Shipping and freight terms
Freight is rarely charged on the thing you would expect. Parcels are charged on whichever is greater, actual or volumetric weight. European road groupage is charged on floor space. Sea freight is charged by the container, unless you are not filling one, in which case it is charged by volume.
These are the units and the terms behind them, in the order they turn up: what the goods cost delivered, how the weight is worked out, and what the shipment is called at each size.
Landed cost
The full cost of imported goods once freight, insurance, duty, import VAT and clearance charges are added to the supplier’s invoice.
Two numbers, not one
The gross landed cost is what leaves your bank account at clearance. If you can reclaim the import VAT, your cost basis for pricing is that figure minus the VAT — often twenty points lower.
Confusing the two makes healthy margins look impossible, or leaves you short of cash on clearance day. Both figures matter; they answer different questions.
Volumetric weight
A parcel’s size expressed as a weight, calculated as length × width × height divided by a contractual divisor. Carriers bill whichever is higher: actual weight or volumetric.
The divisor is a density threshold
A divisor of 5000 allows one kilogram per 5,000 cm³ — that is 200 kg per cubic metre. Anything less dense is billed on volume. Water is 1000 kg/m³, and almost no packaged consumer product comes close to 200, which is why volume decides the bill more often than sellers expect.
It is negotiable
The divisor is a line in your carrier contract, not a rule. Common values are 5000 for express parcels, 6000 for air freight, 3000 for road groupage. Moving from 5000 to 6000 lowers the billed weight of every bulky parcel by 17%.
Loading metre (LDM)
One metre of trailer floor across the full width — roughly 2.4 m² of load space. The unit European hauliers price road groupage in.
How to calculate it
LDM = (length × width) / 2.4
Two euro pallets side by side occupy roughly 0.8 LDM. A standard trailer is about 13.6 loading metres.
Height only matters if the goods cannot be stacked. Non-stackable freight is charged for the full column above it, which is why “do not stack” labels are expensive.
FCL (full container load)
A shipment that occupies a whole container, booked as a unit. You pay for the box whether or not you fill it.
When it beats LCL
Usually above roughly 15 cubic metres, though the crossover depends on the route. FCL is cheaper per cubic metre, moves faster because it skips consolidation and deconsolidation, and carries less handling damage because nobody opens it in transit.
Standard sizes are 20 ft (about 33 m³) and 40 ft (about 67 m³). Weight limits bite before volume does on dense goods.
LCL (less than container load)
A shipment that shares a container with other consignments, priced per cubic metre. The option when you have less than a container.
What it really costs
The quoted rate per cubic metre is only part of it. Consolidation at origin, deconsolidation at destination and terminal handling are charged separately and frequently exceed the sea freight itself on small shipments.
It is also slower — your goods wait for the container to fill and again for it to be unpacked — and passes through more hands, which means more damage.
Demurrage and detention
Daily charges for time. Demurrage runs while the container sits at the terminal; detention runs while you hold the container after taking it away.
Why it catches new importers
Free time is short — often three to seven days — and the clock starts on discharge, not on when you found out the ship arrived. Missing paperwork, an EORI number applied for too late or a customs query can burn it in a weekend.
Rates escalate: the second week typically costs several times the first. It is the single most avoidable cost in importing, and avoiding it is purely a matter of having the documents ready before the vessel lands.
CMR note
The standard consignment note for international road transport in Europe. Also the document most often used to prove that goods physically left your country.
Why it matters for VAT
An intra-EU supply is exempt only if the goods actually moved between member states. Tax authorities ask for proof of that movement more often than for anything else, and a signed CMR is the standard answer.
Keep it with the invoice, not in a separate transport folder. Its absence is a common reason the exemption is refused even where everything else was correct.
3PL (third-party logistics)
An external provider that stores your inventory, picks and packs orders and ships them under your brand. The marketplace-independent alternative to FBA.
The tax consequence people miss
A 3PL warehouse in another member state is your stock in another member state. That creates a local VAT registration obligation from the first item, regardless of turnover, and OSS does not cover it.
Ask where the warehouse actually is before signing. “European fulfilment” sometimes means several countries.
MOQ (minimum order quantity)
The smallest quantity a supplier is willing to make or sell in one order. It exists because setup costs are fixed, which is also why it is negotiable.
What it really costs you
An MOQ above your realistic sales rate converts into storage cost and tied-up cash. Six months of stock at a good unit price is often worse than three months at a slightly worse one, particularly under fulfilment programmes that charge for storage.
Suppliers frequently accept a lower quantity against a higher unit price, a longer lead time, or payment terms weighted in their favour. Ask what the MOQ is for rather than treating it as fixed.