With the craziness going on in the world today, you might be buying overseas without fully knowing how your products get to you. So here’s a “no-jargon” primer — we’ll define a few terms and end with how to have the conversation with your shipper or a potential shipping partner in the future.

And to be clear: this isn’t just for business owners who are currently shipping. If your business is starting to grow beyond your local market, then ocean shipping is probably on your radar. This is for you, too.

The good news for everyone is that it’s not actually that complicated — once it’s laid out in plain English.

The Big Picture: How Ocean Shipping Actually Works

At its core, international ocean shipping is straightforward: you have goods that need to get from Point A to Point B, and a ship carries them across the water. Duh, right? Well, where the complexity comes in is everything that happens before and after the ship moves — documentation, customs, container logistics, and a web of providers who each handle a piece of the puzzle.

Most shipments follow a path like this (generally speaking, at least):

• Goods are packed and prepared at the origin (a factory, warehouse, or supplier).
• A trucking company (“drayage” provider) moves them to the port.
• The goods are loaded into shipping containers and put on the ship.
• The ship transits to the destination port.
• Customs clearance happens at the destination.
• Another trucking or drayage provider moves the goods from the port to the final destination.

Each of those steps can involve different companies and different fees. That’s why having a good provider who can manage or coordinate all of this for you is so valuable — which we’ll get to in just a sec.

Key Terms You’ll Hear

Before we talk about providers, let’s build a vocabulary (no jargon, just terms 🙂 ). They are terms that come up constantly in ocean shipping conversations.

Container Types and Sizes

TEU (Twenty-foot Equivalent Unit): This is the standard unit of measurement for container capacity. One TEU is one standard 20-foot (small) shipping container. You’ll hear it used as a measure of ship capacity (“this vessel holds 10,000 TEUs”) and as a billing unit. So a 10,000 TEU vessel holds 5,000 40-foot shipping containers!

FEU (Forty-foot Equivalent Unit): A 40-foot container, which equals two TEUs. Most small businesses find that a 40-foot container gives them more flexibility for larger shipments.

FCL (Full Container Load): You’re renting and filling an entire container yourself. It’s sealed at origin and doesn’t get opened until it reaches its destination. FCL is typically more cost-effective per unit when you have enough volume to fill the container, and it offers better security since no one else’s cargo shares the space.

LCL (Less than Container Load): You’re sharing container space with other shippers. Your goods are consolidated with other people’s cargo to fill a container. LCL is the go-to option for smaller shipments — you only pay for the space you use, billed by the cubic meter (CBM). The tradeoff is slightly longer transit times because of the consolidation and deconsolidation processes.

Key Documents

Bill of Lading (B/L or BOL): This is arguably the most important document in ocean shipping. It’s three things in one: a receipt confirming the carrier received your goods, a contract between you and the carrier defining the terms of transport, and in some cases, a title document that gives whoever holds it the right to claim the cargo. You’ll hear references to a “House Bill of Lading” (issued by your freight forwarder or NVOCC — we’ll cover these in just a sec) and a “Master Bill of Lading” (issued by the actual ocean carrier). Always verify the details on a BOL before the ship departs — errors here can cause serious delays. (You’ll see most people use “BOL” and we’ll do the same.)

Commercial Invoice: A document from the seller to the buyer listing the goods, quantities, and prices. Customs authorities use this to assess duties and taxes.

Packing List: A detailed breakdown of what’s in the shipment — quantities, weights, dimensions, and contents. Customs agents use this to verify what’s in the container.

Certificate of Origin (COO or CO): A document that certifies where your goods were manufactured. This matters for customs because certain trade agreements give preferential tariff rates to goods from specific countries.

Incoterms — A Funny Name for Who Pays for What

Incoterms (International Commercial Terms) are a set of standardized trade terms published by the International Chamber of Commerce (ICC). They define exactly who — the buyer or the seller — is responsible for costs and risks at each stage of the journey. You’ll see them on every international shipping quote and contract. Here are the most common ones you’ll encounter as a small business:

FOB (Free on Board): The seller covers all costs to get the goods loaded onto the ship at the origin port. Once they’re on board, it’s the buyer’s problem — costs and risk transfer to the buyer at that point. FOB is very commonly used and tends to be favorable for buyers since you take control early in the process.

