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Ad Valorem
According to the value. For example, an import duty rate of 10% ad valorem means 10% of the value of the goods.
Agent
An independent person or corporation acting as a representative, usually in a foreign market, who attempts to sell products for an overseas seller (principal) and earns a commission on successful sales. Agents are not normally involved in the delivery or servicing of products.
Air Waybill (AWB)
The document covers transport by air. It is issued by the carrier, whether an airline or a freight forwarder, as a non-negotiable document serving as a receipt to the consignor for the goods and containing the conditions of transport. It also shows the details of the consignee so that they can be contacted on the arrival of the goods.
Applicant
The buyer has requested his bank to arrange an L/C on his behalf. In some countries where the buyer may have trouble arranging an import license, the applicant may be a third party acting on behalf of the buyer.
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BAF
Bunker Adjustment Factor - an adjustment to shipping companies' freight rates to take into account fluctuations in the cost of fuel oil (bunkers) for their ships.
Bank Guarantee
A document issued by a bank acting as a guarantor for their customer. The bank's guarantee is accepted because of its status and creditworthiness compared to that of its customer. Often used in conjunction with major projects, in the form of Bid Bonds, Performance Bonds, and Warranty Bonds, commonly for 10% of the contract value, all of which provide the buyer with a measure of comfort should the seller not fulfill his obligations at various stages of the contract.
Beneficiary
The seller in whose favor an L/C is issued, ie, the person who will "benefit" from the L/C. (See also Letter of Credit).
Bill of Exchange
An unconditional order in writing, issued by the seller (drawer) instructing the buyer (drawee) to pay the seller's bank (payee) a specified amount (normally the full invoice value) on demand (at sight) or at a fixed or determinable future time. A suitable form can be obtained from the seller's bank or drawn upon a blank sheet of paper.
Bill of Lading (B/L)
The document covers transport by sea. Signed by the carrier, whether a shipping line or a freight forwarder, it serves as a receipt to the consignor for the goods, as evidence of the contract of transport containing the conditions of transport, and as a document of title by which possession of the goods can be transferred. Typically a B/L is issued in a set of three signed originals or negotiables, one of which must be presented to claim the goods upon which the others become void.
Box
Colloquial term for a shipping container.
Breakbulk
Non-containerized cargo.
BSRA
Basic Service Rate Additional - the charge levied by shipping companies to importers for LCL cargo, including the port charges, transport to an unpacking depot (see CFS), subsequent sorting and storage of the goods, and finally loading onto a vehicle collecting the goods for delivery to the buyer
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C&F Cost and Freight (named port of shipment) - Incoterms
This abbreviation was changed in 1990 to CFR but is still commonly used.
CAF
Currency Adjustment Factor - an adjustment to shipping companies' freight rates to take into account the effect over time of fluctuations in currency exchange rates.
Carnet
A document, normally issued by a Chamber of Commerce, which is a member of the International Chamber of Commerce (ICC), enables the holder to temporarily take merchandise into certain countries, as samples or for display purposes, without the need to pay import duty or pay a bond for the duty. The issuer will require the holder to give them security by way of a bank guarantee.
Cash Against Documents (CAD)
An arrangement whereby the buyer pays for goods as soon as the buyer receives the seller's documents. There is normally an intermediary involved, ie, a bank or an agent acting on behalf of the seller, to ensure that the transaction takes place smoothly.
Certificate
A general term for any document issued by the seller or another party certifying that some action has taken place or some fact about the goods.
Certificate of Origin
A certificate stating the country of origin of the goods. Depending on the importing country's requirements, this can be as simple as being issued by the seller or the manufacturer. In most cases, however, it is required to be issued by a Chamber of Commerce in the country of origin.
CFR Cost and Freight (named port of destination) - Incoterms
The seller must pay the costs and freight necessary to bring the goods to the named destination, but the risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. The seller is responsible for clearing the goods for export. This term very specifically requires the carriage of the goods in a "seagoing vessel."
CIF Cost, Insurance, and Freight (named port of destination) - Incoterms
This term is similar to CFR but with the addition that the seller has to procure marine insurance against the buyer's risk of loss of or damage to the goods. This term very specifically requires the carriage of the goods in a "seagoing vessel".
CIP Cost and Insurance Paid to (named place of destination) - Incoterms
This term is similar to CPT but with the addition that the seller has to procure marine insurance against the buyer's risk of loss of or damage to the goods, covering that period until the goods have been delivered from the carrier to the buyer. Being based on FCA, this term may be used for any mode of transport.
