Glossary of Shipping Terms

ATA Carnet: ATA stands for the combined French and English words “Admission Temporaire/ Temporary Admission.” The ATA carnet is an international customs document that may be used by its holder for temporary duty-free importation of certain goods into a country in lieu of the usual customs documents required. The carnet serves as a guarantee against the payment of customs duties that may become due on goods temporarily imported and not re-exported. Quota compliance may be required on certain types of merchandise. A carnet is temporary as it is only valid for one year, and does not replace an export license.

ATDNSHINC: Acronym for “Any Time, Day or Night, Sundays and Holidays Included”. Refers to when a shipping or freight vessel will operate.

Acceptance: A shipping term with several related meanings: (1) A time draft or bill of exchange the drawee has accepted and is unconditionally obligated to pay at maturity. The draft must be presented first for acceptance (the drawee becomes the acceptor) then payment. The word “accepted” and the date and place of payment must be written on the face of the draft; (2) The drawee’s act in receiving a draft, thus agreeing to pay it; (3) Broadly speaking, any agreement to purchase goods under specified terms. An agreement to purchase goods at a stated price under stated terms.

Ad Valorem: According to value. An ad valorem tariff is calculated as a percentage of the value of goods cleared through customs, for example, 15 percent ad valorem means 15 percent of the value.

Adjustment Assistance: Financial, training and reemployment technical assistance provided to workers or businesses to help them cope with difficulties arising from increased import competition. The intention of such assistance is to help an industry become more competitive in the same line of production, or to move into other economic activities.

Advance Against Documents: A loan made on the security of the documents covering the shipment.

Affreightment Contract: An agreement by a steamship line to provide cargo space on a vessel at a specified time for a specified price to accommodate an importer or an exporter, who then becomes liable for payment even though later unable to make the shipment. An affreightment contract is with a ship-owner to use the ship to carry goods (freight) in the whole or part of the ship’s cargo-carrying space for a specified price.

Air Waybill: A bill of lading that covers both domestic and international flights transporting goods to a specified destination. It is a non-negotiable instrument of air transport that serves as a receipt for the shipper and indicates the carrier has accepted the goods listed, obligating itself to carry them to the airport of destination according to conditions specified. An air waybill accommodates both domestic and international destinations. See Inland, Ocean and Through bill of lading entries.

All-Risk Clause: An insurance provision that all loss or damage to goods is insured except inherent vice (self-caused). An all-risk clause is the broadest form of insurance coverage available, providing protection against all risks of physical loss or damage from any cause such as fire collision, pilferage (theft), etc. Not covered is damage due to delay, acts of nature, war, worker strikes, poor packaging,and change in market conditions. An all-risk clause insurance for air shipments typically excludes any loss due to cold or changes in atmospheric pressure.

American National Standards Institute (ANSI): A private, non-profit membership organization that accredits its U.S. standards developers and approves American national standards. It is also the sole U.S. representative to the Geneva-based International Organization for Standardization. ANSI works closely with the Commerce Department’s National Institute of Standards and Technology (NIST) to coordinate a national strategy in negotiations to establish international standards.

Andean Trade Preference Act (ATPA): A U.S. government program providing for duty-free entry of merchandise from Bolivia, Colombia, Ecuador and Peru. It was enacted into law on December 4, 1991, and expired on July 31, 2013.

Anti-Dumping Clause: A tariff imposed to discourage sale of foreign goods in the U.S. market at very low prices. In international trade, dumping is the act of importing goods into a country at a price less than the prevailing fair market value in that country.

Arbitrage: The practice of exchanging the currency of one country for that of another or a series of countries to gain an advantage from the difference in exchange rates. Cross currency arbitrage exploits an opportunity resulting from a pricing discrepancy among different currencies in the foreign exchange market.

Arbitration Clause: A clause in a sales contract outlining the method for settling disputes. An arbitration clause binds the parties in the freight agreement to a type of resolution outside the courts, in a mutually agreed forum that has been preselected.

Assist: Any materials, tools or services the importer provides free of charge or at a reduced cost that are used to produce or sell merchandise for export to the U.S. When not included in the price, the value of the assist is added to the transaction value of imported goods to assess duties. Assist refers to the processes and services that enable and smooth the importing and shipping of products and freight into the United States.

Automated Broker Interface (ABI): Direct computer interface between customhouse brokers and/or freight forwarders and U.S. Customs.

Backhaul: A backhaul, in context of trucking and logistics, is the return trip of a commercial truck transporting cargo / freight on a return journey back to the point of origin. Backhaul can be all or part of the same route it originally travelled. Backhaul involves the interdependency between freight brokers and carriers. Backhauls are also sometimes referred to as deadheads (empty) in the trucking industry, and as such sometimes a carrier might be willing to offer discounts during the backhaul portion in order to have some revenue generating freight onboard for the unavoidable return trip.

Balance of Payments: An accounting of a country’s credit and debit transactions with other countries or international institutions. Balance of Payments are divided into two broad groups: Current Account and Capital Account.

Balance of Trade: The difference between a country’s imports and exports. When exports exceed imports, the balance is said to be favorable. If it’s vice versa, a deficit exists.

Balloon Freight: Freight that is low weight; but requires high volume. Freight that is light yet bulky.

Barter: Trade where goods are traded for goods directly without the use of money or involvement of a third party. This is an important means of trade with countries using currency that is not readily convertible.

Beggar-Thy-Neighbor Policy: A course of action through which a country tries to reduce unemployment and increase domestic output by raising tariffs and instituting non-tariff barriers to hinder imports, or by accomplishing the same objective through competitive devaluation. America’s Smoot-Hawley Tariff Act of 1930 is a good example.

Beneficiary: The person in whose favor a letter of credit is issued or a draft is drawn.

Bilateral: Trade Agreement: A formal or informal agreement covering commerce between two countries. These agreements sometimes list quantities of specific goods that may be exchanged within a given period.

Bill of Lading: A shipping receipt document issued by a carrier to the shipper with shipping information such as type of goods, quantity, freight rate, and destination. BOL is a contract between the carrier and the shipper. BOL evidences agreement between the parties of receipt of goods from the shipper – about the items being shipped, destination, and payment. BOL helps guarantee payment will be received, and that the importers will receive their goods.

