Glossary

A#

AEO (Authorized Economic Operator)#

A certification granted by customs authorities to businesses that meet specific security and compliance standards in international trade. AEO status provides benefits such as faster customs clearance, fewer inspections, and priority treatment. The program is recognized by the World Customs Organization (WCO) and implemented in many countries including the EU and US (C-TPAT).

Related terms: Customs clearance, Importer of record, Exporter of record

Airway Bill (AWB)#

A transport document issued by an air carrier or freight forwarder for air cargo shipments. Unlike a Bill of Lading, an Airway Bill is non-negotiable and serves as receipt of goods, evidence of the contract of carriage, and customs documentation. There are two types: Master Airway Bill (MAWB) issued by airlines and House Airway Bill (HAWB) issued by freight forwarders.

Related terms: Bill of Lading, Transport document, Freight forwarder

Alongside Vessel#

The delivery point where cargo is placed on the wharf or quay within reach of the ship’s loading equipment. Under FAS (Free Alongside Ship), the seller’s delivery obligation is complete when goods are placed alongside the vessel at the named port of shipment.

Related terms: FAS, Port of shipment, Wharf

B#

Bill of Lading (B/L)#

A legal document issued by a carrier or freight forwarder that serves three critical functions: (1) receipt of goods confirming the cargo was loaded, (2) evidence of the contract of carriage, and (3) document of title allowing transfer of ownership while goods are in transit.

Types:

• Ocean Bill of Lading - For sea freight, can be negotiable
• House Bill of Lading (HBL) - Issued by freight forwarder
• Master Bill of Lading (MBL) - Issued by shipping line

Key characteristics:

• “On board” notation confirms goods are loaded on vessel
• Required for Letter of Credit payments
• Original B/L needed to release cargo at destination
• Can be “negotiable” (transferable) or “straight” (non-negotiable)

Related terms: Carrier, Consignee, Shipper, Transport document

Breakbulk Cargo#

Non-containerized cargo that is loaded individually onto a vessel, typically items too large or heavy for standard containers. Examples include machinery, construction equipment, steel coils, and project cargo. Breakbulk requires specialized handling equipment and is often loaded using the ship’s cranes.

Related terms: Project cargo, Container, FCL

Bulk Cargo#

Unpackaged cargo loaded directly into a ship’s hold without containers or packaging. Divided into dry bulk (grain, coal, ore, cement) and liquid bulk (oil, chemicals, LNG). Bulk carriers are specialized vessels designed for specific cargo types.

Related terms: Breakbulk cargo, Cargo

Buyer#

The party in a sales contract that purchases goods from the seller. Under Incoterms, the buyer’s obligations vary depending on the chosen term, ranging from minimal (DDP) to maximum (EXW) responsibility for transport, insurance, customs clearance, and costs.

Related terms: Seller, Consignee, Importer

C#

Cargo Insurance#

Insurance coverage protecting goods against loss or damage during transportation. Coverage levels are defined by Institute Cargo Clauses (ICC):

• ICC A - All-risk coverage (comprehensive)
• ICC B - Named perils plus additional risks
• ICC C - Basic named perils only (minimum)

Under CIF and CIP, the seller must provide cargo insurance. CIP requires ICC A (all-risk), while CIF requires only ICC C (minimum).

Related terms: CIF, CIP, Risk transfer, ICC A, ICC C

Carrier#

Any party that contracts to transport goods by any mode of transport (sea, air, road, rail). The carrier issues transport documents (Bill of Lading, Airway Bill) and is responsible for the cargo during transit. In Incoterms, “carrier” includes freight forwarders when they contract for carriage.

Related terms: Freight forwarder, Bill of Lading, Transport document

CFS (Container Freight Station)#

A warehouse facility where LCL (Less than Container Load) cargo is consolidated into containers for export or deconsolidated from containers for import. CFS operations include receiving cargo, stuffing/destuffing containers, and cargo storage.

Related terms: LCL, Consolidation, Container

CFR (Cost and Freight)#

An Incoterm for sea and inland waterway transport where the seller delivers goods on board the vessel, pays freight to the named port of destination, but risk transfers to the buyer once goods are loaded. The buyer is responsible for insurance and import clearance.

