Reference
Trade & Shipping Glossary
Clear definitions of the international trade and shipping terms importers, exporters and freight forwarders use every day — 45 terms across Incoterms, documents, payment, customs and freight.
See also: Incoterms 2020 → · HS code search → · Trade by commodity →
Incoterms
Free On BoardFOBSeller's cost and risk end once goods are loaded on board the vessel.Cost, Insurance and FreightCIFSeller pays freight and minimum insurance to the destination port; risk passes at loading.Ex WorksEXWBuyer collects the goods at the seller's premises and handles everything after.Delivered Duty PaidDDPSeller delivers cleared for import, paying all costs including duties and taxes.IncotermsICC's standard trade terms defining cost, risk and customs split between buyer and seller.
Shipping & Logistics
Freight ForwarderAn agent that arranges transport, customs and documentation on a shipper's behalf.Bill of LadingB/LThe carrier's document that is receipt, contract of carriage and title to the goods.House Bill of LadingHBLA bill of lading issued by a freight forwarder to the actual shipper.Sea WaybillA non-negotiable transport receipt; no original needed to release cargo.Full Container LoadFCLA shipment that fills (or books) an entire container exclusively.Less than Container LoadLCLA shipment too small for a full container, consolidated with others.TransshipmentTransferring cargo from one vessel to another at an intermediate hub en route.ConsolidationCombining several small shipments into one container or load.DrayageShort-distance trucking of a container, typically to or from a port or rail yard.Reefer ContainerA refrigerated container for temperature-controlled cargo.
Trade Documents
Commercial InvoiceThe seller's bill for the goods; the basis for customs valuation.Proforma InvoiceA preliminary quote-style invoice issued before the sale is confirmed.Packing ListAn itemized list of how a shipment is packed: contents, weights and dimensions.Certificate of OriginC/OA document certifying the country where goods were produced.
Payment & Finance
Letter of CreditL/CA bank's guarantee to pay the seller once compliant documents are presented.Telegraphic TransferT/TA bank-to-bank wire transfer — the most common cross-border payment method.Documentary CollectionBanks exchange shipping documents for payment, without guaranteeing it.Open AccountGoods are shipped and delivered before payment is due — favorable to the buyer.
Customs & Compliance
HS CodeThe international product classification code used to set tariffs and rules.HTS CodeA country's extended tariff code built on the international HS code.TariffA tax levied on imported (sometimes exported) goods, set by HS code.Import DutyThe customs charge payable on imported goods, based on value and HS code.Customs ValueThe value of goods on which customs duty is assessed.Customs BrokerA licensed agent who clears goods through customs on an importer's behalf.Customs ClearanceThe process of getting goods approved to enter or leave a country.Free Trade AgreementFTAA pact between countries that lowers or removes tariffs on qualifying goods.Rules of OriginCriteria that determine a product's economic nationality for tariff purposes.Bonded WarehouseA secure facility where imported goods are stored with duty suspended.Anti-Dumping DutyAn extra duty on imports priced below fair value to protect local industry.
Containers & Measurement
Twenty-foot Equivalent UnitTEUThe standard capacity unit equal to one 20-foot container.Cubic MeterCBMThe volume measure (length × width × height) used to price LCL freight.Chargeable WeightThe greater of actual and volumetric weight, used to price freight.Volumetric WeightA weight derived from a shipment's volume, to price low-density cargo.Gross WeightTotal weight of goods plus all packaging.
Freight Charges
DemurrageA penalty charge for keeping a container at the port beyond free time.DetentionA charge for holding the carrier's container outside the port too long.Free TimeThe grace period to use a container before demurrage or detention applies.Terminal Handling ChargeTHCPort/terminal fees for handling a container at origin or destination.Bunker Adjustment FactorBAFA surcharge that passes fuel-price changes through to ocean freight.Currency Adjustment FactorCAFA surcharge offsetting exchange-rate movements on freight priced in a foreign currency.