Binding Rulings: See the Import Section in the WORLDLINK Import/Export Customer Handbook.

Blank Sailing: A canceled sailing. AKA a void sailing. A sailing that has been canceled by the carrier. A Blank Sailing can be when a vessel is skipping one port, or that the entire string of port visits is canceled.

Blind Load: A shipment where the receiver and the shipper are both anonymous to one another. Also applies to situations where the origin (or destination) of the shipment remains concealed.

Bonded Warehouse: A facility authorized by customs authorities for the storage of goods on which payment of duties is deferred until goods are removed.

Booking Number: A number assigned to a contract of affreightment used as an identifying reference on bills and correspondence.

Bounties or Grants: Payments by governments to producers of goods, often to strengthen their competitive position.

Boycott: Refusal to deal with a person, firm or country.

Cable Address: A code word of less than 10 letters, registered annually with the Central Bureau of Registered Addresses, used in lieu of the entire name and address of a firm receiving or sending cablegrams to reduce the number of cable words.

Caribbean Basin Initiative (CBI): A U.S. government program providing for the duty-free entry of merchandise from designated beneficiary countries or territories. It was enacted as the Caribbean Basin Economic Recovery Act, became effective on January 1, 1984 and has no expiration date.

Carriage Paid To (CPT) and Carriage and Insurance Paid To (CIP): Pricing terms indicating that carriage or carriage and insurance have been paid to a destination. They apply in place of CFR and CIF, respectively, for non-sea shipments.

Carrier: A company responsible for transporting freight for a shipper for a fee. The carrier is the business responsible for the transportation modes and logistics of moving the designated freight.

Carrier’s Certificate: A document issued by the carrier certifying the owner of the goods transported by the carrier, evidencing the owner’s right to make entry.

Cartage: Freight being shipped from one location to another within the same city or metropolitan area.

Cash against Documents (CAD): Payment for goods in which a commission house or other intermediary transfers title documents to the buyer upon payment in cash.

Cash in Advance (CIA): Payment for goods in which the price is paid in full before payment is made. Usually used for small purchases.

Cash with Order (CWO): Payment for the goods by the buyer on ordering and in which the transaction is binding between the two parties.

Certificate of Manufacture: A document sometimes used instead of a bill of lading to support the export draft for acceptance of payment.

Certificate of Origin: A document certifying the country of origin for certain goods.

Change of Destination: A COD request for freight already in transit on a container ship to transport those goods to another destination than what was originally booked.

Charge In Full (CIF): An abbreviation used in some international sales contracts when the selling price includes all “costs, insurance and freight” for the goods sold (“charge in full”). This means the seller arranges and pays for all relevant expenses in shipping goods from the port of export to the port of import.

Charter Party: Renting of an entire vessel or part of its freight space for a particular trip or stipulated time period.

Clean Bill of Lading: A receipt for goods issued by a carrier indicating the goods were received in “apparent good order and condition.” A Foul Bill of Lading indicates the goods were damaged when received.

Codes of Conduct: International instruments that indicate desirable standards of behavior for nations and multinational corporations operating in the international community. Such codes are monitored by a special committee that meets under the auspices of GATT and which encourages consultations and the settlement of disputes. Countries that are not contracting parties to GATT may adhere to these codes.

Commercial Code: A published code designed to reduce total number of words in a cablegram.

Commercial Invoice: The document that usually accompanies an export draft, which, in addition to providing other details, identifies the merchandise and its value.

Commingling: Packing together different articles that are subject to different duties.

Commodity: Broadly defined as any article exchanged in trade, but most commonly used to refer to raw materials such as copper, tin, sugar, coffee and rubber.

Common External Tariff (CXT): A tariff rate uniformly applied by a common market or customs union, such as the European Community, to imports from non- member countries. While the European Common Market is based on the principle of a free internal trade area with a common external tariff, not all free trade areas have common external tariffs.

Compact of Free Association (FAS): A U.S. government program providing for the duty-free entry of merchandise from the Marshall Islands and the Federated States of Micronesia. It became effective on October 18, 1989, and has no expiration date.

Comparative Advantage: A central concept in international trade theory that holds that a country or region should specialize in making and exporting goods and services that it can produce relatively more efficiently than others. In turn, the country should import goods and services for which it has comparative disadvantage producing.

Computed Value: The sum of materials, fabrication and other processing involved in producing merchandise, plus profit, expenses, assists and packing. Computed value is used to determine the transaction value of imported goods where other methods are unavailable.

Consignee marks: A symbol placed on packages for export identification purposes, generally consisting of a triangle, square, circle etc. with letters and/or numbers as well as port of discharge.

Consignment: A payment method where an importer only pays for goods when they are sold to a third party, and in which the title is retained by the exporter until the sale is complete.

Consul: A government official residing in a foreign country who is charged with the representation of the interests of his country and its nationals.

Consular Declaration: A formal statement, made to the consul of a foreign nation, describing the goods to be shipped.

Consular Invoice: A document covering a shipment of goods, issued by the consul of the country where the goods are destined.

Consulate: The jurisdiction, terms of office, or official premises of a consul.

Consumption Entry: An official form used for declaration of value, description and the total duty due on such transaction.

Container Load: Full (FCL) and less than full (LCL) container load. LCL is when a shipper has less than enough goods to fill an entire shipping container so multiple client consignments are combined and shipped together in the same container. At the destination port they are separated back into their original consignments by shipper. LCL enables small and midsize businesses that do not ship large goods volumes to still meet delivery deadlines. LCL rates are a tactic for freight costs savings. Sharing of space via LCL is an eco-friendly tactic.

Container Yard: A port facility where containers are stored before being loaded, or after being discharged from a ship. CYCY indicates responsibility of the carrier begins at the container yard of the port of loading and ends at the container yard of the port of discharge.

Continuous Bond: A customs bond covering an importer’s transactions for a period of a year. A Single Entry Bond covers only one import shipment.

Cost and Freight (CFR): An abbreviation commonly used in sales contracts.

Countertrade: A reciprocal trading arrangement that includes such transactions as counterpurchase, reverse contracts, buyback arrangements, clearing agreements, switch arrangements, swap schemes and barter arrangements. For example, a swap scheme could involve “exchanging” Russian oil for oil from a Latin American producer so the Russian oil can be shipped to Southeast Asia, while the Latin American oil instead goes to Cuba, thus saving on transportation costs.

