle time and fraud risk.

We switched this lane to eBL to cut courier delays. - The bank accepts eBLs via the approved digital platform. - Title transfer happened instantly through the eBL solution.

ETA/ETD (Estimated Time of Arrival/Departure)

Schedule indicators for planning and communications. ETA is when a vessel or container is expected to arrive; ETD is when it is expected to depart.

Vessel ETA 06:00 UTC Friday; ETD depends on pilot availability. - Update customers when ETA slips due to weather. - The terminal advanced our ETD after clearing customs early.

FAK (Freight All Kinds)

A simplified, commodity-agnostic ocean rate often used for spot or LCL moves on a given trade lane.

We moved these LCL boxes under a FAK rate to Rotterdam. - The carrier’s FAK to USEC is $1,200/TEU this month. - FAK simplifies pricing for mixed commodities.

FCL/LCL (Full Container Load/Less than Container Load)

Modes of containerized shipping. FCL is a dedicated container; LCL consolidates multiple shippers’ cargo in one container.

It’s an FCL shipment; one shipper and one consignee per box. - We’ll consolidate LCL cargo at the CFS before export. - FCL is cheaper per unit, but LCL offers flexibility.

Feeder Vessel

A smaller ship connecting regional ports with hub ports, where cargo is transferred to larger mainline vessels.

Cargo transships at Busan to a feeder for Japan. - The feeder missed the mother vessel, causing a week’s delay. - We chartered extra feeders due to yard congestion.

FOB (Free On Board)

An Incoterm indicating the seller delivers goods loaded on the nominated vessel at the named port; risk passes to the buyer at loading.

FOB Shanghai means the seller loads the goods on the vessel. - Under FOB, risk transfers when goods pass the ship’s rail. - The buyer arranged ocean freight since it’s FOB terms.

Freight Forwarder

A logistics intermediary that arranges transportation and documentation; may act as an NVOCC issuing a house bill while booking with carriers.

The forwarder booked space and issued a house bill. - We rely on forwarders for customs brokerage and inland moves. - The BCO is shifting volumes from NVOs to direct carrier contracts.

General Average

A maritime principle where all parties in a sea venture proportionally share the losses and expenses incurred for the common safety (for example jettison, firefighting).

The owner declared General Average after the fire. - Shippers must post GA security before cargo release. - The adjuster will apportion GA contributions.

Gross Tonnage (GT)

A dimensionless measure of a ship’s internal volume used for regulatory and fee purposes, calculated under the International Tonnage Convention.

Port dues here are based on GT, not DWT. - GT is a volumetric measure defined by the Tonnage Convention. - The newbuild’s GT increased after design changes.

H&M (Hull and Machinery Insurance)

Insurance that covers physical damage to the ship’s hull and machinery; distinct from P&I which covers third-party liabilities.

H&M covers physical damage to the ship from grounding. - We filed an H&M claim after the main engine failure. - The bank requires minimum H&M cover on the mortgaged vessel.

Hague-Visby Rules

An international regime governing carrier responsibilities and liabilities for carriage of goods by sea, including limits per package and certain defenses.

Cargo claims are limited under Hague-Visby by package. - The bill of lading incorporates Hague-Visby compulsorily. - We rely on Hague-Visby defenses for inherent vice.

IMO (International Maritime Organization)

The UN specialized agency that sets global maritime safety, security, and environmental standards through conventions, codes, and guidelines.

The IMO’s MEPC adopted new CII measures. - We follow IMO guidelines on cyber risk management. - IMO instruments include SOLAS and MARPOL.

IMO 2020 Sulfur Cap

The global limit on marine fuel sulfur content reduced to 0.50% m/m on 1 January 2020, driving a shift to VLSFO, MGO, or scrubber use.

Post-IMO 2020, we switched to VLSFO on non-scrubber ships. - Fuel testing ensures IMO 2020 compliance. - Charterers pay a premium for compliant fuels after IMO 2020.

Intermodal

Door-to-door transport using multiple modes (ocean, rail, truck) under a single through movement or coordinated contracts.

We’ll route intermodal via rail to Chicago and truck to consignee. - Intermodal ramps are congested this week. - The all-in door rate includes intermodal drayage.

ISPS Code (International Ship and Port Facility Security)

An IMO security framework mandating security assessments, plans, and measures for ships and port facilities, with designated security levels.

