INTERNATIONAL TRADING

(IMPORT &EXPORT)
Glossary
Please note that these definitions are for guidance purposes only. This Glossary is also not intended to be comprehensive, and comprises
mainly terms that relate to the sphere of operation of Subcontracts International's business.
No responsibility whether direct or indirect can be accepted in the event or incomplete, erroneous or misleading definitions provided
here. Exporters and Importers are recommended to take legal advice when dealing with commercial documentation.

 ASWP
Any Safe World Port
This is not an official incoterm, but is often used in sellers' quotes as, e.g. "CIF ASWP", and is widely
accepted. CIF ASWP in a quote implies that CIF shipment would cost the same for delivery to any safe
port in the world, whatever the distance from source.
 ATB
Authority To Board
Used for oil shipments - issued by the seller, it provides the authority to enable the buyer to board the
vessel to confirm cargo availability, quantity and quality.
 ATL
Authority To Load
Authority to load buyer's vessel
 AWB
Air Way Bill
The air freight equivalent of a BOL.
 BCL
Bank Comfort Letter
Also known as a Bank Capability Letter, or Bank Confirmation Letter, this is a letter from the
customer's bank confirming his ability to meet a certain level payment requirements. It should however
be understood that this does not imply any guarantee of payment.
 BG
Bank Guarantee
 BOL / BL
Bill of Lading
This is the receipt given by the shipping company when goods are loaded on board the vessel. This is an
important document and gives title to the goods. It is needed by the buyer to obtain the goods from
the port.
 BPU
Bank Payment Undertaking

 CFR
Cost and Freight
The price includes the cost of the goods, loading, and freight to the named Destination Port. This does
not include unloading charges. e.g. CFR Rotterdam.
 C&F, CNF
Same as CFR. These are old terms and should not be used. The correct term to use is CFR (see
INCOTERMS).
 CIF
Cost, Insurance and Freight
This is the same as CNF, but also includes insurance to the named Destination Port. e.g. CIF Conakry.
 COO, CO or C/O
Certificate of Origin
 INTERNATIONAL TRADING
(IMPORT &EXPORT)
A documentary statement signed by the exporter and attested to by a local Chamber of
Commerce/Consulate, attesting the country of origin (normally the exporter's) of the goods being
shipped. Some countries have different types of CO (e.g. Singapore has 'Ordinary' and 'Preferential')
 CPA
Charter Performance Agreement
 DLC
Documentary Letter of Credit (see L/C)
 DDP
Delivered Duty Paid
Delivered, all duty paid, to the named Destination (which can be customer's works) e.g. DDP Madrid.
All delivery charges and duties to the named destination are paid by the exporter.
 E&OE
Errors and Omissions Excepted
This is often found on invoices and quotations, and denotes that the author does not take responsibility
if there are errors or missing text. Documents should therefore be thoroughly checked.
 EXW
Ex-Works
The buyer pays all costs of transport from pickup at the suppliers premises. e.g. EXW Delhi.
 FAS
Free Alongside Ship
The supplier pays costs only to the port of loading. Loading and shipment are then the responsibility of
the buyer. However the supplier must clear the goods for export. e.g. FAS Port Klang.
 FOB
Free on Board
This means that the supplier pays only to the point where the goods are loaded on board the carrying
vessel. The seller must clear the goods for export. As soon as the goods are over the ship's rail they
become the responsibility of the buyer. e.g. FOB Cape Town.
 FCA
Free Carrier
The supplier must deliver the goods, cleared for export, to the carrier nominated by the buyer at the
named place.
 FCL
Full Container Load
The goods fill a container, no other purchaser's goods will share the container. Often suppliers will not
supply less then one full container. LCL would denote less than one container load.
(Also short for FCLtrading.com, a leading commodity trading company)
 FCO
Full Corporate Offer
A FCO usually starts with a clause similar to the following: <="" i="">