Countervailing Duties: Special duties imposed on imports to offset the benefits of subsidies to producers or exporters in the exporting countries. GATT Article VI permits the use of such duties. The U.S. government’s Executive Branch has been empowered since the 1890s to impose countervailing duties in amounts equal to any “bounties” or “grants” reflected in products imported into the U.S. Such duties may only be imposed after the U.S. International Trade Commission determines that certain imports are causing or threatening to cause material injury to an American industry. (See Dumping).

Credit Risk Insurance: Covers risks of non-payment for delivered goods.

Customs: Classification: The particular category in a tariff nomenclature in which a product is classified for tariff purposes. Or it can be the procedure for determining the appropriate tariff category in a country’s nomenclature system used for the classification, coding and description of internationally traded goods. Most important trading nations-except for the U.S., Russia and Canada-classify goods according to the Customs Cooperation Council Nomenclature (CCCN), formerly known as the Brussels Tariff Nomenclature (BTN).

Customs Bond: A contract required by Customs between a principal and a surety to ensure the performance of legal obligations incurred upon importing merchandise. Customs is the beneficiary.

Customs Harmonization: International efforts to increase the uniformity of customs nomenclatures and procedures among cooperating countries.

Customshouse Broker: An individual or firm, such as WORLDLINK, licensed to enter and clear goods through customs.

Deadheading: A cargo truck (semi-truck) pulling an empty trailer. Deadheading is when a trucker backhauls (returns via the same route) the empty cargo container to its point of origin.

Deductive Value: The resale price of imported goods in the U.S. less certain deductions such as profit and expenses.

Deferred Payment Credit: A type of letter of credit providing for payment some time after the presentation of shipping documents by the exporter.

Demurrage: Excess time taken for loading or unloading a vessel not caused by the vessel operator, but due to the acts of a charterer or shipper. Also refers to imported cargo not picked up within a certain time. Demurrage is a fee container lines charge when imported containers haven’t picked up on time. When containers have been discharged from a ship there is a designated free period for storing them in the port (provided by the container line) during which the containers are to be pick up.

Destination Control Statement: Any of various ones required by the U.S. government to be displayed on export shipments, specifying the export destinations that have been authorized.

Detention: A fee paid if picked up imported containers are not returned to the shipping line in time. Detention fees are calculated by number of extra days they remained away. Detention charges can also include demurrage fees if as a result of the delay those containers cannot be shipped out by the container line as planned due to the delay in returning them in time for their next planned transit.

Devaluation: The official lowering of the value of one country’s currency in relationship to the currencies of one or more other countries. If the U.S. dollar is devalued in relationship to the Swiss franc, one dollar will buy fewer francs than before.

Developed/Developing Countries: Developed countries are generally considered to be the more industrialized nations, sometimes collectively referred to as the “North” because most are in the Northern Hemisphere. The developing countries generally are those lacking a high degree of industrialization, infrastructure, sophisticated technology, widespread literacy, etc. They are often collectively referred to as the “South” because most are in the Southern Hemisphere. Another frequently used term is lesser developed countries or LDCs.

Direct Exporting: Sale by an exporter directly to a buyer in a foreign country.

Dispatch: An amount paid to a charterer by the vessel operator if loading or unloading is accomplished in less time than provided for in the charter party.

Dispute Settlement: Resolution of conflict, usually through a compromise between opposing claims, sometimes facilitated through an intermediary. GATT provides for legal redress of disputes through its Articles XXII and XXIII.

Distributor: A foreign agent who sells directly for a manufacturer and maintains an inventory on hand.

Dock Receipt: A receipt given for a shipment received or delivered at a shipment pier. When delivery of a foreign shipment is completed, the dock receipt is surrendered to the vessel operator or his agent and serves as the basis for preparing the Ocean Bill of Lading.

Documents against Acceptance (D/A): Instructions given by a shipper to a bank indicating that documents transferring title of the goods should be delivered to the buyer (drawee) only upon the buyer’s acceptance of the attached draft.

Documents against Payment (D/P): A type of payment for goods in which the documents transferring title to the goods are not given to the buyer until he has paid the value of a draft issued against him.

Domestic International Sales Corporation (Interest Charge DISC): A special U.S. corporation authorized by the U.S. Revenue Act of 1971 and amended by the Tax Reform Act of 1984. A DISC may borrow from the U.S. Treasury at the average one-year Treasury Bill interest rate to the extent of income tax liable on 94 percent of its annual corporate income. To qualify, the corporation must derive 95 percent of its income from U.S. exports. Plus, at least 95 percent of its gross assets (working capital, inventory, building and equipment, etc.) must be export- related. Such a corporation may buy and sell independently, or may operate as a subsidiary of another corporation. Also, it may maintain sales and service facilities outside the U.S. to promote and market its goods. DISCs can now provide a tax deferral of up to $10 million of exports as long as the funds remain in export-related investments. (See Foreign Sales Corporation)

Draft (Bill of Exchange): A financial instrument issued by one party directing another party to make payment. Also, an allowance made for loss of weight during shipment on goods dutiable based on net weight.

Drawback: A government rebate, in whole or in part, of customs duties assessed on imported goods that are subsequently exported as raw materials or components. Drawback regulations and procedures vary among countries. (See the Import Section in the WORLDLINK Import/Export Customer Handbook.)

Drawee: The individual or firm on whom a draft is drawn and who owes the stated amount. The Drawer receives payment.

Dry Cargo: Dry goods that have a higher tolerance to heat and cold. Dry cargo ships are used to carry Dry Cargo, such as metal ores, coal, steel products, forest products, and grains. Dry Cargo ships are equipped with on-deck cranes and other mechanism for loading and unloading of the Dry Cargo goods. Opposite of Reefer Cargo.

Dumping: Under U.S. law, the sale of an imported commodity in the U.S. at “less than fair value,” usually considered to be a price lower than that at which it is sold within the exporting country or to third countries. Dumping is considered unfair because it disrupts markets and injures producers of the same product in the importing country.

Duty: A tax imposed on imports by the customs authority of a country. Duties are generally based on the value of the goods (ad valorem duties), some other factor such as weight or quantity (specific duties) or a combination of value and other factors (compound duties).

