The Difference Between Commodity and Cargo

Aren’t they the same, you may ask? Well, the short answer is NO. There are certainly differences between commodity and cargo

Commodity Can be defined as a raw material or product that is traded, even on a stock exchange such as ores, grain, coffee, etc. A commodity becomes “cargo” when it enters the transportation world. Simply put, and don’t over thinks this – “cargo” is what is transported.

Several words are associated with the terms commodity and cargo. You may have heard the term “Commodity Trading”, but you’ll likely never hear the term “Cargo Trading” the commodity is what is being bought and sold. How and when commodity becomes cargo will only be decided after the trade is complete.

Trading is completed mainly using “International Commercial” terms otherwise known as “Incoterms”

You may have also heard the term “Cargo Operation or Handling”, never “Commodity Operation or Handling”. This is mainly because cargo is what is being transported and handled on board the cargo ships, in the ports and on the roads in the big rigs. Remember, as long as a “commodity” is being transported, it is referred to as “cargo”.

Another term you may be familiar with is “Commodity Brokers”, “Commodity Traders”, and “Cargo Brokers”. Commodity brokers connect sellers and buyers for any specific commodity and Cargo Brokers connect “Commodity Traders” who trade in commodities and Ship owners for the carriage of the commodities.