 ICPO
Irrevocable Corporate Purchase Order
However this acronym can also mean Irrevocable Commission Payment Order (the meaning Irrevocable
Confirmed Payment Order has also been quoted).
 INCOTERMS
"International Commercial Terms"
A set of import/export related shipping terms devised and published by the International Chamber of
Commerce (ICC). These terms (Incoterms 2000) are internationally accepted and should always be used
in order to avoid misunderstandings between trading partners. All terms in this glossary are Incoterms.
 INTERNATIONAL TRADING
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 L/C
Letter of Credit
A Letter of Credit is a document issued by a bank which guarantees the payment of a buyer's drafts for
a specified period of time and up to a specified amount, under specified conditions. Effectively it is a
method of payment where the buyer's bank guarantees payment to the supplier. L/C are almost always
irrevocable, can (if required) be transferable, and subject to terms (e.g. on SIGHT, 30 days, 60 days,
etc.). For regular shipments a Revolving L/C is often utilised. The various types can be defined as
follows :
CL/C (Confirmed Letter of Credit) A letter of credit, issued by a foreign bank, with validity confirmed
by a First Class (usually US or European) bank. A seller with CL/C terms is assured of payment even if
the foreign buyer or the foreign bank defaults.
DL/C or DLC (Documentary Letter of Credit) A document issued by a bank which guarantees the
payment of a buyer's drafts for a specified period and up to a specified amount. The Documentary
Letter of Credit provides a more secure means of carrying out transactions in import-export trade than
by documentary bills collection (see Bill of Exchange). A letter of credit when transmitted through a
bank, usually in the seller's country, becomes the means by which the seller obtains payment. The
necessary documents, correctly completed, are presented to a bank by an agreed date. If the terms of
the credit are met, a seller can receive payment from a bank immediately.
IL/C (Irrevocable Letter of Credit) An Irrevocable Letter of Credit cannot be amended or cancelled
without the consent of the issuing bank, the confirming bank (if confirmed), and the beneficiary. The
payment is guaranteed by the bank if the credit terms and conditions are fully met by the beneficiary.
The words Irrevocable Documentary Credit or Irrevocable Credit may be indicated in the L/C. It means
that once the buyer's conditions in the letter have been agreed to by the seller, they constitute a
definite undertaking by the buyer's bank and cannot be revoked without the seller's agreement.
Revocable Letters of Credit are rarely used as the terms of the credit can be cancelled or amended by
an overseas buyer at any time without notice to the seller.
RL/C (Revolving Letter of Credit) When a letter of credit (L/C) is specifically designated a Revolving
Letter of Credit, the amount involved when utilized is automatically reinstated, that is, the amount
becomes available again without issuing another L/C and usually under the same terms and conditions
within a period of time (usually several months to one year). This saves administration when multiple
shipments are involved.
SL/C or SBLC (Stand-by Letter of Credit) is a financial guarantee or performance bond issued by a bank
on behalf of a buyer. i.e. a written obligation of the issuing bank to pay a sum to a beneficiary on
behalf of their customer in the event that the customer himself does not pay the beneficiary. The SL/C
is regulated by the ICC-500 rules.
RDLC Revolving Documentary Letter of Credit
 LCL
Less than a Container Load
LCL denotes less than one container load. The goods do not fill the complete space of a container.
Often containers are consolidated, i.e. they are filled with goods from different suppliers for different
buyers in order to make efficient use of space.
 LOI
Letter of Intent
A document by which the buyer states that he intends to enter into a transaction.
 PB
Performance Bond
 POF
Proof of Funds
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(IMPORT &EXPORT)
A note from a buyer's bank to the seller/seller's bank that money is available to complete the proposed
transaction.
 POP
Proof of Product
A Proof of Product ('POP') is often requested by customers or agents who believe it will give them some
guarantee of the existence of the product and ability of the supplier to deliver. In practice many POPs
are produced which are false. In practice it offers no proof at all, because once a POP has been drafted
it is automatically out of date - the product could have been sold to another buyer and therefore no
longer exists. Nevertheless, a POP is still occasionally requested as apparent proof that a seller/broker
has the product, which is possibly not the case.
A POP for large quantities is often not genuine as it is unlikely that a manufacturer has stockpiled
possibly millions of tonnes of a product. Large quantities of a products are made to order to match the
terms of a specific contract, in this case a proof of allocation would be more relevant. A POP without a
contract reference is also worthless, a POP with a contract reference can and will only be issued once a
financial instrument has been put in place, so is therefore superfluous.
A POP is realistically provided only when the buyer's bank issue a Bank Confirmation Letter (BCL) to the
seller's bank via SWIFT. Then the seller's bank can check the availability of funds in the buyer's bank
and issue a POP to the buyer's bank within an agreed time period (e.g. 5 days). In reality, the best and
only real proof of product is when the seller can demonstrate the products in his possession at the dock
side.
 RDLC
Revolving Documentary Letter of Credit (see L/C)
 RWA
A banking term meaning Readiness, Willingness and Availability of funds for a particular transaction.
 SGS
This is an international company (SGS Group) who are the definitive quality/specification testing
agency for many commodities. Their certificates are internationally accepted.
 SPA
Sale and Purchase Agreement
 TTM
Table Top Meeting
Sometimes required for large transactions - where the parties physically meet at a prescribed location,
usually involving the exchange of documents.
 TTT
Tanker to Tanker Transfer
(relates to a method of consignment for Crude Oil)
 TTO
Tanker Take Over
(relates to method of consignment for Crude Oil)