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Fun with acronyms!

Posted by Freight Forwarding Dept. - Cole International on Jul 4, 2018 8:55:00 AM

Most industries and workplaces – not to mention sports and pastimes – have their own jargon, which often includes a whole vocabulary of acronyms. The shipping and logistics industry is no exception. Even if you’re properly familiar with an industry, there are probably some that still give you pause – or seem downright foreign.
These acronyms refer to two types of cargo vessels that are differentiated by their method of loading and offloading. Though they often compete with one another for business, each type has benefits for specific market segments.
RORO – roll on, roll off – vessels carry wheeled cargo such as cars, trucks, semi-trailer trucks, trailers and railroad cars. The cargo on a RORO vessel is driven (or rolled) on and off the ship on its own wheels or with a wheeled platform vehicle.
LOLO – lift on, lift off – vessels use a crane to load and unload their cargo. They can transport a variety of different products, usually in shipping containers, and have more flexibility in their cargo types and container capacity.
LOLO ships require more time, labour and equipment for loading and offloading cargo. RORO vessels, though quicker to load and unload, are more limiting because cargo must be on wheels and can’t be stacked and rearranged as freely.
This set of terms is specific to the accounting world, assigning value to a company’s inventory for the purposes of taxation.
FIFO stands for "first in, first out," and assumes that the goods first added to inventory are the also first removed from inventory for sale.
LIFO stands for "last in, first out," and assumes that the goods last added to inventory are the first removed from inventory for sale.
If inflation were nonexistent, both inventory valuation methods would give the same result. But the fact of inflation means that the goods purchased later have a higher value than those purchased before.
On the accounting balance sheet…
FIFO gives a better indication of the value of ending inventory, but it also increases net income because older inventory is used to value the cost of goods sold in the present day. Increasing net income can potentially increase the amount of taxes owing.
LIFO results in a valuation that's lower, and a lower net income because the cost of goods sold is higher. LIFO isn't a good indicator of ending inventory value because the older inventory might in reality be much lower valued and perhaps even obsolete.
Do you have any acronym uncertainty? Our in-house acronym deciphering team is here to help. Email us today to get help understanding the shipping, warehousing or accounting worlds better!
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Information provided by: Freight Forwarding Dept. - Cole International