Shipping and freight forwarding terms and acronyms can be a real minefield. We’ve explained a few of the more common ones, but do get in touch if there are any we don’t have listed.
Shipping and freight forwarding terms and acronyms can be a real minefield. We’ve explained a few of the more common ones, but do get in touch if there are any we don’t have listed.
AEO – Authorised Economic Operator
The AEO concept is based on the Customs-to-Business partnership introduced by the World Customs Organization (WCO). Traders who voluntarily meet a wide range of criteria work in close cooperation with customs authorities to assure the common objective of supply chain security and are entitled to enjoy benefits throughout the EU.
The EU established its AEO concept based on the internationally recognized standards, creating a legal basis for it in 2008 through the ‘security amendments’ to the “Community Customs Code” (CCC) (Regulation (EC) 648/2005) and its implementing provisions.
The programme, which aims to enhance international supply chain security and to facilitate legitimate trade, is open to all supply chain actors. It covers economic operators authorized for customs simplification (AEOC), security and safety (AEOS) or a combination of the two.
Actual Time of Arrival, or Airport-To-Airport, or Air Transport Association of America.
Actual Time of Departure.
An AWB is a bill of lading which covers both domestic and international flights transporting goods to a specified destination. Technically, it is a non-negotiable instrument of air transport which serves as a receipt for the shipper, indicating that the carrier has accepted the goods listed therein and obligates itself to carry the consignment to the airport of destination according to specified conditions. Normally AWB refers to the Air Waybill issued by carrying airlines and also called Master Air Waybill (MAWB) which comes with three digits of numeric airline identification codes issued by IATA to non-U.S. based airlines and Air Transport Association of America to U.S. based airlines. However, air freight forwarders also issue HAWB (House Air Waybill ) to their customers for each of the shipments.
A unit load device ( ULD ) which links directly with the airplane cargo handling and restraint system.
All Risks Coverage, a type of marine insurance, is the broadest kind of standard coverage, but excludes damage caused by war, strikes, and riots.
A term used to describe blocked space by airlines on behalf of forwarders/shippers.
A phrase referring to the side of a ship. Goods to be delivered alongside are to be placed on the dock or lighter within reach of the transport ship’s tackle so that they can be loaded aboard the ship. Goods are delivered to the port of embarkation, but without loading fees.
BAF ( Bunker Adjustment Factor )
An adjustment in shipping charges to offset price fluctuations in the cost of bunker fuel.
Bill of Lading ( B/L )
Bills of lading are contracts between the owner of the goods and the carrier. There are two types. A straight bill of lading is nonnegotiable. A negotiable or shipper’s order bill of lading can be bought, sold, or traded while goods are in transit and is used for many types of financing transactions. The customer usually needs the original or a copy as proof of ownership to take possession of the goods.
Bill of Sale
A bill of sale is a legal document made by a ‘seller’ to a purchaser, reporting that on a specific date, at a specific locality, and for a particular sum of money or other “value received”, the seller sold to the purchaser a specific item of personal, or parcel of real, property of which he had lawful possession. It is a written instrument which evidences the transfer of title to personal property from the vendor, seller, to the vendee, buyer.
The Customs Service authorizes bonded warehouses for storage or manufacture of goods on which payment of duties is deferred until the goods enter the Customs Territory. The goods are not subject to duties if re-shipped to foreign points.
Break Bulk (B/B)
For consolidated air freight, it is moved under one MAWB and each consignment designated to specific consignee or recipient is under one HAWB . When freight forwarder receives the consolidated cargo from carrier, they will break the consolidation apart per HAWB then proceed customs clearance along with associated shipping and import documents. Such Break-Bulk is normally handled by airlines or their contracted ground handling agent.
A general cargo vessel designed to efficiently handle un-containerised cargo. Vessels are usually self-sustaining in that they have their own loading and unloading machinery.
CAF (Currency Adjustment Factor)
A freight surcharge or adjustment factor imposed by an international carrier to offset foreign currency fluctuations. In some cases an emergency currency adjustment factor (ECAF) may be applied when a charge or rate has been originally published in a currency that is experiencing sustained or rapid decline. The CAF is charged as a percentage of the freight.