CIF (Cost, Insurance, and Freight): The seller pays for shipping and insurance to get the goods to the destination port. Risk still transfers to the buyer when the goods are loaded onto the ship at origin, even though the seller is paying for the freight. This can get confusing — you’re paying insurance on something you technically own the risk for.

DDP (Delivered Duty Paid): The seller handles everything — shipping, insurance, customs clearance, and import duties — and delivers to your door. It’s the most convenient option for buyers but usually the most expensive, since the seller is pricing in all the logistics risk.

EXW (Ex-Works): The seller makes the goods available at their location, and the buyer takes responsibility for [literally] everything from that point — pickup, export clearance, shipping, insurance, customs. This gives buyers the most control but also the most responsibility.

There are a bunch more to choose from, but these are the most common ones you’ll see.

Other Terms You’ll Run Into

Demurrage: A fee charged when you leave a container at the port past the “free time” allowed after the ship arrives. Think of it like a parking ticket — the longer you leave the container sitting there, the more it costs. This can add up fast, so it’s important to have your customs clearance and pickup arranged before the ship docks.

Detention: Similar to demurrage, but this fee is for holding the container beyond the allowed time after it’s been picked up from the port (essentially, taking too long to unload it and return the empty container). This is usually something you face if you buy FCL or if you’re a smaller operation.

Drayage: The trucking leg that moves your container between the port and a warehouse or final destination. It’s a short-haul move but an important piece of the logistics puzzle. This of this as the B2B version of ‘last mile’ shipping.

CBM (Cubic Meter): The standard unit of volume used to measure LCL shipments. Your provider will use this to calculate what you owe for shared container space.

Port of Loading (POL) / Port of Discharge (POD): The port where your goods are loaded onto the ship (POL) and where they’re unloaded (POD). These are key details on every shipping quote.

OTI (Ocean Transportation Intermediary): A regulatory category used by the U.S. Federal Maritime Commission (FMC) that covers both freight forwarders and NVOCCs. If a provider is U.S.-based, they should be licensed or registered with the FMC as an OTI. This definition is coming in 3, 2, 1…

The Key Players: Who Does What

Now that you know the terminology, let’s talk about the types of providers you’ll encounter when sourcing ocean shipping services.

Ocean Carriers (VOCCs)

These are the companies that actually own and operate the ships. VOCC stands for Vessel-Operating Common Carrier. Names like Maersk, MSC, CMA CGM, and Hapag-Lloyd fall into this category. As a small business, you probably won’t deal with them directly — their minimum volumes and contract requirements are geared toward large shippers.

NVOCCs (Non-Vessel Operating Common Carriers)

An NVOCC acts like an ocean carrier — but doesn’t own any ships. Instead, they buy large blocks of container space from the actual carriers at wholesale rates — the huge minimums that those big carriers above require — then sell that space to smaller shippers at competitive prices. Think of them as the bulk buyer at a warehouse club, passing savings on to you.

NVOCCs are particularly valuable for small businesses because they give you access to rates and space that you’d never be able to negotiate on your own directly with a major shipping line. They’re required to be licensed with the Federal Maritime Commission (FMC) in the United States, and they issue their own House Bill of Lading.

One practical difference between an NVOCC and a freight forwarder: an NVOCC legally acts as a carrier and assumes liability for your cargo between ports. A freight forwarder (without NVOCC status) is an agent — they arrange transport but don’t take on carrier-level legal responsibility for the goods.

Freight Forwarders

A freight forwarder is your logistics coordinator — think of them as a travel agent for your cargo. They don’t own ships or containers, but they know every carrier, every route, and every fee structure. They work with ocean carriers (or NVOCCs), trucking companies, customs brokers, and warehouses to orchestrate your entire shipment from door to door.

A good freight forwarder will help you choose the right Incoterms, identify the best routing, handle your documentation, coordinate customs clearance, and keep you updated throughout the process. For small businesses that are new to international shipping, working with an experienced freight forwarder is often the smartest first move you can make.

Many companies operate as both a freight forwarder and an NVOCC, which gives you the best of both worlds: the competitive pricing of an NVOCC combined with the full-service coordination of a forwarder.

Customs Brokers

A licensed customs broker handles the regulatory side of getting your goods through customs at the destination. They prepare and submit the required documentation, classify your goods under the correct tariff codes, and ensure duties and taxes are paid correctly. In the U.S., customs brokers are licensed by U.S. Customs and Border Protection (CBP).