Key points:

• Seller pays freight to destination port
• Risk transfers at port of loading (on board)
• Buyer should arrange cargo insurance
• Only for sea/waterway transport

Related terms: CIF, FOB, Port of destination

CIF (Cost, Insurance and Freight)#

An Incoterm for sea and inland waterway transport where the seller delivers goods on board the vessel, pays freight and insurance to the named port of destination. Risk transfers to the buyer once goods are loaded. Insurance requirement is minimum coverage (ICC C).

Key points:

• Seller pays freight and insurance to destination
• Risk transfers at port of loading (on board)
• Minimum insurance (ICC C) required
• Only for sea/waterway transport

Related terms: CFR, CIP, Cargo insurance

CIP (Carriage and Insurance Paid To)#

An Incoterm for any mode of transport where the seller delivers goods to the carrier, pays for carriage and insurance to the named destination. Risk transfers when goods are handed to the first carrier. Insurance requirement is all-risk coverage (ICC A).

Key points:

• Seller pays carriage and insurance to destination
• Risk transfers when handed to first carrier
• All-risk insurance (ICC A) required
• Suitable for containerized cargo

Related terms: CPT, CIF, Multimodal

Commercial Invoice#

A document issued by the seller to the buyer that describes the goods sold, their value, and terms of sale. Essential for customs clearance, it serves as the basis for calculating duties and taxes. Required information includes buyer/seller details, description of goods, quantity, price, Incoterms, and payment terms.

Related terms: Customs clearance, Packing list, Export documentation

Consignee#

The party to whom goods are shipped and delivered, named in the Bill of Lading or transport document. The consignee has the right to receive the cargo at destination and may be the buyer, their agent, or a third party such as a bank (in Letter of Credit transactions).

Related terms: Shipper, Bill of Lading, Buyer

Consolidation#

The process of combining multiple smaller shipments from different shippers into a single container or transport unit for more economical shipping. Performed by freight forwarders at Container Freight Stations (CFS), consolidation enables LCL shippers to share container costs.

Related terms: LCL, CFS, Freight forwarder, Deconsolidation

Container#

A standardized metal box used for intermodal freight transport. Standard sizes include 20-foot (TEU) and 40-foot (FEU) containers. Types include dry containers, refrigerated (reefer), open-top, flat rack, and tank containers. Containers enable efficient multimodal transport and protect cargo.

Related terms: FCL, LCL, TEU, Container yard

Container Yard (CY)#

A facility where full containers are stored, received, and dispatched. Container yards are located at ports, inland depots, and freight terminals. CY-to-CY means delivery from origin container yard to destination container yard.

Related terms: Container, FCL, Terminal

CPT (Carriage Paid To)#

An Incoterm for any mode of transport where the seller delivers goods to the carrier and pays for carriage to the named destination. Risk transfers to the buyer when goods are handed to the first carrier. The buyer is responsible for insurance.

Key points:

• Seller pays carriage to named destination
• Risk transfers when handed to first carrier
• Buyer should arrange insurance
• Suitable for multimodal/containerized cargo

Related terms: CIP, CFR, Multimodal

Customs Broker#

A licensed professional or company that handles customs clearance on behalf of importers and exporters. Customs brokers prepare and submit documentation, calculate duties and taxes, and ensure compliance with import/export regulations.

Related terms: Customs clearance, Import duties, Export clearance

Customs Clearance#

The process of completing all formalities required to import or export goods through a country’s customs authority. Includes submitting documentation, paying duties and taxes, and obtaining release of cargo. Under Incoterms, responsibility for export and import clearance varies by term.

Related terms: Export clearance, Import clearance, Customs broker

D#

DAP (Delivered at Place)#

An Incoterm for any mode of transport where the seller delivers goods to the named destination, ready for unloading from the arriving vehicle. The seller bears all risks and costs to destination but is not responsible for unloading or import clearance.

Key points:

• Seller delivers to named destination
• Buyer handles unloading and import clearance
• Risk transfers when goods arrive ready for unloading
• Suitable for any transport mode

Related terms: DPU, DDP, Named place

DDP (Delivered Duty Paid)#

An Incoterm representing maximum seller obligation. The seller delivers goods to the named destination, cleared for import, with all duties and taxes paid. The buyer’s only responsibility is unloading. This is the opposite of EXW.