The port raised ISPS to Level 2 during the incident. - Ensure the Ship Security Plan drills are logged per ISPS. - ISPS compliance is checked during PSC inspections.

Laytime

The agreed time allowed to load and/or discharge in a voyage charter, after which demurrage applies; governed by detailed exceptions and calculation rules.

We have 5,000 MT per weather working day SHEX laytime. - Laytime calculation shows 12 hours saved due to rain. - Exceeding laytime triggers demurrage under the C/P.

MARPOL (International Convention for the Prevention of Pollution from Ships)

The primary IMO convention to prevent pollution from ships, with annexes covering oil, noxious liquids, harmful substances, sewage, garbage, and air emissions.

Ballast and garbage handling follow MARPOL Annex I and V. - MARPOL Annex VI governs SOx, NOx, and GHG measures. - We updated procedures after MARPOL amendments.

NVOCC (Non-Vessel-Operating Common Carrier)

A carrier in legal terms that issues its own bills of lading and assumes responsibility for carriage without operating vessels, typically buying space from ocean carriers.

The NVO issued a house B/L and booked a master B/L with the carrier. - The FMC regulates NVOCC tariffs for US trades. - NVOs consolidate LCL cargo to build FCL loads.

P&I Club (Protection and Indemnity)

A mutual insurance association covering shipowners’ and charterers’ third-party liabilities, including cargo, pollution, personal injury, and fines.

The P&I Club issued an LOI for cargo delivery without original B/Ls. - P&I covers third-party liabilities like pollution and crew claims. - The ship’s P&I entry is with a top-tier IG club.

Port State Control (PSC)

Inspections by national authorities to verify foreign ships’ compliance with international conventions; may result in deficiencies or detentions.

PSC detained the vessel for ISM deficiencies. - Paris MoU white list status reduces PSC risk. - Prepare for PSC by reviewing certificates and drills.

Reefer Container

A refrigerated container with integral cooling and temperature-control systems for perishable cargo. Requires power supply and monitoring.

Plug the reefer into shore power immediately after discharge. - Set the reefer to -18°C with controlled atmosphere. - We booked priority stowage for the reefer cargo.

Scrubber (Exhaust Gas Cleaning System)

Equipment that removes sulfur oxides and particulates from exhaust gas, allowing ships to burn HSFO while meeting sulfur limits. Types include open-loop and closed-loop.

Open-loop scrubbers are restricted in some ports. - The scrubber retrofit paid back in 18 months. - Monitor washwater to meet local regulations.

SOLAS (International Convention for the Safety of Life at Sea)

The primary IMO safety convention governing ship construction, equipment, and operations, including lifesaving appliances, fire protection, and cargo safety (for example VGM).

SOLAS requires verified gross mass before loading. - The vessel failed a SOLAS-mandated drill. - SOLAS Chapter II-2 covers fire protection.

Stevedore

Port labor or terminal operators who load, discharge, lash, and handle cargo and containers.

The stevedore gang will start lashing at 08:00. - Stevedoring charges are included in the THC at destination. - We need experienced stevedores for out-of-gauge cargo.

TEU/FEU (Twenty-foot/Forty-foot Equivalent Unit)

Standardized units for container capacity and throughput: 1 TEU equals a 20-foot container; 1 FEU equals a 40-foot container or 2 TEU.

The ship’s nominal capacity is 14,000 TEU. - FEU rates are quoted at a premium to TEU on this trade. - We measure throughput in TEU across terminals.

Terminal Handling Charge (THC)

A fee for container handling at the terminal, typically covering stevedoring, equipment use, and yard movements at origin and/or destination.

Origin THC is included; destination THC is collect. - THC covers stevedoring, lifting, and yard moves. - Compare all-in rates carefully to see if THC is separated.

Time Charter

A contract where the charterer hires a vessel for a period, paying daily hire and directing employment while the owner manages crewing and technical operations.

We fixed a 12-month time charter at $28,000 per day. - Off-hire applies while the main engine is down. - The charterer pays for bunkers under the time charter.

Transshipment

The transfer of containers from one vessel to another at an intermediate hub port to reach the final destination, common in hub-and-spoke networks.

Cargo will transship at Port Klang onto the westbound service. - The miss-connection at the hub added 7 days transit. - We prefer direct services to avoid transshipment risk.