Many freight forwarders include customs brokerage as part of their services, or they work with customs brokers as part of their provider network. It’s important to confirm this when you’re evaluating providers — no one wants to be forced to take a crash course in customs clearance and/or finding a broker under duress.

FCL vs. LCL: How to Know Which One You Need

This is one of the first decisions you’ll make when planning an ocean shipment, so it’s worth understanding clearly.

LCL is almost always the right choice for small businesses starting out. You don’t need to fill an entire container — you just pay for the space your cargo occupies. It’s billed by cubic meter (CBM) or weight, whichever is greater. The downside is slightly longer transit times because of the consolidation and deconsolidation process at each end.

FCL starts making more financial sense as your volumes grow. A rough rule of thumb: if your shipment exceeds about 15 CBM (roughly half a 20-foot container), it’s often worth getting quotes for both LCL and FCL to see which is more economical. FCL also makes sense for high-value or fragile goods where you want the added security of a sealed, dedicated container.

When you’re getting quotes, ask your provider to run the numbers both ways if you’re anywhere near that threshold. A good forwarder will do this automatically.

Questions to Ask When Sourcing a Provider

This is the important part if you’re a business looking to offshore production or otherwise purchasing your products overseas. When you’re evaluating freight forwarders, NVOCCs, or full-service logistics providers, here are the questions that will help you separate the good ones from the not-so-great ones:

• Are you licensed with the FMC? (Confirm their OTI number for U.S.-based providers — the FMC maintains a public registry you can search.)
• Do you offer both freight forwarding and NVOCC services, or do you subcontract the ocean portion?
• Do you handle customs brokerage, or do I need to arrange that separately?
• What carriers do you work with on my specific trade lane? (The route between origin and destination country.)
• What are your free time allowances for demurrage and detention at the destination port?
• What’s included in your quote — and what’s not? (Always ask for a door-to-door all-in estimate, not just the ocean freight rate.)
• How will I track my shipment, and how do you communicate updates?
• What happens if there’s a delay or a problem with my cargo?

That last question is a great litmus test. A provider who gives you a thoughtful, specific answer is showing you they’ve handled problems before and know what they’re doing. Vague reassurances are a yellow flag.

A Few Things That Catch New Shippers Off Guard

Here are some common surprises that first-time shippers encounter — knowing about them upfront will save you stress and money.

Quotes don’t always include everything. An “ocean freight rate” from a carrier or forwarder often covers port-to-port only. It may not include origin charges, destination charges, drayage, customs fees, or document fees. Always ask for a complete, door-to-door breakdown so you know your true landed cost.

Rates change — sometimes a lot. Ocean freight rates fluctuate based on demand, fuel costs, port congestion, and global events. The rate you’re quoted today might not be available next month. If you’re planning a shipment, get quotes close to when you actually intend to book.

Documentation errors cause real delays. A mistake on a Bill of Lading, commercial invoice, or customs declaration can hold your goods in customs for days or even weeks. Work with a provider who reviews your documents carefully before the ship departs.

Demurrage adds up faster than you’d think. Most ports give you a few free days to pick up your container after it arrives. After that, daily fees kick in. Make sure your customs broker has everything ready and your drayage is booked well before your ETA.

Are you looking to dive deeper, but not sure where to start? We can help.

Some light reading for you…

Freightos. (2023, December 10). What Is an NVOCC: Meaning, Licenses, and Usage. https://www.freightos.com/freight-resources/what-is-nvocc/

Intek Logistics. What Is an NVOCC in Shipping? http://www.inteklogistics.com/blog/what-is-nvocc-shipping

FreightAmigo. (2025, June 6). Essential Ocean Freight Shipping Terms Every Logistics Professional Should Know. http://www.freightamigo.com/blog/essential-ocean-freight-shipping-terms-every-logistics-professional-should-know/

EMO Trans. (2026, January 23). LTL, LCL, FTL and FCL Guide. http://www.emotrans-global.com/blog/ltl-lcl-ftl-fcl-guide/

All Forward. Freight Forwarding Glossary: 50 Essential Shipping Terms. http://www.all-forward.com/Blogs/Essential-Shipping-Terms