Key points:

• Maximum seller obligation
• Seller handles export and import clearance
• Seller pays all duties and taxes
• Buyer only responsible for unloading

Related terms: EXW, DAP, Import duties

Deconsolidation#

The process of separating consolidated LCL cargo back into individual shipments at the destination Container Freight Station (CFS). After deconsolidation, each consignee can collect or arrange delivery of their goods.

Related terms: Consolidation, LCL, CFS

Delivery Point#

The specific location where the seller fulfills their delivery obligation under Incoterms. The delivery point determines where risk transfers from seller to buyer. Examples include seller’s premises (EXW), on board vessel (FOB), or named destination (DAP).

Related terms: Risk transfer, Named place, Incoterms

Demurrage#

A charge levied when cargo or containers remain at a port terminal beyond the allowed free time after vessel arrival. Demurrage applies to import containers not picked up within the free period. Charges are daily and can escalate over time.

Related terms: Detention, Free time, Terminal

Detention#

A charge for keeping a shipping container outside the port or terminal beyond the allowed free time. Detention applies when containers are held at the consignee’s premises longer than permitted. Different from demurrage, which applies inside the terminal.

Related terms: Demurrage, Free time, Container

DPU (Delivered at Place Unloaded)#

An Incoterm for any mode of transport where the seller delivers goods unloaded at the named destination. The seller bears all risks and costs including unloading, but is not responsible for import clearance. Replaced DAT (Delivered at Terminal) in Incoterms 2020.

Key points:

• Seller responsible for unloading
• Risk transfers after unloading at destination
• Buyer handles import clearance
• Can be any place, not just terminal

Related terms: DAP, DDP, Unloading

E#

Export Clearance#

The process of completing all customs formalities required to ship goods out of a country. Includes filing export declarations, obtaining licenses if required, and ensuring compliance with export regulations. Under most Incoterms (except EXW), the seller is responsible for export clearance.

Related terms: Customs clearance, Import clearance, Export license

Export License#

A government authorization required to export certain controlled goods, technologies, or to specific destinations. Export licenses are regulated by agencies such as the Bureau of Industry and Security (BIS) in the US. Some goods require licenses based on their nature, destination, or end-use.

Related terms: Export clearance, Export control, Customs

Exporter of Record#

The party legally responsible for the export shipment and compliance with export regulations. The exporter of record files export declarations, ensures proper licensing, and is liable for any violations. Usually the seller, but can be a third party.

Related terms: Importer of record, Export clearance, Customs

EXW (Ex Works)#

An Incoterm representing minimum seller obligation. The seller makes goods available at their premises (factory, warehouse). The buyer bears all risks and costs from that point, including loading, export clearance, and transport.

Key points:

• Minimum seller obligation
• Buyer responsible for everything after pickup
• Buyer handles export clearance (unusual)
• Risk transfers at seller’s premises

Related terms: DDP, FCA, Named place

F#

FAS (Free Alongside Ship)#

An Incoterm for sea and inland waterway transport where the seller delivers goods alongside the vessel at the named port of shipment. Risk transfers when goods are placed alongside the ship. The buyer arranges loading, freight, and insurance.

Key points:

• Delivery alongside vessel at port
• Risk transfers alongside ship
• Buyer handles loading onto vessel
• Only for sea/waterway transport

Related terms: FOB, Alongside vessel, Port of shipment

FCA (Free Carrier)#

An Incoterm for any mode of transport where the seller delivers goods to the carrier nominated by the buyer at the named place. If delivery is at seller’s premises, seller loads the goods. If elsewhere, seller delivers goods ready for unloading.

Key points:

• Versatile term for any transport mode
• Two delivery options (seller’s premises or carrier’s location)
• Risk transfers when handed to carrier
• Recommended for containerized cargo instead of FOB

Related terms: FOB, Carrier, Multimodal

FCL (Full Container Load)#

A shipping method where a shipper uses an entire container for their cargo, regardless of whether it fills the container completely. FCL is more economical for larger shipments, offers faster transit (no consolidation), and reduces cargo handling risks.

Key characteristics:

• One shipper per container
• Direct service without consolidation
• Lower per-unit cost for large shipments
• Container sealed at origin, opened at destination

Related terms: LCL, Container, CFS

FOB (Free On Board)#

An Incoterm for sea and inland waterway transport where the seller delivers goods on board the vessel at the named port of shipment. Risk transfers when goods are loaded on board. The buyer arranges and pays for freight and insurance.