Embargo: A prohibition upon exports or imports of specific products or between specific countries, usually during war. Embargoes imposed against a country by the United Nations to influence its conduct are sometimes referred to as sanctions.

Entry (Customs): A statement of the kinds, quantities and value of goods imported together with duties, if any, declared before a customs official.

Entry Papers: Those documents that must be filed with Customs officials describing goods imported, such as consumption entry, Ocean Bill of Lading or Carrier Release, and Commercial Invoice.

Escape Clause: A provision in a bilateral or multilateral commercial agreement permitting a signatory nation to suspend tariff or other concessions when imports threaten serious harm to its producers of competitive domestic goods. GATT Article XIX sanctions such safeguard provisions. Section 201 of the U.S. Trade Act of 1974 requires the U.S. International Trade Commission to investigate complaints from domestic producers regarding threats from imports.

Evidence of Right to Make Entry: Documents such as a carrier’s certificate, bill of lading or airway bill certifying the owner of the goods and enabling them to enter Customs.

Ex-(From): When used in pricing terms such as ex-factory or ex-dock, ex- signifies that the price quoted applies only at the point of origin, in this case at the seller’s factory or the dock at the import point. In practice, such a quotation means the seller agrees to place the goods at buyer’s disposal at the specified place within a fixed period of time.

Ex-Dock: A sales term meaning the exporter assumes all shipping costs.

Ex-Mill (Ex warehouse, ex mine, ex factory): The seller is obligated to place the specified quantity of goods at the specified price at his mill loaded on trucks, rail cars or any other specified means of transport. The buyer must accept the goods in this manner and make all arrangements for transportation.

Exchange Controls: The rationing of foreign currencies, bank drafts and other instruments for settling international financial obligations by countries seeking to lessen acute balance of payments difficulties. When such measures are imposed, importers must apply for prior authorization from the government to obtain the foreign currency required to bring in designated amounts and types of goods. By restricting imports, exchange controls are considered non-tariff trade barriers.

Exchange Permit: A government permit sometimes required by the importer’s government to enable the importer to convert his or her own country’s currency into foreign currency with which to pay the seller in another country.

Exchange Rate: The price (or rate) at which one currency is exchanged for another currency, for gold or for Special Drawing Rights (SDRs).

Export Broker: An individual or firm that brings together buyers and sellers for a fee, but does not take part in the actual sales transaction.

Export Commission House: An organization that, for a commission, acts as a purchasing agent for a foreign buyer.

Export Declaration: A formal statement made to the Director of Customs at a port of exit declaring full particulars about goods being exported.

Export License: A government document that permits the licensee to engage in the export of designated goods to certain destinations.

Export Management Company: A private firm that serves as the export department for several manufacturers, soliciting and transacting export business on behalf of clients for a commission, retainer or salary plus commission.

Export Merchant: A producer or merchant who sells directly to a foreign purchaser without going through an intermediary such as an export broker.

Export Quotas: Specific restrictions or ceilings imposed by an exporting country on the value or volume of certain imports. Quotas are intended to protect domestic producers and consumers from temporary shortages of the goods affected or to bolster their prices in world markets.

Export Rate: A freight rate specially established for application on export traffic and generally lower than the domestic rate.

Export Restraints: Quantitative restrictions imposed by exporting countries to limit exports to specified foreign markets, usually as a follow-up to formal or informal agreements reached with importing countries.

Export Subsidies: Government payments or other financial incentives to domestic producers or exporters contingent on the export of their goods and services. GATT Article XVI recognizes in general that subsidies distort normal commercial activities and hinder GATT objectives.

Export Trading Company: A corporation or other business unit organized and operated principally to export goods and services, or to provide export-related services to other companies. The Export Trading Act of 1982 exempts authorized trading companies from certain provisions of the U.S. anti-trust laws. Similar to an export management company.

FAS: Free Alongside Ship. In international trade, this is the point of embarkation from which the vessel or aircraft selected by the buyer will transport the goods. Under this system, the seller is obligated to pay the costs and assume all risks for transporting the goods from his or her place of business to the FAS point.

FOB: Free On Board. An abbreviation sometimes used in international sales contracts, for example, FOB at a named port of export. The seller quotes the buyer a price that covers all costs up to and including delivery of goods aboard a vessel at the agreed upon port, stipulated as “FOB vessel.” Normally, the buyer assumes responsibility for all shipping and transportation costs beyond the seller’s place of business. The same principle applies to the terms Free On Rail (FOR) and Free On Truck (FOT).

Flatbed Hauling: A form of shipping for uniquely shaped or heavy freight that are too big either in weight or size for a conventional truck. Flatbed hauling is shipping of freight that needs open sides in order to access it when loading or unloading.

Force Majeure: A standard clause in marine contracts that exempts parties for nonfulfillment of their obligations due to conditions beyond their control, i.e. earthquakes, floods, wars, etc.

Foreign Branch Office: A sales or other office maintained in a foreign country and staffed by direct employees of the exporter.

Foreign Sales Agent: An agent residing in a foreign country who acts as a salesman for a domestic manufacturer.

Foreign Sales Corporation (FSC): A firm incorporated in Guam, the U.S. Virgin Islands, the Commonwealth of Northern Mariana Islands, American Samoa or any foreign country that has a satisfactory exchange-of-information agreement with the U.S. and elects to be taxed as a U.S. corporation. However, an FSC exempts from its taxable income a portion of the combined net income of the FSC and its affiliated supplier on the export of U.S. products. In addition, to qualify for special tax treatment, an FSC must maintain an office outside U.S. territory, maintain a summary of its permanent books of account at the foreign office, and have at least one director residing outside the U.S. Variations include small and shared FSCs.

Foreign-Trade Zones: Foreign or “free” trade zones are secured areas legally outside a nation’s customs territory. Their purpose is to attract and promote international trade and commerce. The Foreign-Trade Zones Board authorizes operations based upon showing the intended operations are not detrimental to the public interest. Foreign-trade zones are usually located in or near customs points of entry, at industrial parks, or terminal warehouse facilities. Foreign exporters planning to expand or open new American outlets may forward their goods to an FTZ in the U.S. where they can be held for an unlimited time awaiting a favorable American or nearby country market. The goods are not subject to customs entry, payment of duty or tax, or bond, during this holding period.

