FORMS AND TERMS

Terms/Glossery

Air Waybill - A bill of lading which covers 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 listing therein and obligates itself to carry the consignment to the airport of destination according to specified conditions.

Bill of Lading - A document that establishes the terms of a contract between a shipper and a transportation company under which freight is to be moved between specified points for a specified charge. Usually prepared by the forwarder on forms issued by the carrier, it serves as a document of title, a contract of carriage, and a receipt for goods.

Carnet - A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries (for display, demonstration or similar purposes) without paying duties or posting bonds.

Certificate of Origin - A document, required by certain foreign countries for tariff purposes, certifying as to the country of origin of specified goods.

C.I.F. - Cost, Insurance, Freight - A pricing term indicating that these costs are included in the quoted price.

Dock Receipt - A document issued by an ocean carrier to acknowledge receipt of a shipment at the carrier's dock or warehouse facilities.

Drawback - A refund of duties paid on imported goods which is provided at the time of their re-exportation.

Dumping - Importing merchandise into a country (e.g. the United States) at lower prices that are detrimental to local producers of the same kind of merchandise.

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), other factors such as weight or quantity (specific duties), or a combination of value and other factors (compound duties).

Ex-"From" - When used in pricing terms such as "Ex Factory" or Ex Dock", it signifies that the price quoted applies only at the point of origin (in the two examples, at the sellers factory or a dock at the import point). In practice this kind of quotation indicates that the seller agrees to place the goods at the disposal of the buyer at the specified place within a fixed period of time.

F.O.B. - "Free On Board" - A pricing term indication that the quoted price includes the cost of loading the goods into transport vessels at the specified place.

Foreign Trade Zone - A port designated by the government of a country for duty-free entry of any non-prohibited goods. Merchandise may be stored, displayed, used for manufacturing, etc., within the zone and re-exported without duties being paid. Duties are imposed on the merchandise (or items manufactured from the merchandise) only when the goods pass from the zone into an area of the country subject to Customs Authority.

Letter of Credit (LC) - A document, issued by a bank per instructions by 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.

Packing List - A list showing the number and kinds of items being shipped, as well as other information needed for transportation purposes.

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, etc.).

Quota - The quantity of goods of a specific kind that a country will permit to be imported without restriction or imposition of additional duties.

Shipper's Export Declaration - A form required for overseas shipments and prepared by a shipper, indicating the value, weight, destination, and other basic information about an export shipment.

Tare Weight - The weight of a container without the weight of goods it contains.

Through Bill of Lading - A single bill of lading covering both the domestic and international carriage of a export shipment; an air waybill, for instance, is essentially a through bill of lading used for air shipments. Ocean shipments, on the other hand, usually require two separate documents - an inland bill of lading for domestic carriage and an ocean bill of lading for international carriage. Compare Air Waybill and Bill of Lading.

Validated Export License - A document issued by the U.S. Government authorizing the export of commodities for which written export authorization is required by law.

 


Inco Terms

FAS – Free Alongside Ship (named port of shipment)[edit]

The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. Suitable only for maritime transport but NOT for multimodal sea transport in containers (seeIncoterms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.

FOB – Free on Board (named port of shipment)[edit]

The seller must load the goods on board a vessel designated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel. The seller must clear the goods for export. The term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. This term has been greatly misused over the last three decades ever sinceIncoterms 1980 explained that FCA should be used for container shipments.

It means the seller pays for transportation of goods to the port of shipment, loading cost. The buyer pays cost of marine freight transportation, insurance, uploading and transportation cost from the arrival port to destination. The passing of risk occurs when the goods are on board the vessel.

CFR – Cost and Freight (named port of destination)[edit]

Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel. Insurance for the goods is NOT included. This term is formerly known as CNF (C&F, or C+F). Maritime transport only.

CIF – Cost, Insurance and Freight (named port of destination)[edit]

Exactly the same as CFR except that the seller must in addition procure and pay for the insurance. Maritime transport only. freight

DAF – Delivered at Frontier (named place of delivery)[edit]

This term can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier.

DES – Delivered Ex Ship (named port of delivery)[edit]

Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading the goods and any duties, taxes, etc. are for the Buyer. A commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals; and where the seller either owns or has chartered, their own vessel.

DEQ – Delivered Ex Quay (named port of delivery)[edit]

This is similar to DES, but the passing of risk does not occur until the goods have been unloaded at the port of discharge.

DDU – Delivered Duty Unpaid (named place of destination)[edit]

This term means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. A transaction in international trade where the seller is responsible for making a safe delivery of goods to a named destination, paying all transportation expenses but not the duty. The seller bears the risks and costs associated with supplying the goods to the delivery location, where the buyer becomes responsible for paying the duty and other customs clearing expenses.·