CFS
Container Freight Station - place or depot where individual LCL cargo is loaded into, and unloaded from, containers
Charterparty
A written contract between a shipowner and a charterer who rents use of the ship or part of its freight capacity. A voyage charter party is a contract covering the transport of goods from one or more ports to one or more ports and will detail the costs and responsibilities involved.
Commercial Invoice
A document issued by the seller, addressed to the buyer, giving details of the individual transaction, including a complete description of the goods, prices, currency, delivery and payment terms, and so on. This is generally used by the Customs authorities in the importing country to assess customs duties payable.
Conference
A group of shipping companies who have associated with offering regular services on specific routes at published rates. Sometimes referred to as liner shipping. Non-conference shipping lines are sometimes referred to as independent or outsiders.
Consignee
The party is shown on the bill of lading or air waybill to whom the shipment is consigned. Need not always be the buyer, and in some countries will be the buyer's bank. See also Bill of Lading - Order B/L and Notify Party.
Consolidation
Where a freight forwarder groups, or consolidates, one or more shipments for one or more shippers to the one destination as one overall shipment. (See also House B/L and Master B/L).
Consular Invoice
The seller's commercial invoice is certified, for a fee, in the exporting country by the consular representative of the importing country. Now required only by a handful of countries.
Container ship
The ship is designed to take ISO (International Standards Organisation) containers in vertical cells within the ship's holds as well as on the deck. These ships generally rely on infrastructure on the wharf to load and unload the containers.
Conventional ship
The ship was designed with holds which can load almost any type of loose cargo, such as drums, sacks, crates, pallets, etc. These ships are designed with their own derricks for loading and unloading.
CPT Carriage Paid To (named place of destination) - Incoterms
The seller must pay the costs and freight necessary to bring the goods to the named destination, but the risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier. Being based on FCA, this term may be used for any mode of transport.
Customs Broker
A person or corporation licensed by the Australian Customs Service to handle on behalf of importers the process of clearing goods through customs.
Customs Duty
A tax, duty, or tariff levied at the time of import upon goods entering a country. Usually based on the value of the goods (ad valorem), on the physical nature of the goods such as quantity or weight, or on a combination of the value and other factors.
CY
Container Yard - place or depot where individual containers are held prior to loading on board a ship and after unloading from the ship. Can be inland or at the dock-side.
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DAF Delivered at Frontier (named place) - Incoterms
The seller must pay the costs and freight to bring the goods to a land frontier, but before the customs border of the adjoining country. This term is for land transport only.
DDP Delivered Duty Paid (named place of destination) - Incoterms
The seller fulfills his obligation to deliver when the goods have been made available at an agreed point at the named place in the country of importation, often the buyer's premises. The seller has to bear the risks and all costs, including duties, taxes, and other charges of delivering the goods thereto cleared for importation. This term should not be used if the seller is unable directly or indirectly to obtain any necessary import license or approval. This term may be used for all modes of transport.
DDU Delivered Duty Unpaid (named place of destination) - Incoterms
The seller fulfills his obligation to deliver when the goods have been made available at an agreed point at the named place in the country of importation. The seller has to bear the risks and all costs and other charges of delivering the goods thereto, not including duties and taxes. The buyer is responsible for customs clearance, and if he fails to do this, he is responsible for the consequences. This term may be used for all modes of transport.
Documentary Collection
A method whereby the seller uses the services of his bank to ensure that the buyer only receives the shipping documents under conditions specified by the seller, ie, upon payment, or upon acceptance, of the seller's bill of exchange. (see also Bill of Exchange, Cash Against Documents, and URC522).
Documentary Credit
The officially correct term for Letter of Credit. The UCP500 only mentions "Documentary Credit," not "Letter of Credit." See also Letter of Credit and UCP500).
Demurrage
Extra charges are paid to a carrier when loading and/or unloading has not been completed within the specified time.
DEQ Delivered Ex Quay (named port of destination) - Incoterms
Similar to DES but the seller must also arrange discharge onto the quay or wharf.
DES Delivered Ex Ship (named port of destination) - Incoterms
The seller makes the goods available to the buyer on board the ship at the destination port and is responsible for all costs and risks until that point, as well as arrival within the given period. Typically this term would be used for bulk cargo on a chartered ship.
Documents against Acceptance (D/A)
see Documentary Collection
Documents against Payment (D/P)
see Documentary Collection
Draft
see Bill of Exchange
Drawee
see Bill of Exchange
Drawer
see Bill of Exchange
Dumping
The practice of selling goods in a foreign market at a price lower than which they would be sold at in the home market to gain a competitive advantage over other suppliers. If this is shown to be injurious to locally-based suppliers in the foreign market, the government of that country may impose remedies by way of anti-dumping duties.
