Shipping Glossary

Shipping Glossary

1. Bill of Lading (BL)

A legal document issued by a carrier to acknowledge receipt of cargo for shipment. It serves as a contract for the transportation of goods and a receipt for the cargo.

2. Airway Bill (AWB)

A shipping document used for air cargo. It serves as a receipt for the goods, a contract for carriage, and proof of the terms and conditions agreed between the shipper and the airline.

3. Customs Clearance

The process of getting goods through customs to allow them to enter or leave a country. This includes the submission of documentation, payment of duties, and inspection by customs authorities.

4. Freight Forwarder

A third-party logistics provider who arranges the transportation of goods on behalf of importers or exporters. Freight forwarders manage shipments, including booking cargo space, preparing documents, and arranging customs clearance.

5. Incoterms

Internationally recognized trade terms used to define the responsibilities of buyers and sellers in terms of shipping costs, risks, and delivery responsibilities. Examples include FOB, CIF, and EXW.

6. Harmonized System (HS) Code

An international system for classifying traded products. Each product is assigned an HS code, which helps in determining tariffs and taxes for imports and exports.

7. Importer Exporter Code (IEC)

A unique code issued by the Directorate General of Foreign Trade (DGFT) to Indian businesses for international trade. The IEC is mandatory for anyone importing or exporting goods in India.

8. Import Duty

A tax imposed on goods brought into a country. The rate of duty depends on the type of goods and their classification under the Harmonized System (HS) Code.

9. Bill of Entry

A legal document filed by an importer to declare the goods being imported into the country to customs authorities. It includes details like the description, value, and classification of goods.

10. LCL (Less Than Container Load)

A shipping term used when goods do not fill an entire shipping container. LCL shipments are consolidated with other shipments to fill a full container.

11. FCL (Full Container Load)

A shipping term used when a shipment occupies the entire space of a container. The cargo is typically owned by a single shipper.

12. Customs Bonded Warehouse

A secure storage facility authorized by customs where goods can be stored without the payment of duties and taxes, typically while awaiting clearance or further processing.

13. Freight Collect

A term used in shipping where the buyer (consignee) is responsible for paying the freight charges upon delivery of the goods.

14. Freight Prepaid

A term where the seller (shipper) is responsible for paying the freight charges before the shipment is dispatched.

15. Packing List

A document that provides details of the contents of a shipment, including item descriptions, quantities, and packaging specifics. It is used for customs clearance and logistics purposes.

16. Shipping Instruction

A document issued by the shipper to the freight forwarder detailing how the goods should be transported, including the destination, method of transport, and any specific handling requirements.

17. Sea Waybill

A non-negotiable document used in sea freight transactions to confirm receipt of goods and provide instructions for delivery without requiring physical presentation of the document.

18. Transshipment

The process of transferring cargo from one vessel or vehicle to another during transport, typically at an intermediate port or location.

19. Tariff

A schedule of duties and taxes applied to imports and exports. Tariffs are based on the HS Code and are used to determine the import duty rates.

20. Certificate of Origin

A document used in international trade to certify the origin of the goods being shipped. It may be required for tariff or trade agreement purposes.

21. Transit Time

The total time it takes for goods to travel from the point of origin to the destination, including all transportation and customs processes.

22. Importer

The person or business entity that brings goods into a country from another country, typically responsible for paying the import duties and clearing the goods through customs.

23. Exporter

The person or business entity that sends goods from one country to another, often responsible for preparing the necessary export documentation and ensuring compliance with export regulations.

24. Containerization

The use of standardized shipping containers to transport goods by sea, air, or land. This method simplifies the logistics process and ensures goods are securely transported.

25. Warehousing

The storage of goods in a warehouse facility before or after transportation, sometimes used as part of the supply chain process for goods awaiting clearance or distribution.

26. Shipping Line

A company that operates ships that carry cargo for international trade. Shipping lines typically offer services on specific routes and provide container shipping.

27. Air Freight

A method of shipping goods via air transport, typically used for fast deliveries of goods that require time-sensitive delivery or high-value items.

2. Incoterms Glossary

1. EXW (Ex Works)

Definition: The seller makes the goods available at their premises or another agreed location. The buyer is responsible for all costs and risks from that point onward.

Key Points: Seller's responsibility ends when the goods are made available. Buyer handles all logistics, duties, and risks.

2. FOB (Free On Board)

Definition: The seller is responsible for delivering the goods onto the vessel at the specified port of shipment. The risk passes to the buyer once the goods are on board.

Key Points: Seller covers transport to the port and loading onto the vessel. Buyer assumes responsibility and costs once the goods are loaded.

3. CIF (Cost, Insurance, and Freight)

Definition: The seller is responsible for the cost of goods, shipping, and insurance to the destination port. The risk passes to the buyer once the goods are loaded on the ship.

Key Points: Seller covers transport and insurance, but the buyer assumes responsibility once the goods are onboard.

4. CFR (Cost and Freight)

Definition: The seller pays for the cost of transport to the destination port. However, unlike CIF, the seller is not responsible for insurance.

Key Points: Seller handles shipping costs but not insurance. The risk is transferred to the buyer when goods are loaded onto the ship.

5. DDP (Delivered Duty Paid)

Definition: The seller assumes full responsibility for all costs and risks, including transportation, insurance, customs duties, and taxes, to deliver goods to the buyer's premises or agreed destination.

Key Points: The seller covers everything, including import duties and taxes. The buyer only has to receive the goods.

6. DAP (Delivered at Place)

Definition: The seller is responsible for delivering goods to a specified location in the destination country, but not for unloading or clearing goods through customs.

Key Points: Seller bears all costs up to delivery at the agreed place. Buyer is responsible for customs duties and unloading.

7. DPU (Delivered at Place Unloaded)

Definition: The seller is responsible for delivering and unloading the goods at a specified place in the destination country. The seller is responsible for all transport costs and risks.

Key Points: The seller handles everything up to delivery and unloading. Buyer is responsible for customs clearance and any further transport.

8. FCA (Free Carrier)

Definition: The seller delivers goods, cleared for export, to a carrier or another person nominated by the buyer at an agreed location.

Key Points: Seller arranges export clearance and delivers goods to the carrier. Buyer is responsible for import duties, shipping, and risks after that point.

9. FAS (Free Alongside Ship)

Definition: The seller delivers goods alongside the ship at the specified port of shipment. The buyer is responsible for the goods once they are alongside the vessel.

Key Points: Seller arranges transport to the port and delivery alongside the vessel. Buyer takes on responsibility and risk from there.

10. CPT (Carriage Paid To)

Definition: The seller is responsible for paying the transport costs to deliver the goods to a named destination, but the risk is transferred to the buyer once the goods are handed over to the carrier.

Key Points: Seller pays for shipping but risk passes to the buyer when the goods are handed over to the carrier.

11. CIP (Carriage and Insurance Paid To)

Definition: The seller pays for the transportation and insurance to the agreed destination. However, the risk passes to the buyer once the goods are handed to the carrier.

Key Points: Seller covers transport and insurance, but the buyer assumes risk once goods are in transit.