Foul Bill of Lading: A receipt for goods issued by a carrier bearing a notation that the outward containers or the goods have been damaged.

Free In and Out (F.I.O.): Cost of loading and unloading a vessel is borne by the charterer.

Free Out (F.O.): Cost of unloading a vessel is borne by the charterer.

Free Trade: A theoretical concept assuming international trade unhampered by government measures such as tariffs or non-tariff barriers. Countries, instead, continually strive to establish freer trade.

Free Trade Area: Two or more countries that have eliminated tariff and most non-tariff barriers affecting trade among them, while each participating country applies its own independent schedule of tariffs to imports from non-member countries. An example is the European Free Trade Association (EFTA). Free trade areas are governed by GATT. Foreign trade zones or FTZs are the U.S. form of free trade areas. Free trade zones (sometimes called “customs free” or “duty free” zones) is a generic term referring to special commercial and industrial areas where special customs procedures allow importation of foreign merchandise without the requirement that duties be paid immediately.

Free of Capture and Seizure (F.C.&S.): An insurance clause providing that loss is not insured if due to capture, seizure and like actions, legal or not. or to actions such as piracy, war, etc.

Free of Particular Average (F.P.A.): A marine insurance clause providing that partial loss or damage is not insured.

Freight All Kinds (FAK): When an LTL carrier groups multiple classes of freight into a single pricing class. FAK is a single tariff classification for freight that would typically be priced at several different tiers. FAK simplifies pricing, reduces reclassification and billing errors for shippers that transport multiple products with different classes by grouping them all into a single trucking freight rate.

Freight Forwarder: An independent business, such as WORLDLINK, that handles export shipments for compensation and takes care of making all necessary arrangements and providing the services necessary to expedite the shipment to its overseas destination. They must be licensed by the Federal Maritime Commission or the Air Transport Association to handle ocean and/or air shipments.

Full Truckload: FTL shippers are ones who ship enough cargo to entirely fill a trailer. Shipping FTL is faster than LTL (less than truckload) because a truck carrying just one type of cargo allows for the freight to be transported directly from its origin to its destination, without any other stops along the way.

General Agreement on Tariffs and Trade (GATT): A binding contract among more than 100 governments. GATT was established in 1947 as an interim measure pending the establishment of the International Trade Organization under the Havana Charter. ITO was never ratified by Congress. Operating in the absence of an explicit international organization, GATT provides the legal framework for international trade with its primary mission being the reduction of trade barriers. GATT’s headquarters are at Geneva, Switzerland. Cycles of multilateral trade negotiations under GATT are called “rounds,” for example, the 1964-67 Kennedy and 1973-79 Tokyo rounds. The most recent round concluded in 1993.

General Average: A maritime law principle under which all parties to an ocean-going shipment share in liability in the event of loss or damage.

General Export License: Licenses authorized by the Bureau of Export Administration that permit export of goods and technology to specified countries without the need for a validated license. There are more than 20 different types of general licenses.

Generalized System of Preferences (GSP): A mutually beneficial concept developed by the United Nations Conference on Trade and Development (UNCTAD) to encourage expansion of manufactured and semimanufactured exports from developing countries by making their goods more competitive in developed country markets through tariff preferences. The U.S. GSP system comprises nonreciprocal tariff preferences that benefit developing countries.

GmbH: Gesellschaft mit beschrankter Haftung (limited liability company), the most common German corporation structure.

Government Procurement Policies and Practices: The means and mechanisms by which official government agencies buy goods and services. They can be non-tariff barriers to trade if they discriminate in favor of domestic suppliers when competitive imported goods are cheaper or of better quality.

Graduation: The presumption that individual developing countries are capable of assuming greater responsibilities and obligations in the international community-within GATT or the World Bank, for example-as their economies advance through industrialization, export development, rising living standard, etc.

Gross Weight: The full weight of a shipment, including goods and packaging.

Immediate Transportation Entry: An Immediate Transportation Entry is a customs form declaring goods for transportation by a bonded carrier from a port of entry destined to proceed further to a bonded warehouse at an inland port, or another port of entry. An Immediate Transportation Entry is filed with U.S. Customs and Border Protection (CBP) when imported goods arrive at a United States port of entry destined for another port of entry within the United States as the actual final destination.

Import License: A document required and issued by some national governments authorizing the importation of goods into their countries.

Import Merchant: A merchant who buys overseas for his own account for the purpose of later resale, handling all details of import documentation and transportation.

Import Rate: A rate established specifically for application on import traffic and generally less, when so published, than a domestic rate.

Import Substitution: An attempt by a country to reduce imports by encouraging domestic producers.

Importer Distributor: A merchant who imports goods, usually on an exclusive territory arrangement, maintains an inventory and through a sales staff, sells to retailers.

Inbound Freight: A shipment currently on its way: Cargo coming from a point of origin and making its way to a business or warehouse to be stored. It is referred to as inbound freight while it’s on the way to its intended destination.

Incoterms: International Commercial Terms. The negotiated terms during purchase of how transportation of purchased goods from their origin to their destination is going to be accomplished often relies on the pre-defined commercial terms published by the International Chamber of Commerce. The Incoterms help communicate the tasks, costs, and risks associated with transportation and delivery of purchased goods.

Indent: A requisition for goods, enumerating conditions of the sale. Acceptance constitutes agreement to the conditions of the sale.

Indirect Exporting: Sale by an exporter to the buyer through a domestically located intermediary.

Infant Industry Argument: The view that “temporary protection” for a new industry or firm in a certain country through tariff and non-tariff barriers to imports can help that industry become established.

Inland Bill of Lading: A bill of lading used in transporting goods overland to the exporter’s international carrier. Although a through bill of lading is sometimes used, an inland bill of lading and an ocean bill of lading still are usually required.

Inland Carrier: A transportation line that hauls export or import traffic between ports and inland points.

Intellectual Property: Ownership conferring the right to possess, use or dispose of products created by human ingenuity, including patents, trademarks and copyrights.

Intermodal Shipping: Freight delivery that involves two or more modes of transportation. Typically refers to the use of truck shipping following the initial use of ocean shipping, rail shipping, or air shipping. Intermodal shipping is when a point of pick up is needed to deliver the freight from the first mode of transportation so to ultimately arrive at the intended point of delivery.