A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries for display, domonstration or other purposes without paying import duties or posting bonds.
Clean Bill of Lading
A receipt for goods issued by a carrier with an indication that the goods were received in apparent good order and condition, without damages or other irregularities.
An aircraft configured to carry both passengers and cargo on the Main Deck .
The commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods for the assessment of customs duties and are also used to prepare consular documentation. Governments using the commercial invoice to control imports often specify its form, content, number of copies, language to be used, and other characteristics.
The person or firm named in a freight contract to whom goods have been consigned or turned over. For export control purposes, the documentation differentiates between an intermediate consignee and an ultimate consignee.
Delivery of merchandise from an exporter (the consignor) to an agent (the consignee ) under agreement that the agent sell the merchandise for the account of the exporter. The consignor retains title to the goods until sold. The consignee sells the goods for commission and remits the net proceeds to the consignor.
In order to handle small lot of consignment efficiently and competitively, freight forwarder usually put many consignments into one lot then tender to carrier for forwarding. In this case, each consignment will be shipped with one HAWB respectively and all of them will be under one master AWB.
Cost and Freight (C & F)
Cost and Freight (CFR) to a named overseas port of import. Under this term, the seller quotes a price for the goods that includes the cost of transportation to the named point of debarkation. The cost of insurance is left to the buyer’s account. (Typically used for ocean shipments only. CPT, or carriage paid to, is a term used for shipment by modes other than water.) Also, a method of import valuation that includes insurance and freight charges with the merchandise values.
Cost, Insurance and Freight ( CIF )
Cost, insurance, and freight ( CIF ) to a named overseas port of import. Under this term, the seller quotes a price for the goods (including insurance), all transportation, and miscellaneous charges to the point of debarkation for the vessel. (Typically used for ocean shipments only. CIP, or carriage and insurance paid to, is a term used for shipment by modes other than water.)
The government authorities designated to collect duties levied by a country on imports and exports.
An individual or company licensed by the government to enter and clear goods through Customs. The U.S. Customs Service defines a Customs Broker, as any person who is licensed in accordance with Part III of Title 19 of the Code of Federal Regulations ( Customs regulations) to transact Customs business on behalf of others. Customs business is limited to those activities involving transactions with Customs concerning the entry and admissibility of merchandise; its classification and valuation; the payment of duties, taxes, or other charges assessed or collected by Customs upon merchandise by reason of its importation, or the refund, rebate, or drawback thereof.
The procedures involved in getting cargo released by Customs through designated formalities such as presenting import license /permit, payment of import duties and other required documentations by the nature of the cargo such as FCC or FDA approval.
A document, required by some foreign countries’ customs officials to verify the value, quantity, and nature of the shipment, describing the shipment of goods and showing information such as the consignor, consignee , and value of the shipment.
DAFF (Department of Agriculture)
Department of Agriculture, Fisheries and Forestry, is now known as Department of Agriculture. Its responsible for Quarantine and Biosecurity at the boarder.
Deliver Duty Paid.
Deliver Duty Unpaid.
Commodities classified by IATA according to its nature and characteristic in terms of the effect of its danger to carrier’s flying safety.
Provides specific information to the inland carrier concerning the arrangement made by the forwarder to deliver the merchandise to the particular pier or steamship line. Not to be confused with Delivery Order which is used for import cargo.
Excess time taken for loading or unloading a vessel, thus causing delay of scheduled departure. Demurrage refers only to situations in which the charter or shipper, rather than the vessel’s operator, is at fault.
Also called measurement weight. This is the size of consignment calculated by total square feet by 6000. Carrier charge for freight based on the dimensional weight or actual gross weight whichever is higher.
Ship without consolidation and under one MAWB ie non- consolidation .
Drawback is a rebate by a government, in whole or in part, of customs duties assessed on imported merchandise that is subsequently exported. Drawback regulations and procedures vary among countries.
A tax imposed on imports by the customs authority of a country. Duties are generally based on the value of the goods, some other factors such as weight or quantity (specific duties), or a combination of value and other factors (compound duties).