Duty Drawback
If goods which have been imported, and upon which customs duty has been paid, are exported or have been used in the manufacture of goods which have been exported, then the exporter may be entitled to a refund of the original import duty paid.
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Exchange Rate
The price of one currency in terms of another.
Export
To send goods from a country to an overseas destination.
EXW Ex Works (named place) - Incoterms
The seller's only responsibility is to make the goods available at his premises (ie, works or factory). The buyer bears the full cost and risk involved in bringing the goods from there to the desired destination, and the buyer must be able to carry out any required export formalities. The term represents the minimum obligation for the seller.
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FCA Free Carrier (named place)- Incoterms
The Seller fulfills his obligation to deliver when he has handed over the goods, cleared for export, into the charge of a carrier, or another person, named by the buyer at the named place or point. This term may be used for any mode of transport, including multi-modal transport.
FAK
Freight All Kinds, as a general description of the goods on a master B/L, is covered under the one freight rate regardless of the nature of the individual goods.
FAS Free Alongside Ship (named port of shipment) - Incoterms
The seller fulfills his obligation to deliver when the goods are placed alongside the vessel at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The seller is responsible for clearing the goods for export. This term can only be used for sea or inland waterway transport, and its correct use is only when using a chartered ship or when goods are not containerized.
FCL
Full Container Load, generally but not always indicating that goods in the container are from one seller who packed the container, going to one buyer who will unpack the container.
FI (Free In)
In the international ocean freight terminology, the word “Free” means “Not included.” I.e., if FI, then the shipper is responsible for the cost of loading goods onto a vessel for international shipping overseas.
FO (Free Out)
FO is the international shipping term in ocean freight that indicates that the consignee (recipient) is responsible for the cost of unloading cargo from the vessel at the destination.
FIO (Free In and OUT)
The international shipping term used in the ocean freight industry means that the carrier is NOT responsible for the cost of loading and unloading goods onto/from the vessel.
FIS Free into Store - Incoterms
An unofficial trade term indicating that the seller's price includes all costs up to delivery to the buyer. This is similar in effect to DDP.
Flat Rack
A device that is designed for cargo that will not fit into containers to be shipped on container ships. Consists of a base and two ends of the same dimensions as an ISO container.
FOB Free On Board (named port of shipment) - Incoterms
The seller fulfills his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The seller is responsible for clearing the goods for export. This term can only be used for sea or inland waterway transport. This is probably the most commonly misused term in international trade. Its correct use now is only where the ship's rail is relevant to the transaction, such as when using a chartered ship or when goods are not containerized. Obviously, it cannot apply to airfreight.
Force Majeure
A clause in a contract that protects both parties in the event that part of the contract cannot be complied with due to causes outside the control of the parties and could not have been avoided by exercising due care. For example, floods, earthquakes, civil unrest and so on.
Freight Forwarder
A person or corporation who arranges the transport of goods on behalf of either the seller or buyer. In many cases, the freight forwarder will also consolidate several small shipments into one larger one to take advantage of better freight rates. In most cases, the freight forwarder will assume the legal liabilities of acting as a carrier
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Gross Weight
The total weight of a shipment of goods, including their packaging such as crates, pallets, etc.
Groupage
see Consolidation
Hazardous Goods
Certain cargoes, as prescribed by the UN, such as explosive, radioactive, poisonous, and flammable goods, etc, must be declared to the carrier before being loaded onto ships or aircraft. The penalties for miss-declaring or failing to declare hazardous or dangerous cargo are extremely high.
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Import
To bring goods from overseas into one's country.
Incoterms 2000
A set of rules for the interpretation of the most commonly used trade terms in foreign trade, recognized throughout the world, issued by the International Chamber of Commerce.
http://www.iccwbo.org/incoterms/id3040/index.html
Insurance
A process whereby someone with a risk of something happening to their financial detriment (the assured) pays someone else (an underwriter) a fee (premium) to bear that risk on their behalf.
Insurance Certificate
A certificate issued by the insurance underwriter giving details of a particular transaction that is held insured under an insurance policy.
Insurance Policy
Contract of insurance
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Landed Cost
The total cost that an importer pays to have goods delivered to their premises. This typically includes the costs of goods, international transport, insurance premium, port charges, customs duties, delivery charges, bank charges, etc.
LCL
Less than Container Load, a small amount of cargo insufficient to on its own be economically shipped as FCL. It will be combined with other LCL cargo from other shippers going to the same destination port into a FAK FCL. See also Consolidation.
