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Glossary of Terms

Questioning some of the terminology you’ve found on our site? Check out the the glossary of terms we’ve listed below!

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.
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.

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.

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.

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 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) – 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”.

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).

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.

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.

Demurrage

Extra charges paid to a carrier when loading and/or unloading has not been completed within the specified time.

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.

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.

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.

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

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.

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

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.

Manifest

A list of the various shipments being carried on a ship or aircraft.

Notify Party

The person or company to be advised by the carrier upon arrival of the goods at the destination port.

Packing List

A document which details the contents, and often dimensions and weight, of each package or container.

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.

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.

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.