EDI , Electronic Data Interchange for Administration, Commerce, and Transportation, is an international syntax used in the interchange of electronic data. Customs uses EDI to interchange data with the importing trade community.
Estimated Time of Arrival. Then, It normally takes 3 hours for carriers to Break Bulk then ready to be picked up by forwarders along with customs release notification.
Estimated Time of Departure. The cut-off time for carriers’ cargo ramp handling is normally two hours ahead of ETD . However, the freight forwarders’ consolidation cut-off time may vary depending on each forwarder’s operations respectively.
Ex Works (…named place) ( EXW )
A term of sale in which for the quoted price, the seller merely makes the goods avaliable to the buyer at the seller’s “named place” of business. This trade term places the greatest responsibility on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included.
FCL or CY
Full Container Load, also known as CY . CY is the abbreviation of Container Yard. When the term CY to CY , it means full container load all the way from origin to destination.
Federal Maritime Commission
The FMC is an independent agencys which regulates oceanborne transportation in the foreign commerce and in the domestic offshore trade of the United States.
Flat Rack Containers
Especially for heavy loads and over-dimensional cargo. Containers do not have sides or a top. This allows easy fork-lift and crane access.
Forty-Foot Equivalent Unit (FEU)
FEU is a measure of a ship’s cargo-carrying capacity. One FEU measures forty feet by eight feet by eight feet — the dimensions of a standard forty-foot container. An FEU equals two TEUs.
Free Alongside Ship
Free Alongside Ship , FAS , at a named port of export. Under FAS , the seller quotes a price for the goods that includes charges for delivery of the goods alongside a vessel at the port of departure. The seller handles the cost of unloading and wharfage ; loading, ocean transportation, and insurance are left to the buyer. FAS is also a method of export and import valuation.
Free Carrier ( FCA )
Free Carrier , FCA , to a named place. This term replaces the former ” FOB named inland port” to designate the seller’s responsibility for the cost of loading goods at the named shipping point. It may be used for multimodal transport, container stations, and any mode of transport, including air.
Free On Board ( FOB )
Common price term used in international trade meaning seller’s responsible for the cost of goods is to the point of loading it to the vessel deck or aircraft loading deck. The risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods have been so delivered. FOB normally comes with port of loading either airport or sea port.
Freight Carriage … and Insurance paid to
This term is the same as “Freight/Carriage Paid to …” but with the addition that the seller has to procure transport insurance against the risk of loss of damage to the goods during the carriage. The seller contracts with the insurer and pays the insurance premium.
Freight Carriage … paid to
Like C & F, “Freight/Carriage paid to …” means that the seller pays the freight for the carriage of the goods to the named destination. However, the risk of loss of or damage to the goods, as well as of any cost increases, is transferred from the seller to the buyer when the goods have been delivered into the custody of the first carrier and not at the ship’s rail. The term can be used for all modes of transport including multi-modal operations and container or “roll on-roll off” traffic by trailer and ferries. When the seller has to furnish a bill of lading , waybill or carrier’s receipt, he duly fulfills this obligation by presenting such a document issued by the person with whom he has contracted for carriage to the named destination. (Also see incoterms )
An independent business which handles export shipments for compensation. At the request of the shipper, the forwarder makes the actual arrangements and provides the necessary services for expediting the shipment to its overseas destination. The forwarder takes care of all documentation needed to move the shipment from origin to destination, making up and assembling the necessary documentation for submission to the bank in the exporter’s name. The forwarder arranges for cargo insurance, makes the necessary overseas communications, and advises the shipper on overseas requirements of marking and labeling.
Freight for All Kinds ( FAK )
FAK is a shipping classification. Goods classified FAK are usually charged higher rates than those marked with a specific classification and are frequently in a container which includes various classes of cargo.
In the context of travel activities, gateway refers to a major airport or seaport. Internationally, gateway can also mean the port where customs clearance takes place.
Goods and Service Tax, GST in relation to importing, is payable on the landed cost of the goods, known as the CIF value. The GST is calculate thus: (Purchase price of goods + Duty + Insurance + Freight) x GST
House Air waybill issued by carrying airlines’ agent, normally freight forwarder.