Key points:

• Delivery on board vessel at port
• Risk transfers when goods are on board
• Buyer pays freight from port of shipment
• Only for sea/waterway, NOT recommended for containers

Related terms: FCA, CFR, CIF, Port of shipment

Forwarder’s Cargo Receipt (FCR)#

A document issued by a freight forwarder confirming receipt of goods for shipment. Unlike a Bill of Lading, an FCR is not a document of title and is non-negotiable. Often used in FCA transactions and supply chain finance.

Related terms: Bill of Lading, Freight forwarder, FCA

Free Time#

The period during which containers can remain at a port terminal or with equipment without incurring demurrage or detention charges. Free time is typically 3-7 days for imports and varies by port and shipping line. Additional free time can sometimes be negotiated.

Related terms: Demurrage, Detention, Terminal

Freight Forwarder#

A company that organizes shipments on behalf of shippers, arranging transportation, documentation, and customs clearance. Freight forwarders consolidate cargo, book space with carriers, and provide logistics services. They may act as carriers (NVOCC) or agents.

Related terms: Carrier, NVOCC, Consolidation, Customs broker

G#

Gross Weight#

The total weight of goods including all packaging, pallets, and the container (for containerized cargo). Gross weight is used for freight calculations and must be declared accurately. For containers, Verified Gross Mass (VGM) is mandatory under SOLAS regulations.

Related terms: VGM, SOLAS, Tare weight

H#

House Bill of Lading (HBL)#

A Bill of Lading issued by a freight forwarder or NVOCC to their customer (shipper). The HBL covers the relationship between the forwarder and shipper, while the Master Bill of Lading covers the relationship between the forwarder and the ocean carrier.

Related terms: Bill of Lading, Master Bill of Lading, NVOCC

I#

ICC (International Chamber of Commerce)#

The global business organization that publishes Incoterms rules. Founded in 1919, the ICC updates Incoterms approximately every 10 years to reflect changes in international trade practices. The current version is Incoterms 2020.

Related terms: Incoterms, Incoterms 2020

ICC A / ICC C (Institute Cargo Clauses)#

Standardized insurance coverage levels for cargo:

• ICC A - All-risk coverage (most comprehensive)
• ICC B - Named perils plus additional risks
• ICC C - Basic named perils only (minimum)

CIP requires ICC A coverage; CIF requires minimum ICC C coverage.

Related terms: Cargo insurance, CIF, CIP

Import Clearance#

The process of completing all customs formalities to bring goods into a country. Includes filing import declarations, paying duties and taxes, and meeting regulatory requirements. Under most Incoterms, the buyer is responsible for import clearance (except DDP).

Related terms: Customs clearance, Export clearance, Import duties

Import Duties#

Taxes levied by customs authorities on imported goods. Duties are calculated based on the customs value, tariff classification, and country of origin. Under DDP, the seller pays import duties; under all other Incoterms, the buyer pays.

Related terms: Customs clearance, DDP, Tariff

Importer of Record#

The party legally responsible for ensuring imported goods comply with all regulations and for paying duties and taxes. The importer of record files import declarations and is liable for any violations. Usually the buyer, but can be a third party.

Related terms: Exporter of record, Import clearance, Customs

Incoterms#

International Commercial Terms published by the International Chamber of Commerce (ICC). Incoterms are standardized trade terms that define the responsibilities of buyers and sellers regarding delivery, risk transfer, and cost allocation in international and domestic trade.

The 11 Incoterms 2020:

• Any mode: EXW, FCA, CPT, CIP, DAP, DPU, DDP
• Sea/waterway only: FAS, FOB, CFR, CIF

Related terms: ICC, Risk transfer, Delivery point

Intermodal Transport#

Transportation using multiple modes (sea, rail, road, air) under a single contract, typically with cargo remaining in the same container throughout. Intermodal transport is efficient for door-to-door delivery and reduces handling.

Related terms: Multimodal, Container, Through Bill of Lading

L#

LCL (Less than Container Load)#

A shipping method where cargo from multiple shippers is consolidated into a single container. LCL is used when a shipment is too small to fill an entire container (typically less than 15 cubic meters). The cargo is delivered to a Container Freight Station (CFS) where it’s combined with other shipments, then deconsolidated at the destination CFS for final delivery.

