Most common terms used in freight forwarder

In our freight forwarder practice, we will encounter some terms, and today we tells you on the meaning of the current common terms.

Ad Valorem	Latin term meaning “according to the value” i.e. the value according to which duty and taxes are calculated. Customs often use this.
ATA Carnet	The ATA Carnet is an international Customs document which is issued in accordance with the ATA and Istanbul Conventions and it provides a guarantee that is valid internationally. It can be used as security for import duty/tax and allows the temporary admission and transit of goods. Sometimes used to control temporary export/re-importation of products but when used this way, the guarantee will not apply.
B/L or BOL	The Bill of Lading is the official shipping document.  The possessor of this will be the owner of the goods but it will not be released to the buyer until all costs have been paid. If the buyer does not possess the B/L then the goods cannot be delivered or released to him.
BAF	Bunker Adjustment Factor – this is the name given to the oil used to fuel sea vessels – BAF is a surcharge made by the carrier to take into account the cost of bunker with regard to freight cost.
Bonded Goods	You will often hear this term used referring to goods stored in a secure warehouse i.e. bonded warehouse. Whilst there, they are not liable for payment of duty but as soon as the goods are moved, duty is liable to be paid.
Brokerage	Often used in connection with customs brokerage i.e. a third party used to clear imports or exports.
C of O, Form A	Certificate of Origin – this document shows the country of origin of the goods and is normally signed by the Government Dept. of the country of export.  If you are able to pay lower duty rates then this Form A maybe required.
C&F (or CFR) and CIF	Cost and Freight or Cost, Insurance and Freight – this is when the buyer of the goods pays an amount to the seller to cover the cost of sending the goods by sea plus a fee to get the goods to the point of discharge.  No local charges are paid as these are for the buyer.  If the term is CIF then marine insurance is also paid by the seller.
CAF	Currency Adjustment Factor – charge added to sea freight to take account of changes in currency.
Cargo Manifest	This list shows the goods carried in a transport unit i.e. container. It will normally show document numbers, shipper, consignee, carton markings, quantity of packages, description of goods etc.
CBM (M3)	This is a cubic metre and is the usual unit of volume used to calculate the volume of goods or container capacity.
CFR	Cost and Freight – this shows that the seller’s price will include for cost of goods and freight to the agreed country.  Once the goods arrive at the buyer’s chosen port, they take over the costs.
CFS	Container Freight Station – a facility where LCL shipments are loaded/unloaded (usually at a port).
CIF	Cost, Insurance and Freight – these are pretty much the same as CFR except the buyer also pays the insurance.
CIP	Carriage and Insurance Paid – very much like CPT but they include for maritime insurance.
CISF	China Import Service Fee – a cost that may arise when goods are shipped using CFR or CIF shipping terms.
CITES	Convention on International Trade in Endangered Species.
Commercial Invoice	This shows the buyer and seller details and the type of goods, amount, price and terms of sale.  Customs will view this when calculating duty and tax to be paid.
Consignee (Cnee)	This is the person receiving the goods.
Container	A large metal box used to hold goods in transit, normally 20ft or 40ft in length.  They are easily moved between ship, train and truck and are unpacked upon arrival at final destination i.e. warehouse.
CPT	Carriage Paid To – similar to CFR, the only difference being that CPT can be used for air or sea.
Customs clearance	When goods clear through customs at the country or origin or country of destination.
DAP	Delivered at Place – the sellers pays for everything up to delivery to the chosen destination.  The buyer only pays import duty and tax.
DAT	Delivered At Terminal – the seller takes care of all responsibility and costs up to unloading goods at the destination port terminal.  The buyer will only pay for customs clearance, import duty, taxes and costs to deliver to his warehouse.
DDP	Delivered Duty Paid – delivered to the consignee with duty paid i.e. the seller pays the costs to get the shipment to the chosen destination and will also pay import duty and taxes due in the buyer’s country.  All the consignee needs to do is unload the goods from the truck when they arrive at his warehouse.
DDU	Delivered Duty Unpaid – it is up to the shipper to get the goods to the agreed point of delivery but not to clear the goods for import; the consignee has to pay duty/taxes.
Deferment	When a bank account is held with Customs specifically to pay customs duty and VAT – if you don’t have one then you can often use the Deferment Account of your chosen import agent/shipping agent.
Demurrage	Charges raised by the carrier when a container or vehicle goes over its allotted time i.e. held too long at the port or delivery point and in excess of the 3hrs allowed for unloading.
Devanning	When cargo is taken out of a container i.e. unloaded.
Document Fees	Costs entailed when producing the shipping documents for your products.
EDI	(Electronic Data Interchange) – These are standards adhered to for electronic message (data) interchange on an international level, as developed and supported by the UN.
Entry Summary Declaration (ENS)	These are the costs paid by your supplier when declaring goods to the shipper.  If this is not done 5 days before the closing date, your goods will miss the boat and have to go on the next one.
EORI	Economic Operator Registration and Identification – this is a number which lets customs keep track of what is being imported/exported. If goods are coming into the UK then you need this number.
ETA	Estimated Time of Arrival – when ship or plane is due  to arrive at port.

