A

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 delivery or servicing of
product.

Air Waybill (AWB)

The document which 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 arrival of the goods.

 HAWB
House AWB issued by a freight forwarder acting as a carrier.
 MAWB
The term used for the AWB issued on airline's stationery to a freight forwarder for all
of the goods covered by one or more House AWBs on the one flight going from one
loading airport to one destination airport.

Applicant
The buyer who 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 their status and creditworthiness compared to that of their
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 fulfil his obligations
at various stages of the contract.

Beneficiary
The seller in whose favour 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 up on a blank sheet of paper.

Bill of Lading (B/L)

The document which 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.

 Combined Transport / Multimodal B/L

A B/L covering transport by shipping container from an inland place prior to the
loading port, to an inland place beyond the destination port. Most freight forwarders
and shipping companies title their B/Ls as "Bill of Lading for Combined Transport or
Port-to-Port shipment" or similar.

 Congen B/L
A standard form of bill of lading used in shipments by chartered ship.
 Clean B/L
A bill of lading indicating that the goods were received by the carrier in good order
and condition, without any clauses declaring a defective condition in the goods
and/or their packing.

 Dirty/Foul/ Claused B/L

A bill of lading with any clauses declaring a defective condition in the goods and/or
their packing. Almost invariably not acceptable to banks for presentation under L/Cs
and almost always not acceptable to the buyer. (See also Clean Bill of Lading).

 House B/L
A bill of lading issued by a freight forwarder acting as a carrier. The terms and
conditions of the contract may well be different to the terms and conditions
contained on the shipping company's B/L, which can in extraordinary circumstances
lead to legal complications should a dispute arise.

 Master B/L
The term used for the B/L issued by a shipping company to a freight forwarder for all
of the goods covered by one or more House B/Ls on the one ship going from one
loading port to one destination port.

 Ocean B/L
A B/L covering port-to-port shipment. Typically banks continue to use this term on
L/Cs even though the majority of international shipments are containerised (See also
Multimodal B/L).

 On Board/ Shipped On Board B/L

A B/L evidencing that the goods were not only received by the carrier but were
actually loaded on board in good order and condition. "Shipped" indicates that not
only were the goods on board, but that the ship has departed the port.

 Order B/L
A negotiable B/L, in which the goods are consigned "to order of" a particular party,
often the shipper in which case the consignee is mostly shown simply as "to order".
  Straight B/L
A non-negotiable B/L in which the goods are consigned directly to a named
consignee.

Box
Colloquial term for a shipping container.

Breakbulk
Non-containerised 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) to enable 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 to some
action having 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) - Incotrems

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 to clear 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) - Incotrems

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) - Incotrems

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 charterparty is a contract covering 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 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 to offer 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 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 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
Ship 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
Ship 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 fulfils 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 licence or approval. This
term may be used for all modes of transport.

DDU Delivered Duty Unpaid (named place of destination) - Incoterms

The seller fulfils 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, but 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 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 the 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 fulfils 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 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 fulfils 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 to clear 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 containerised.

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.

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 which is designed for cargos which 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 fulfils 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 to clear 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 containerised. Obviously it cannot apply to airfreight.
Force Majeure
A clause in a contract which 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 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, which must be declared to the carrier before being loaded onto ships
or aircraft. The penalties for mis-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,
recognised 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
which is held insured under an insurance policy.

Insurance Policy
Contract of insurance

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Landed Cost
The total cost which an importer pays to have goods delivered into their premises. This
typically includes the costs of the 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 an FAK FCL. See also Consolidation.

Letter of Credit
A conditional order in writing, issued by a buyer's bank, guaranteeing 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 - Irrevocable

A credit which cannot be revoked, cancelled or amended unless the beneficiary agrees.
Virtually all L/Cs 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 discrepancy/ies 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 which include loading/unloading charges, generally with a 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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Nett Weight
The weight, or mass, of the goods themselves without any packaging.

Notify Party
The person or company 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, indicating 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 which 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 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 containerised 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 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 Inter-bank Financial Telecommunications, whereby banks can
electronically transfer funds, issue L/Cs, etc.

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T
T/T
Telegraphic transfer, 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 drawn for a period other than at sight or on demand.

TEU
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.

Transhipment
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 or 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 centimetres is divided by 6000 to give an
equivalent weight in kgs. The airline or forwarder will charge whichever is the greater of the
actual weight and volumetric weight. Also shown sometimes as 167 kg = 1 cbm

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Wharfage
see APCA, BSRA and PSC