Key characteristics:

• Cost-effective for smaller shipments
• Longer transit times due to consolidation/deconsolidation
• Cargo handled multiple times (higher risk of damage)
• Freight charged per cubic meter or weight (whichever is greater)

Related terms: FCL, CFS, Consolidation, Freight forwarder

Letter of Credit (L/C)#

A payment instrument issued by a bank guaranteeing payment to the seller upon presentation of compliant documents. Letters of Credit provide security for both parties in international trade and require specific documentation including Bills of Lading, commercial invoices, and certificates.

Related terms: Bill of Lading, Commercial invoice, Payment terms

Loading#

The process of placing cargo onto a vessel, vehicle, or container. Under FOB and CFR/CIF, loading onto the vessel is the seller’s responsibility. Loading charges may be included in freight or billed separately depending on the contract terms.

Related terms: Unloading, FOB, Stevedore

M#

Master Bill of Lading (MBL)#

A Bill of Lading issued by the ocean carrier (shipping line) to the freight forwarder or NVOCC. The MBL covers the main ocean transport and lists the forwarder as shipper/consignee. Individual shippers receive House Bills of Lading from the forwarder.

Related terms: Bill of Lading, House Bill of Lading, Carrier

Multimodal Transport#

Transportation of goods using two or more different modes under a single contract. A multimodal transport operator (MTO) takes responsibility for the entire journey. Multimodal Bills of Lading cover door-to-door movements across different transport modes.

Related terms: Intermodal, FCA, CPT, CIP

N#

Named Place#

The specific location designated in an Incoterms rule where delivery occurs or to which carriage is arranged. Examples: “FCA Shanghai Warehouse,” “DAP Buyer’s Factory Munich,” “CIF Port of Rotterdam.” Precise naming prevents disputes about delivery points.

Related terms: Delivery point, Port of destination, Incoterms

NVOCC (Non-Vessel Operating Common Carrier)#

A freight forwarder that acts as a carrier by issuing their own Bills of Lading, although they don’t own or operate vessels. NVOCCs consolidate cargo from multiple shippers and book space with ocean carriers, taking responsibility for the shipment.

Related terms: Freight forwarder, House Bill of Lading, Carrier

O#

On Board#

A notation on a Bill of Lading confirming that goods have been loaded onto the vessel. “On board” or “shipped on board” notations are essential for FOB, CFR, and CIF shipments and for Letter of Credit compliance. The date of the on board notation determines the shipment date.

Related terms: Bill of Lading, FOB, Risk transfer

Origin Charges#

Costs incurred at the origin/export location including terminal handling, documentation, customs clearance, and local transport to the port. Origin charges allocation depends on the Incoterm used. Also called “local charges” or “pre-carriage costs.”

Related terms: Destination charges, THC, Customs clearance

P#

Packing List#

A document itemizing the contents, weight, and dimensions of each package in a shipment. The packing list accompanies the commercial invoice and is used by customs, carriers, and consignees to verify cargo. Essential for customs clearance and insurance claims.

Related terms: Commercial invoice, Documentation, Customs clearance

Port of Destination#

The seaport where goods are delivered or discharged under sea freight Incoterms. For CFR and CIF, the seller pays freight to the named port of destination but risk transfers at the port of loading. Must be clearly named in the contract.

Related terms: Port of shipment, CFR, CIF, Named place

Port of Shipment#

The seaport where goods are loaded onto the vessel. Under FOB, FAS, CFR, and CIF, this is where risk transfers from seller to buyer. The port of shipment must be named in FOB and FAS terms.

Related terms: Port of destination, FOB, FAS, Loading

Project Cargo#

Oversized, heavy, or complex cargo requiring specialized transport and handling. Examples include industrial equipment, wind turbines, and construction machinery. Project cargo often requires custom logistics solutions, heavy-lift vessels, and specialized permits.

Related terms: Breakbulk cargo, Heavy lift, Out-of-gauge

Proof of Delivery#

Documentation confirming that goods were delivered to the consignee. May include signed delivery receipts, Bills of Lading, or electronic confirmations. Proof of delivery is essential for payment release and resolving delivery disputes.