The Harmonized Commodity Description and Coding System (or Harmonized System, HS) is a system for classifying goods in international trade, developed under the auspices of the Customs Cooperation Council. Beginning on January 1, 1989, the new HS numbers replaced previously adhered-to schedules in over 50 countries, including the United States.
International Air Transport Association ( IATA ), established in 1945, is a trade association serving airlines, passengers, shippers, travel agents, and governments. The association promotes safety, standardization in forms (baggage checks, tickets, weigh bills), and aids in establishing international airfares. IATA headquarter is in Geneva, Switzerland.
Two-character Airline identification assigned by IATA in accordance with provisions of Resolution 762. It is for use in reservations, timetables, tickets, tariffs as well as air waybill .
The import certificate is a means by which the government of the country of ultimate destination exercises legal control over the internal channeling of the commodities covered by the import certificate .
A document required and issued by some national governments authorizing the importation of goods.Also referred as import permit. With such documentation, customs clearance can be conducted.
Import restriction, applied by a country with an adverse trade balance (or for other reasons), reflect a desire to control the volume of goods coming into the country from other countries may include the imposition of tariffs or import quotas, restrictions on the amount of foreign currency available to cover imports, a requirement for import deposits, the imposition of import surcharges, or the prohibition of various categories of imports.
Maintained by the International Chamber of Commerce (ICC), this codification of terms is used in foreign trade contracts to define which parties incur the costs and at what specific point the costs are incurred. (also see incoterm section)
This certificate is used to assure the consignee that insurance is provided to cover loss of or damage to the cargo while in transit.
Carriers that have both air and ground fleets; or other combinations, such as sea, rail, and truck. Since they usually handle thousands of small parcels an hour, they are less expensive and offer more diverse services than regular carriers.
An intermediate consignee is the bank, forwarding agent, or other intermediary (if any) that acts in a foreign country as an agent for the exporter, the purchaser, or the ultimate consignee , for the purpose of effecting delivery of the export to the ultimate consignee.
Movement of goods by more than one mode of transport, ie. airplane, truck, railroad and ship.
Irrevocable Letter of Credit
A letter of credit in which the specified payment is guaranteed by the issuing bank if all terms and conditions are met by the drawee. It is as good as the issuing bank.
Less than Container Load, consolidated container load.
Lower deck type 3 container. This is the most commonly used container in passenger aircraft.
Letter of Credit
A financial document issued by a bank at the request of the consignee guaranteeing payment to the shipper for cargo if certain terms and conditions are fulfilled. Normally it contains a brief description of the goods, documents required, a shipping date, and an expiration date after which payment will no longer be made. An Irrevocable Letter of Credit is one which obligates the issuing bank to pay the exporter when all terms and conditions of the letter of credit have been met. None of the terms and conditions may be changed without the consent of all parties to the letter of credit . A Revocable Letter of Credit is subject to possible recall or amendment at the option of the applicant, without the approval of the beneficiary. A Confirmed Letter of Credit is issued by a foreign bank with its validity confirmed by a U.S. bank. An exporter who requires a confirmed letter of credit from the buyer is assured payment from the U.S. bank in case the foreign buyer or bank defaults. A Documentary Letter of Credit is one for which the issuing bank stipulates that certain documents must accompany a draft. The documents assure the applicant (importer) that the merchandise has been shipped and that title to the goods has been transferred to the importer.
The compartment below the Main Deck (also synonymous with lower hold and lower lobe).
The deck on which the major portion of payload is carried, normally known as Upper Deck of an airplane. The full cargo freighter aircraft has it entire upper deck equipped for main deck type of containers/pallets while Combi aircraft uses it rear part of the upper deck for cargo loading. There is no upper deck or main deck type of container/pallet at passenger aircraft.
MPI (Ministry for Primary Industries)
Ministry for Primary Industries is commonly known as MPI(formally MAF). It is charged with leadership of the New Zealand biosecurity system. This encompasses facilitating international trade, protecting the health of New Zealanders and ensuring the welfare of our environment, flora and fauna, marine life and Maori resources.