ETD	Estimated Time of Departure – when ship or plane is due to leave port of origin.
EXW or Ex Works	Ex-Works – the shipment charges are the responsibility of the consignee. The shipper will purely make the goods ready to collect and the buyer has to fund the rest of the shipment and transport costs to get the goods to his preferred destination.  Example:  EXW (suppliers address).
FAS	Free Alongside Ship – the seller will get the goods alongside the ship ready to load and will clear the goods for export.  The buyer then takes over and assumes responsibility and all terminal handling charges at the port of origin and all those thereafter.
FCA	Free Carrier – the seller will deliver the goods to a named location to a chosen carrier; they will also clear the goods for export.  Once this is done, the buyer takes charge of the responsibility and the costs.
FCL	Full Container Load – the amount of goods to fill a 20ft, 40ft or 40ft HC container.
Feeder Vessel	The ship that moves goods a short distance to and from the port of operation of the main ocean vessel.
FOB	Free on Board – these terms are used frequently and they show that the seller will get the goods loaded onto the ship at a chosen port.  The buyer will then have to pay all freight costs.  Example:  FOB shenzhen.
High Cube (HC or HQ)	A container that exceeds 8ft 6in in height.
Incoterms	These are international terms used during the global transport of goods.  They refer to the terms between the shipper and the buyer and clarify the allocation of responsibility when it comes to each stage of the shipping process.  The terms are shortened to 3 letters followed by the place i.e. FOB Taiwan or CIF Felixstowe. These usually include EXW, FOB, CFR etc.
Kerbside Delivery	Usual delivery is to kerbside unless agreed otherwise.  The driver parks the truck and the buyer has to unload them.
Landed Cost	Total cost of imported costs including cost of freight, insurance, port and dock charges up until the point of entry into the country.  Haulage costs or any fees occurring after the import point are not included, which is why it is referred to as a ‘landed’ cost.
LCL	Less than Container Load – if your goods do not fill a container then this term will be used.  You may share a container with another buyer as shippers prefer to send over full containers in terms of efficiency and lower costs.
Licence fee	Your supplier needs a licence to export goods; if not, they have to pay a licence fee each time they export.
Notify Party	This is the person shown on the Bill of Lading who will be notified when the ship lands; usually the consignee.
Packing List	Document provided by the shipper showing what is in the shipment and how packed.  It normally shows carton numbers, number of items in cartons, weights and dimensions.
POD	Port of Discharge – port at which goods are unloaded from the vessel.
POL	Port of Loading or Port of Origin – the port where goods are loaded onto vessel.
Preference (or Preferential) Duty	A lower duty rate based on the value of the goods and which country they came from.
Reefer	Name used for a temperature controlled container.
Shipper	The person that sends the goods i.e. the supplier.
Shipping Marks and Numbers	Shipping marks on placed on packages to identify them.  They may include the size and weight of carton, name of recipient, number of carton, and name of shipper.  They help to identify the cartons, particularly when containers are shared.
Tail lift Delivery	When you unload goods from truck, if you do not have a fork lift truck then a tail lift on the truck will be helpful. The driver will lower the goods on the tail lift in pallets.
Tariff Code	All products that come into the UK need a code when cleared through customs – this shows how much duty will be paid.
Telex Release	Telex release or Express release are terms used when the Bill of Lading is handled electronically by the shipper, rather than posting it to the consignee.  This is required in order to release the goods.
Terminal Handling Charge	Costs incurred when loading your goods at port i.e. into a container and then onto the vessel.
TEU	Twenty-Foot (20′) Equivalent Unit – used when talking about containers i.e. 20ft is one TEU and 40ft is two TEU.
THC	Terminal Handling Charge which is the cost of handling the goods at port.  If a shipment is made FCL, this is the fee for moving the container and if shipped LCL it’s for unpacking the container.
Tranship	Transfer goods from one from one ship to another.
Transit Time	The time taken for the ship or plane to get from Port of Loading to Port of Discharge.
Transport costs	Charges to get your goods to the port for shipment or from port of arrival to your warehouse.
UN/EDIFACT	United Nations EDI For Administration, Commerce and Transport.
W/M	Weight per Measure – cost is calculated depending on the volume or weight of the shipment, whichever is greater.

 

From STU Supply Chain: Most common terms used in logistics and freight forwarder