A Basic Glossary (and Bibliography) of International Freight and Trade

Glossary

A

Agency for international trade information and cooperation

This is an intergovernmental organisation that is set up to help countries that are less advantaged than others.

Agent

Someone who represents business in domestic and overseas market. In corporate governance terminology, management is the agent of the principal stakeholders in a principal-agent relationship.

ASEAN

Association of Southeast Asian Nations.

B

Bill of Lading

Bills of lading are contracts between the owner of the goods and the carrier. There are two types. A straight bill of lading is non-negotiable. A negotiable or shipper’s order bill of lading can be bought, sold, or traded while goods are in transit.

Bond System

The Bond System, a part of Customs’ Automated Commercial System, provides information on bond coverage. A Customs bond is a contract between a principal, usually an importer, and a surety which is obtained to insure performance of an obligation imposed.

Bonds

A loan that the bond purchaser, or bondholder, makes to the bond issuer.

C

Carnet

Customs document for temporary duty-free admission of goods under certain international conventions.

Cash In Advance (C.I.A.)

A method of payment for goods in which the buyer pays the seller in advance of the shipment of the goods. Usually employed when the goods are built to order, such as specialised machinery.

Certificate Of Origin

A certified document as to the origin of goods, used in foreign commerce.

CIF

(Cost, insurance and freight): Seller is responsible for inland freight, ocean/air freight, and marine/air insurance to the port of final entry in the buyer’s country. The buyer is responsible for inland transportation to his or her location.

CIP

Carriage and Insurance Paid To –Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation.

Commercial Invoice

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.

Consumer Credit Act 1974

An Act of the Parliament of the United Kingdom that significantly reformed the law relating to consumer credit.

Container

A uniform, sealed, reusable metal “box” in which merchandise is shipped by vessel, truck, or rail. Standard lengths include 10, 20, 30, and 40 feet (40 foot lengths are generally able to hold about 40,000 pounds). Containers of 45 and 48 feet are also used, as well as containers for shipment by air.

Contract

A written or spoken agreement, especially one concerning employment

CPT

Carriage Paid To — Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination. Used for any mode of transportation

Croner’s

A publication issued in the United Kingdom providing information about the location of the country, principal ports, population, currency, time zone, voltage, documentary requirements, information required for quoting and packaging requirements. It can be obtained in electronic format for ready access on personal computer.

Customs

The government department usually responsible for collecting sales tax (e.g. VAT in the UK).

Customs Tariff

A schedule of charges assessed by the government on imported and/or exported goods.

D

DDP

Delivered Duty Paid — Title and risk pass to buyer when seller delivers goods to named destination point cleared for import. Used for any mode of transportation.

DEFRA

The UK Government department tasked with issues such as the environment, rural development, the countryside, wildlife, animal welfare etc.

Distribution

Outbound logistics, from the end of the production line to the end user.

1) The activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer. These activities encompass the functions of transportation, warehousing, inventory control, material handling, order administration, site and location analysis, industrial packaging, data processing, and the communications network necessary for effective management. It includes all activities related to physical distribution, as well as the return of goods to the manufacturer. In many cases, this movement is made through one or more levels of field warehouses.

2) The systematic division of a whole into discrete parts having distinctive characteristics.

Documentary Collection

A documentary collection can be defined as the collection of a sum of money due from a buyer by a bank against delivery of certain goods or services.

E

EDI

Electronic Data Interchange for Administration, Commerce and Transport, from the UN-backed electronic data interchange standards body, to create electronic versions of common business documents that will work on a global scale. One digital document under consideration, the International Forwarding and Transport Message will do the jobs of six different electronic messages currently in use.

European Union

An economic and political union established in 1993 after the ratification of the Maastricht treaty by members of the European community and since expanded to include numerous central and eastern European nations. The establishment of the European union expanded the political scope of the European economic community, especially in the area of foreign and security policy, and provided for the creation of a central European bank and the adoption of a common currency, the euro.

Ex Works

An international trade term (incoterms, international chamber of commerce) requiring the seller to deliver goods at his or her own place of business. All other transportation costs and risks are assumed by the buyer.

Export

1) In logistics, the movement of products from one country to another. For example, significant volumes of cut flowers are exported from the Netherlands to other countries of the world.

2) A computer term referring to the transfer of information from a source (system or database) to a target.

Export licence

A document secured from a government, authorising an exporter to export a specific quantity of a particular commodity to a certain country. An export license is often required if a government has place embargoes or other restrictions upon exports.

F

FCA

Free Carrier — Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyer’s collecting vehicle; it is the Buyer’s obligation to receive the Seller’s arriving vehicle unloaded.

FOB

Contractual terms between a buyer and a seller that define where title transfer takes place.

Forfaiting

Forfaiting is a form of international supply chain financing. It involves the discount of future payment obligations on a without recourse basis.

Freight forwarder

An independent business that dispatches shipments for exporters for a fee. The firm may ship by land, air, or sea, or it may specialise. Usually it handles all the services connected with an export shipment; preparation of documents, booking cargo space, warehouse, pier delivery and export clearance

G

GATT

General Agreement on Tariffs and Trade, a multilateral treaty intended to help reduce trade barriers and promote tariff concessions.

I

Import

Movement of products from one country into another. The import of automobiles from Germany to the U.S. is an example.

INCOTERMS

A codification of terms used in foreign trade contracts that are maintained by the International Chamber of Commerce.

International Chamber of Commerce

The largest, and arguably most diverse, business organisation in the world with thousands of member companies representing over 130 countries and a vast array of business interests. The International Chamber Of Commerce (ICC) has a worldwide network of committees and industry experts to keep members abreast of the issues that may affect them, as well as contacts within the World Trade Organization, the United Nations and other intergovernmental agencies.

ISO

International Standards Organisation also referred to as the International Organisational for Standardisation.

L

Letter of credit

A document issued by a bank at a buyer’s request honouring debt obligations to the seller upon receipt of the document.

M

Money Laundering

Concealing the source of illegally gotten money

Money Laundering Reporting Officer

An official of a company who is responsible for monitoring and reporting suspicions related to money laundering

Most favoured nation

A method of establishing equality of trading opportunity among states by guaranteeing that if one country is given better trade terms by another, then all other states must get the same terms.

O

Open Account

A high-risk trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment.

P

Packing List

List showing merchandise packed and all particulars. Normally prepared by shipper but not required by carriers. Copy is sent to consignee to help verify shipment received. The physical equivalent of the electronic Advanced Ship Notice (ASN).

S

Serious Organised Crime Agency (SOCA)

A national police unit responsible for pro-active operations against serious and organised crime.

Single Administrative Document (SAD)

Also known as the C88, this document must be completed for all exports, imports and goods crossing the EU.

SITPRO

A national organisation for the Simplification of International Trade procedures in the United Kingdom.

SWOT

A strategic planning tool looking at Strengths, Weaknesses, Opportunities and Threats with respect to the environment and competition.

T

Trade

A term used to define a geographic area or specific route served by carriers.

Transport

The assisted movement of people and or goods.

U

United Nations (UN)

An international organisation composed of most of the countries of the world. It was founded in 1945 to promote peace, security, and economic development.

V

Value Added

The amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.

W

World Trade Organisation

The World Trade Organisation (WTO) is an organization that intends to supervise and liberalise international trade.

Bibliography