Marine Cargo Insurance
Broadly, insurance covering loss of, or damage to, goods at sea. Marine insurance typically compensates the owner of merchandise for losses in excess of those which can be legally recovered from the carrier that are sustained from fire, shipwreck, piracy, and various other causes. Three of the most common types of marine insurance coverage are “free of particular average” (f.p.a.), “with average” (w.a.), and “All Risks Coverage.”
No Value Declared.
Proof Of Delivery, or a cargo/package receipt with the signature of recipient. This term has been widely used in courier and express industry and also gaining more attention and implementation at air cargo industry..
A shipping document issued by shipper to carrier, Customs and consignee serving the purposes of identifying detail information of package count, products count, measurement of each package, weight of each package, etc.
Pro Forma Invoice
An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (weight, size, and similar characteristics). When an importer apply’s for Letter of Credit as the means of payment, a Pro Forma Invoice from the beneficiary of such Letter of Credit , usually the exporter, is required by the L/C issuing bank.
This is a term normal referred to when shipping cargo air or sea, which does not fall within standard methods. Ie over-height, or oversize cargo which requires special equipment and handle.
Roll-on, Roll-off ( RORO )
A type of ship designed to load and discharge cargo which rolls on wheels or tracks. They are similar to a giant car ferry.
The letters, numbers or other symbols placed on the outside of cargo to facilitate identification.
Shipping weight represents the gross weight in kilograms of shipments, including the weight of moisture content, wrappings, crates, boxes, and containers (other than cargo vans and similar substantial outer containers).
TACT stands for The Air Cargo Tariff. It is published by IAP — International Airlines Publications, an IATA company.
The weight of a ULD and tie down materials without the weight of the goods it contains.
Temporary Importation under Bond
When an importer makes entry of articles and claimed to be exempt from duty under Chapter 98, Subchapter XIII, Harmonized Tariff Schedule of the United States, a bond is posted with Customs which guarantees that these items will be exported within a specified time frame (usually within one year from the date of importation). Failure to export these items makes the importer liable for the payment of liquidated damages for breach of the bond conditions.
In the United States the certificate of title for a vehicle or boat(also known as a car title or pink slip; or pinks in the plural) is a legal form, establishing a person or business as the legal owner of a vehicle.
Through Bill of Lading
A single bill of lading covering receipt of the cargo at the point of origin for delivery to the ultimate consignee , using two or more modes of transportation.
Transshipment refers to the act of sending an exported product through an intermediate country before routing it to the country intended to be its final destination.
Twenty-Foot Equivalent Unit ( TEU )
TEU is a measure of a ship’s cargo-carrying capacity. One TEU measures twenty feet by eight feet by eight feet — the dimensions of a standard twenty-foot container. An FEU equals two TEUs.
Unit Load Device, Any type of container, container with integral pallet, aircraft container or aircraft pallet.
The ultimate consignee is the person located abroad who is the true party in interest, receiving the export for the designated end-use.
Value for Customs Purposes Only
The value for customs purposes of imported merchandise should be based on the actual value of the imported merchandise on which duty is assessed, or of like merchandise, and should not be based on the value of merchandise of national origin or on arbitrary or fictitious values.
Verified Gross Mass (VGM)
IMO (International Maritime Organization) to increase maritime safety and reduce the dangers to cargo, containers, and all those involved in container transport throughout the supply chain.
The Verified Gross Mass (VGM) is the weight of the cargo including dunnage and bracing plus the tare weight of the container carrying this cargo. SOLAS requires the shipper to provide VGM in a “shipping document”, either as part of the shipping instruction or in a separate communication, before vessel loading.
The shipper is obliged to verify the gross mass of the containers carrying their cargo by either of two permissible weighing methods before these containers can be loaded on a vessel.
An insurance provision that covers loss due to war and/or strike.
A charge assessed by a pier or dock owner for handling incoming or outgoing cargo.
A term indicating that a shipper’s agent or representative is empowered to make definitive decisions and adjustments abroad without approval of the group or individual represented.