International Organization for Standardization (ISO): Established in 1947, this is a worldwide federation of national bodies representing some 90 countries. It is responsible for standardization in all fields except electrical and electronic engineering (the responsibility of the International Electrotechnical Commission). ISO 9000 is the general name for the quality standard accepted throughout the European Economic Community. ISO 9001 outlines a model for quality assurance in design, development, production, installation and service. ISO 9002 outlines a model for QA in production and installation. ISO 9003 outlines a model for QA in final inspection and testing. ISO 9004 is not a standard, but includes guidelines for quality management and quality systems elements. The newest ISO 14000 directive covers environmental management standards.

International and Territorial Operations: In general, operations outside U.S. territory, including operations between U.S. points separate by foreign territory or international waters.

Irrevocable Letter of Credit: A letter of credit in which the specified payment is guaranteed by the bank if all conditions and terms are met by the drawee. It is as good as the issuing bank.

Joint Venture: A form of business partnership involving joint management and the sharing of risks and profits as between enterprises based in different countries. If joint ownership of capital is involved, it is referred to as an equity joint venture.

Lay Days: The dates between which a chartered vessel is to be available in port for loading of cargo.

Legal Weight: The weight of the goods plus any immediate wrappings that are sold along with the goods, for example, the weight of a tin can as well as its contents.

Less Than Truckload: LTL refers to any shipment that falls short of filling up all the available space. Freight shipping cost calculations differ for full truckload shipments vs. less than truckload shipments. LTL freight is typically moved by a common carrier. LTL can take longer compared to a full truckload (FTL) because your freight only fills part of the available capacity. Another shipper uses the same trailer and fills the remaining space, which means the carrier will need to make multiple stops instead of heading to just one (your) destination.

Letter Of Credit: A document, issued by a bank per instructions of a buyer of goods, authorizing the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain documents within a given time. A typical letter of credit includes a brief description of goods, documents required, a shipping date and an expiration date after which payment will no longer be made. There are four types of letters of credit: Irrevocable, revocable, confirmed and documentary.

Liquidation: A final review of an entry, meaning the merchandise has been properly classified and all duties assessed.

Maastricht Treaty: Entered into force in November 1993 and also known as the Treaty of European Union, it created the 12-member European Economic Community. The treaty spells out three stages of economic development including trade with other nations.

Manifest: A list of goods transported by a carrier.

Manufacturer’s Export Agent: A firm that acts as an export sales agent for several non-competing manufacturers. Business is transacted under the name of the agent firm.

Marine Insurance: Compensates owners of goods transported overseas in the event such losses cannot be legally recovered from the carrier. Also covers air shipments.

Markings: Letters, numbers and other symbols placed on cargo packages for easier identification.

Mixed Credits: Exceptionally liberal financing terms for an export sale, ostensibly provided for a foreign aid purpose.

Most Favored Nation Treatment (MFN): Non-discrimination in trade policy that provides to all trading partners the same customs and tariff treatment given to the “most-favored nation.” It has been a fundamental principle of U.S. trade since 1778.

Multi-Fiber Arrangement Regarding International Trade in Textiles (MFA): An international compact under GATT that allows an importing signatory country to apply numerical restrictions on textile imports when it considers them necessary to prevent market disruption. MFA provides a framework for regulating international trade in textiles and apparel. It covers wool, man-made (synthetic) fibers, silk blends and other vegetable fiber textiles and apparel.

Multilateral Agreement: An international compact that involves three or more parties. GATT, for example, since 1947 has been seeking to promote more liberal trade through multilateral negotiations called “rounds.”

National Institute for Standards and Technology (NIST): A Commerce Department agency that serves as the national repository for information on voluntary industry standards for foreign and domestic products. Provides information on standards, specifications, test methods, codes and recommended practices.

Net Weight: Weight of the goods alone without any immediate wrappings; for example, the contents of a tin can minus the weight of the can.

Non-Market Economy: A national economy or a country in which the government seeks to determine economic activity largely through central planning as in the case of the former Soviet Union. This compares with a market economy that relies heavily upon market forces to allocate productive resources.

Non-Tariff Barriers: Government measures other than tariffs that restrict imports. The overall reduction in tariffs since World War II has prompted an increase in non-tariff barriers.

Non-Vessel Operating Common Carrier (NVOCC): A cargo consolidator of small shipments in ocean trades, such as WORLDLINK, generally seeking business and arranging for or performing containerization functions at the port.

North American Free Trade Agreement (NAFTA): A free trade agreement involving Canada, the U.S. and Mexico entered into force in January 1994. It progressively eliminates almost all U.S.-Mexico tariffs over a 10-year period, removes other barriers to trade such as import licensing requirements, establishes the principle of national treatment, guarantees service providers of the three nations equal treatment in the NAFTA area, and establishes five basic principles to protect foreign investors and their investment in the NAFTA area.

Ocean Bill of Lading: A bill of lading that indicates an exporter consigns a shipment to an international carrier for transportation to a specified foreign market. Unlike an inland bill of lading, the ocean bill of lading also serves as a collection document. If it is a “straight” bill of lading, the foreign buyer can obtain the shipment simply by showing proof of identity. If it is a “negotiable” bill of lading, the buyer must first pay for the goods, post a bond or meet other seller conditions.

On Board Bill of Lading: A bill of lading in which the carrier certifies goods have been placed on board a certain vessel.

Open Account: A trade agreement in which goods are shipped to a foreign buyer without guarantee of payment. Obviously, the buyer’s integrity must be impeccable.

Open Insurance Policy: A marine insurance policy that applies to all shipments made by an exporter over an extended period.

Order Bill of Lading: A negotiable bill of lading made out to the order of the shipper.

Outbound Freight: Freight that has left a warehouse, business, or facility and is heading elsewhere.

Par Value: The official fixed exchange rate between two currencies or between a currency and a specific weight of gold or a basket of currencies.

Paris Club: A popular designation for meetings between representatives of a developing country that wishes to renegotiate its “official” debt (normally excluding debts owned by and to the private sector without official guarantees) and representatives of the relevant creditor governments and international institutions. Such meetings normally take place at the initiative of a debtor nation that wishes to consolidate all or part of its debt service payments falling due over a specified period. Such meetings may also be called creditors clubs.