Letter of Credit
A conditional order in writing, issued by a buyer's bank, guarantees to pay the seller upon presentation of stipulated documents, strictly in accordance with the credit. It is strongly recommended that every exporter and importer has a copy of the "Uniform Customs and Practice for Documentary Credits," International Chamber of Commerce publication 500. These are available from most major Chambers of Commerce or from us at AUD 20.00, including postage, handling, and GST, to Australian addresses only.
Letter of Credit - Confirmed
A letter of credit which has been further guaranteed by a local bank generally in the exporter's country.
Letter of Credit - Irrevokable
A credit that cannot be revoked canceled, or amended unless the beneficiary agrees. Virtually all L/Cs are issued under UCP500.
Letter of Credit - Discrepancy
Where a document does not comply strictly with the terms and conditions of an L/C.
Letter of Credit - Under Reserve
Where documents with discrepancies are nevertheless negotiated against an L/C, and the negotiating bank reserves the right to take back the funds from the exporter if the discrepancy is not acceptable to either the buyer or the L/C issuing bank.
Liner terms
Freight rates include loading/unloading charges, generally with regular shipping lines.
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Manifest
A list of the various shipments being carried on a ship or aircraft.
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Net Weight
The weight, or mass, of the goods themselves without any packaging.
Notify Party
The person or company is to be advised by the carrier upon arrival of the goods at the destination port.
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On Board / Shipped On Board
A notation on a bill of lading indicated that not only did the carrier receive the goods in good order and condition, but they were also placed on board the ship.
Open Account
The seller allows the buyer to send payment at some future time (ie, 60 days).
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Packing List
A document that details the contents, and often dimensions and weight, of each package or container.
Payee
see Bill of Exchange.
Phytosanitary Certificate
A document issued by the Department of Agriculture, Fisheries, and Forestry, for exports from Australia of plants or plant products.
Port charges
see APCA, BSRA, and PSC
Pre-payment
The buyer pays the seller for the goods prior to shipment.
Pro Forma Invoice
A sample invoice is issued by the exporter before shipment, which the importer may require to arrange import approvals or apply for a letter of credit. It can also be used as an offer to sell goods.
PSC
Port Service Charge, similar to APCA.
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Reefer
Colloquial for a refrigerated container
RO-RO
A "roll-on/roll-off" ship, where loaded transport vehicles are driven onto it, such as a car ferry, or where containerized and other cargo is loaded into it by forklifts or similar. Shipping Marks
Specific markings on packages to identify them apart from other packages and to identify them on the relevant documents.
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Sight Draft
A bill of exchange is drawn "at sight," meaning that as soon as the drawee accepts the bill, it falls due for payment. See also Bill of Exchange.
STC
Said to contain, often placed before the description of goods on a bill of lading because the carrier does not know the nature or quantity of goods actually placed in the packages or the containers.
SWIFT
Society for Worldwide Interbank Financial Telecommunications, whereby banks can electronically transfer funds, issue L/Cs, etc.
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T/T
Telegraphic transfer is an electronic means of transferring funds between banks, generally using SWIFT.
Tare
The weight of packaging or a container without the goods.
Tenor
The period of time before a bill of exchange falls due for payment
Term Draft
A bill of exchange is drawn for a period other than at sight or on demand.
TEU
A twenty-foot equivalent unit the means of describing the carrying capacity of a train or ship. For example, a 40-foot container takes up the space of two TEUs.
THC
Terminal handling charge, levied by CY and CFS operators for goods passing through their operations.
To Order
see Bill of Lading, Order B/L.
Transshipment
Goods are transferred from one ship to another at an intermediate port. Can also refer to goods being transferred from one method of transport to another.
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UCP500
Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce publication 500, which lays out guidelines for banks to follow when dealing with L/Cs. (See also Letter of Credit).
URC522
Uniform Rules for Collections, International Chamber of Commerce publication 522, which lays out guidelines for banks to follow when handling Collections. (See also Collections).
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Value for Duty
The value of an import declared to the customs upon which customs duty will be calculated. In Australia, the value of the goods at the time of export from the exporting country, thus generally the FOB value and using the exchange rate at the date of export. Many other countries use the CIF value at the time of declaration in the importing country.
Volumetric
A notional or calculated weight for bulky goods sent by air. Generally stated as 6000cm3 = 1 kg, meaning that the total volume in cubic centimeters is divided by 6000 to give an equivalent weight in kgs. The airline or forwarder will charge whichever is greater than the actual weight and volumetric weight. Also shown sometimes as 167 kg = 1 cbm
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Wharfage
see APCA, BSRA, and PSC
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More international shipping terms and a list of U.S. Flag international ocean freight carriers by the U.S. Department of Transportation are in this link.
 
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