Related terms: Delivery point, Bill of Lading, Consignee

R#

Risk Transfer#

The point at which responsibility for loss or damage to goods passes from seller to buyer. Under Incoterms, risk transfer is separate from cost allocation - the seller may pay for transport beyond the risk transfer point (e.g., CFR, CIF). The risk transfer point varies by Incoterm.

Examples:

• EXW: At seller’s premises
• FOB/CFR/CIF: When goods are on board vessel
• FCA/CPT/CIP: When handed to first carrier
• DAP/DDP: At named destination

Related terms: Delivery point, Incoterms, Cargo insurance

S#

Seller#

The party in a sales contract that sells and delivers goods to the buyer. Under Incoterms, the seller’s obligations vary depending on the chosen term, ranging from minimum (EXW) to maximum (DDP) responsibility for transport, insurance, customs clearance, and costs.

Related terms: Buyer, Shipper, Exporter

Shipper#

The party that sends goods, named in the Bill of Lading as the sender. Often the seller or exporter, but can be a third party such as a freight forwarder. The shipper is responsible for providing accurate cargo information and documentation.

Related terms: Consignee, Seller, Bill of Lading

SOLAS (Safety of Life at Sea)#

International maritime safety convention requiring Verified Gross Mass (VGM) declaration for all packed containers before vessel loading. Since July 2016, containers without verified weight cannot be loaded. VGM can be obtained by weighing the packed container or calculating cargo weight plus tare weight.

Related terms: VGM, Container, IMO

Stevedore#

A company or workers that load and unload cargo from vessels. Stevedores operate cranes and handling equipment at ports. Stevedoring charges may be included in freight or terminal handling charges, or billed separately.

Related terms: Loading, Unloading, Terminal

T#

Tare Weight#

The weight of an empty container, vehicle, or packaging without cargo. Tare weight is deducted from gross weight to determine net cargo weight. Container tare weight is marked on the container door and used for VGM calculations.

Related terms: Gross weight, VGM, Container

Terminal Handling Charge (THC)#

A fee charged by port terminals for handling containers, including loading/unloading from vessels, yard storage, and gate operations. THC applies at both origin (OTHC) and destination (DTHC). Who pays depends on the Incoterm and freight terms.

Related terms: Origin charges, Destination charges, Terminal

TEU (Twenty-foot Equivalent Unit)#

A standard unit for measuring container capacity, based on a 20-foot container. A 40-foot container equals 2 TEU. TEU is used to measure vessel capacity, port throughput, and trade volumes.

Related terms: Container, FCL, FEU

Through Bill of Lading#

A single Bill of Lading covering the entire multimodal journey from origin to final destination, even when multiple carriers are involved. The issuing carrier takes responsibility for the complete transit.

Related terms: Bill of Lading, Multimodal, Intermodal

Transport Document#

Any document evidencing a contract of carriage, including Bills of Lading, Airway Bills, road consignment notes, and multimodal transport documents. Under Incoterms, the seller must provide the buyer with appropriate transport documents.

Related terms: Bill of Lading, Airway Bill, Carrier

Transshipment#

The transfer of cargo from one vessel or vehicle to another during transit. Transshipment occurs at hub ports where cargo is moved between feeder vessels and mainline ships. Direct services avoid transshipment but may be less frequent.

Related terms: Port, Carrier, Transit time

U#

Unloading#

The process of removing cargo from a vessel, vehicle, or container. Under DPU, the seller is responsible for unloading at destination. Under other D-terms (DAP, DDP), the buyer handles unloading. Unloading charges allocation should be specified in the contract.

Related terms: Loading, DPU, DAP, Stevedore

V#

VGM (Verified Gross Mass)#

The verified weight of a packed container required under SOLAS regulations before vessel loading. VGM must be obtained by either: (1) weighing the packed container on a certified scale, or (2) weighing all cargo and packaging then adding container tare weight. VGM declaration is mandatory since July 2016.

Related terms: SOLAS, Gross weight, Container

W#

Wharf#

A structure at a port where vessels berth to load and discharge cargo. Wharfage is the fee charged for using wharf facilities. Under FAS, delivery occurs when goods are placed alongside the vessel at the wharf.

Related terms: Port, FAS, Alongside vessel, Terminal