Paris Convention: The Paris Convention for the Protection of Industrial Property, first adopted in 1883, is the major international agreement providing basic rights for protecting international property, for example, patents, industrial designs, service marks, trade names and unfair competition. The U.S. ratified this treaty in 1887.

Particular Average: Partial loss or damage to goods.

Peril Point: A hypothetical limit beyond which a reduction in tariff protection would cause serious injury to a domestic industry.

Perils of the Sea: A marine insurance term designating heavy weather, stranding, lightning, collision and sea water damage.

Phytosanitary Inspection Certificate: A U.S. Department of Agriculture certificate issued to satisfy import regulations of foreign countries, indicating that a U.S. shipment has been inspected and is free from harmful pests and plant diseases.

Port Storage: Once containers have been discharged from the ship they arrived on, they are moved to a container yard. Ports provide a limited free period of storage during which the recipient is expected to take care of all necessary customs clearance procedures and make transportation arrangements for the goods to a warehouse or other designated final destination. Ports generally have limited storage space, so they limit port storage time allowances because lack of space can affect port productivity and lead to port congestion. If container goods are not cleared and moved in time, the port can charge for port storage.

Port marks: An identifying set of letters, numbers and/or geometric symbols followed by the name of the port or destination placed on export shipments. Requirements for them can be very strict.

Private Code: A secret system devised to conceal the contents of a message and to reduce the number of words in a cablegram.

Pro Forma Invoice: An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of the goods to be sent, their value and important specifications (weight, size, etc.).

Protectionism: The deliberate use or encouragement of restrictions on imports to enable relatively inefficient domestic producers to compete successfully with foreign producers.

Quota: A quantity control on imported merchandise for a certain period of time. Quotas are established by legislation, by directives or by proclamations issued under authority contained in specific legislation. The majority of import quotas are administered by the U.S. Customs Service. U.S. import quotas include two types: absolute and tariff-rate. Under NAFTA, there are trade preference levels, which are administered like tariff-rate quotas. Tariff-rate quotas provide for entry of a specified quantity of the quota product at a reduced rate of duty during a given period. Absolute quotas are quantitative, that is, no more than the amount specified may be permitted entry during the quota period. Some are global, others allocated to specific countries. Imports that exceed quotas may be warehoused for entry during a subsequent quota period. Quotas are sometimes used to favor preferred sources of supply.

Quotation: An offer to sell goods at a stated price and under stated terms.

Reciprocity: The practice by which governments extend similar concessions to each other, for example, when one government lowers its tariffs or other barriers impeding its imports in exchange for equivalent concessions from a trading partner on barriers affecting its exports (“a balance of concessions”).

Reefer Cargo: The opposite of Dry Cargo, Reefer Cargo refers to refrigerated goods that require a refrigerated cargo ship. Reefer Cargo is the transport of perishable commodities such as fruit, meat, fish, vegetables, dairy products, which require temperature-controlled transportation.

Retaliation: Action taken by a country to restrain its imports from a country that has increased a tariff or imposed other measures that adversely affect its exports in a manner inconsistent with GATT.

Revocable Letter of Credit: One that can be canceled or altered by the drawee (buyer) after it has been issued by the drawee’s bank.

Rollover: Sometimes containers get rolled, which means the container was not loaded onto its intended shipping vessel, likely due to customs problems, overbooking, or vessel omissions. In the event of a rollover, the carrier will reschedule the freight shipment and place the container on a subsequent departing ship.

Schedule B: A reference to Schedule B, Statistical Classification of Domestic and Foreign Commodities Exported from the U.S. All such products must be assigned a seven-digit Schedule B number.

Shipper: One of the most important concepts here – a shipper is the entity (business or individual) that is shipping the goods. CPC Consultants’ focus is helping the shipper find Smarter Shipping Solutions.

Shipper’s Export Declaration: A form required by the Treasury Department and completed by a shipper. It shows the value, weight, consignee, etc. of export shipments as well as Harmonized Schedule B identification number.

Special Drawing Rights (SDRs): These were created in 1969 by the International Monetary Fund as a supplemental international monetary reserve asset. SDRs are available to governments through the IMF and may be used in transactions between the fund and member governments.

Standard Industrial Classification (SIC): A standard numerical code system used by the U.S. government to classify products and services.

Standard Industrial Trade Classification (SITC): A standard numerical code system developed by the United Nations to classify commodities used in international trade.

Steamship Conference: A group of steamship operators running under mutually agreed- upon freight rates.

Sterling Bloc: The British commonwealth countries that fixed the price of sterling used in foreign exchange to encourage trading within the bloc.

Strikes, Riots and Civil Commotions (S.R. & C.C.): A term referring to an insurance clause excluding insurance of loss due to such conditions.

Stuffing & Stripping: Stuffing is the process of loading a container with loose goods prior to shipment. Stripping is the unloading of a container once it arrives at the destination port.

Sue and Labor Clause: A marine insurance provision obligating the insured to do those things necessary after a loss to prevent further loss and to act in the best interests of the insurer.

Surety: A guarantee in the form of cash, a bond, government obligation or other collateral such as land, to secure the performance of an importer with regard to Customs.

Switch Transactions: The practice of exporting or importing goods through an intermediary country to final destinations. This is done when the destination country is short of U.S. dollars and the intermediary country has available U.S. dollars it is willing to exchange for the destination country’s currency on goods.

Tare Weight: The weight of a container and packing materials without the weight of the goods contained.

Tariff: A duty, or tax, levied on goods transported from one customs area to another. Tariffs raise the prices of imported goods, thus making them less competitive within the imported country’s market. Following the GATT Rounds, tariffs are less important. Tariff also often refers to a comprehensive list of merchandise with the rate of duty to be paid to the government for importing products listed.

Temporary Importation Under Bond (TIB): Allows certain classes of imported goods, such as merchandise to be repaired, altered or processed, to remain duty-free under bond as long as the merchandise is exported within a year, or three years with extensions.

Tenor (of a Draft): Designation of a payment as being due on sight, or a certain number of days after sight, or after a designated date.

Terms of Trade: The volume of exports that can be traded for a given volume of imports, and another measure of a country’s economic strength.

Through Bill of Lading: A single bill of lading converting both the domestic and international carriage of an export shipment. An air waybill, for example, is essentially a through bill of lading used for air shipments. Ocean shipments, however, usually require two separate documents-an inland bill of lading for domestic carriage, and an ocean bill of lading for international carriage. Through bills of lading are insufficient for ocean shipments.

