A-Z of shipping and delivery terms you should know.
We understand eCommerce is a busy, complex industry. Often led by technological changes, innovative updates and shipping jargon that is not always familiar.
Scurri has compiled an A-Z list of terms to help better your delivery knowledge.
According to the value. For example, an import duty rate of 10% ad valorem means 10% of the value of the goods.
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 (entity who is financially responsible) so that they can be contacted on arrival of the goods.
- House AWB issued by a freight forwarder acting as a carrier.
- 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.
Advance notification of an incoming delivery, usually electronic. Used by the recipient in processing the incoming delivery
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.
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.
Bill of Lading (B/L) – Shipping terminology breakdown
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.
A standard form of bill of lading used in shipments by chartered ship.
A bill of lading indicating that the goods were received by the carrier in good order and condition.
- 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.
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.
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.
Colloquial term for a shipping container.
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
Cost and Freight (named port of shipment) – Incoterms
This abbreviation was changed in 1990 to CFR but is still commonly used.
Currency Adjustment Factor – an adjustment to shipping companies’ freight rates to take into account the effect over time of fluctuations in currency exchange rates.
A document, normally issued by a 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.
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, i.e. a bank or an agent acting on behalf of the seller, to ensure that the transaction takes place smoothly.
CFR Cost and Freight (named port of destination) – *Incoterms (International Commercial Shipping Terms)
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 for clearing the goods for export. This term very specifically requires the carriage of the goods in a “seagoing vessel”.
Container Freight Station – place or depot where individual LCL cargo is loaded into, and unloaded from, containers
A document issued by the seller, addressed to the buyer, giving details of the individual transaction, including a 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.
The party is 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.
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).
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.
CPT Carriage Paid To (named the 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.
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 the 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.
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, i.e.: upon payment, or upon acceptance, of the seller’s bill of exchange. (see also Bill of Exchange, Cash Against Documents and URC522).
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.
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.
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.
The price of one currency in terms of another.
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, (i.e. 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.
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.
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 for clearing the goods for export.
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.
FI (Free In)
In the international ocean freight terminology, the word “Free” means “Not included” i.e: if FI, then the shipper is responsible for the cost of loading goods onto a vessel for the international shipping overseas.
FO (Free Out)
FO is the international shipping term in ocean freight that indicates that the consignee (recipient) is responsible for the cost of unloading cargo from the vessel at the destination.
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 for clearing 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.
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
The total weight of a shipment of goods, including their packaging such as crates, pallets etc.
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.
To bring goods from overseas into one’s country.
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.
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.
A certificate issued by the insurance underwriter giving details of a particular transaction which is held insured under an insurance policy.
The total cost which an importer pays to have goods delivered to their premises. This typically includes the costs of the goods, international transport, insurance premium, port charges, customs duties, delivery charges, bank charges etc.
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 a FAK FCL. See also Consolidation.
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 are 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.
Freight rates which include loading/unloading charges, generally with regular shipping lines.
A list of the various shipments being carried on a ship or aircraft.
Net Weight. The weight, or mass, of the goods themselves without any packaging.
The person or company to be advised by the carrier upon arrival of the goods at the destination port.
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.
The seller allows the buyer to send payment at some future time (ie: 60 days).
A document which details the contents, and often dimensions and weight, of each package or container.
see Bill of Exchange
A document issued by the Department of Agriculture, Fisheries and Forestry, for exports from Australia of plants or plant products.
see APCA, BSRA and PSC
The buyer pays the seller for the goods before 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.
Port Service Charge, similar to APCA.
Colloquial for a refrigerated container
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.
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.
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.
Society for Worldwide Inter-bank Financial Telecommunications, whereby banks can electronically transfer funds, issue L/Cs, etc.
Telegraphic transfer, an electronic means of transferring funds between banks, generally using SWIFT.
The weight of packaging or a container without the goods.
The period of time before a bill of exchange falls due for payment
A bill of exchange drawn for a period other than at sight or on demand.
The 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.
Terminal handling charge, levied by CY and CFS operators for goods passing through their operations.
see Bill of Lading, Order B/L.
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.
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).
Uniform Rules for Collections, International Chamber of Commerce publication 522, which lays out guidelines for banks to follow when handling Collections. (See also Collections).
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.
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 cm
See APCA, BSRA and PSC