Tied Loan: A loan made by a government agency that requires the foreign borrower to spend the proceeds in the lending country.

Trade Policy Committee (TPC): A U.S. senior inter-agency committee chaired by the U.S. Trade Representative. It provides broad guidance to the President on trade policy issues. Members include the Secretaries of Commerce, State, Treasury, Agriculture and Labor.

Tramp Steamer: A ship not operating on regular routes or schedules.

Transaction Value: The value used to assess duty. It can be the actual price paid for imported goods, or the price paid for identical or similar merchandise, or the computed or deductive value of the goods. The value used is the one that most closely reflects the true value of the goods.

Transfer of Technology: The movement of modern or scientific methods of production or distribution from one enterprise, institution or country to another, as through foreign investment, international trade licensing of patent rights, technical assistance or training.

Transparency: Visibility and clarity of laws and regulations. The GATT Tokyo Round sought to increase the transparency of non-tariff barriers that impede trade.

Transportation and Exportation Entry: A form declaring goods that are entering the U.S., for example, from Canada, for the purpose of exportation through a U.S. port. Carriers and any warehouse must be bonded.

Trigger Price Mechanism (TPM): A U.S. system for monitoring imported steel to identify imports that are possibly being dumped in the U.S. or being subsidized by the governments of the exporting countries.

Trust Receipt: Allows an importer to possess goods without a title and before paying the draft.

Turnkey Contract: An agreement where a contractor assumes responsibility to a client for building productive installations and ensuring that they operate effectively before turning them over to the client.

U.S.-Israel Free Trade Area Agreement (FTA): A U.S. government program providing for free or reduced rates of duty for merchandise from Israel to stimulate trade between the countries. The program was authorized by the Trade and Tariff Act of 1984 and has no termination date. As of January 1, 1995, all currently eligible reduced rate imports from Israel were accorded duty-free treatment.

Valuation: The appraisal of the worth of imported goods by customs officials to determine the amount of duty payable to the importing country. The GATT Customs Valuation Code obligates signatory governments to use transaction value, the price actually paid or payable for goods, as the principal basis for valuing goods for customs purposes.

Value Added Tax (VAT): An indirect tax on consumption levied at each discrete point in the chain of production and distribution, from raw material to end use. Each processor or merchant pays a tax proportional to the amount by which they increase the value of the goods purchased for resale after making their own contribution. The VAT is imposed through the European Community.

Voluntary Restraint Agreements (VRAs): Informal arrangements through which exporters voluntarily restrain certain exports, usually via export quotas, to avoid economic dislocation in an importing country, as well as to avert possible imposition of mandatory import restrictions.

War Risk Insurance: Separate insurance coverage for loss of goods that results from any act of war, necessary during peacetime due to objects left over from previous wars, for example, landmines. In the U.S., such insurance is underwritten exclusively by the American Cargo War Risk Reinsurance Exchange.

War/Strike Clause: An insurance provision covering loss due to these conditions.

Warehouse Entry: A form declaring goods imported and placed in a bonded warehouse. Duty may not be required until goods are withdrawn for consumption.

Weather Working Day: A day when reasonable weather conditions prevail to allow normal working to the vessel. Western Hemisphere Trade Corporation: A U.S. corporation whose business is done in any country of North, South or Central America, or the West Indies, and which usually receives certain tax advantages.

With Particular Average (W.P.A.): An insurance term meaning that partial loss or damage to goods is insured. Generally, the damage must be caused by sea water.

Sources:

“Breaking Into The Trade Game: A Small Business Guide to Exporting,” co-sponsored by Small Business Administration and AT&T. Small Business Administration, Washington, D.C. 20416. Publication #93-13-4924710-1

“Dictionary of International Trade Terms and Acronyms,” Kutztown University Small Business Development Center, Regional International Trade Center, Dixon University, 2986 N. Second St., Harrisburg, PA 17110, Revised November 1995; (717) 720-4230. (NOTE: This is an excellent reference containing definitions for many more terms)

“A Glossary of International Trade Terms,” Business America, September 19, 1986. U.S. Department of Commerce. Available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402; (202) 783-3238

“Importing into the United States,” Department of the Treasury, U.S. Customs Service. Publication #504A, October 1994. Available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. Phone: (202) 783-3238. U.S. Customs Service, P.O. Box 7407, Washington, D.C. 20044

A Basic Guide to Exporting,” U.S. Department of Commerce. January 1992

“Essential Facts: Importing and Exporting. A Complete Guide to International Trading,” Warren, Gorham & Lamont, One Penn Plaza, New York, NY 10119

Acronyms

AADFI: Association of African Development Finance Institutions

AAIB: Arab-African International Bank

AATPO: Association of African Trade Promotion Organizations

ABC: American Business Center

ABEDA: Arab Bank for Economic Development in Africa

ABI: Automated Broker Interface

ABI: American Business Institute

ABS: American Bureau of Shipping – a ship classification society

ACA: Accession Compensatory Amount

ACAB: Association of Central African Bank

ACC: Acceptance – in a freight context

ACE: Automated Commercial Environment

ACV: Air Cushion Vehicle (hovercraft)

AES: Automated Export System

AF: Advanced Freight

AHF: American hull form (insurance policy)

AIMU: American Institute of Marine Underwriters

AML: Absolute Maximum Loss – related to PML – Probable Maximum Loss

CBP: U.S. Customs and Border Protection – part of the Department of Homeland Security

CCL: Commerce Control List – items that have both commercial & military applications

CL: Container Load

CM: Cubic Meters

COD: Change of Destination

COD: Cash on delivery – payment is made upon delivery of goods, rather than in advance

COO: Certificate of origin

COP: Customs of the port – local rules and practices at the port, which may impact a shipment

CPC: CPC Shipping and Freight Consultants. CPC is also the acronym of our name

CYCY: Container Yard to Container Yard

Cu: Cubic – a measurements of volume

DOT: United States Department of Transportation

EAR: Export Administration Regulations from U.S. Department of Commerce

FCL: Full Container Load – sufficient goods to fill an entire shipping container

FTL: Full Truckload

LCL: Less than Container Load

LTL: Less Than Truckload