GENERAL INFO -†Commonly Used Terms (or Industry Terms)

Proforma Invoice

The invoice that is provided by the supplier prior to the shipment of† cargo letting the buyer know all the details of cargo/quantities/values and all relevant specifications related to the cargo.


Commercial Invoice

A commercial invoice is a document used as a customs declaration provided by the person or corporation that is exporting cargo across international boundaries with regards to imports and exports / goods sold. It contains detailed content of the cargo shipped and serves as the complete record of the shipment/Transaction between the importer and exporter.


Letter of Credit (LC)

A commercial letter of credit is a document issued by a financial institution used primarily in international trade, which provides a payment term authorizing the seller of goods to draw a specific sum of funds under specific terms and time frames.


Confirmed Letter of Credit

A letter of credit guaranteed by two banks. That is a bank agrees to honor the letter of creditand make the required funds paymentin case both the letter;s holder and the original issuing bank both fail to make payment. This reduces the risk to a minimum.


Irrevocable Letter of Credit

This is very similar to a letter of credit to where the payment specified is guaranteed by the bank where all conditions and terms are met by the recipient of the LC. The Letter of credit cannot be revoked without the joint consent of both parties.(buyer and Seller)


Confirming Bank

A bank that makes assurances to the beneficiary that the† letter of credit from the issuing bank is genuine and promises to make good on the LC upon presentation of specified relevant documents stipulated on the LC.

Consignment

Merchandise given to a dealer under specific terms and conditions that he/she would hold it for sale in his/her place of business for stipulated period of time for sale. Ownership of goods to remain with the supplier of said goods.


Consignee

An entity or an individual to whom the specified goods are shipped.


Consignor

An entity or an individual on the shipping documents as the shipper of the goods. ( Bill Of lading or B/L)


Shipper

An Individual or an entity who is the title holder of merchandise to be shipped.


Freight Forwarder

A freight forwarder, or forwarding agent is a person or company that organizes shipments for individuals or other companies and may also act as a carrier or may act as an agent on behalf of the shipper.


Demurrage

A cost incurred against shippers or consignees for a delay process in the carrier/ equipment beyond stipulated time given.


Act of God

An event beyond human control,† an uncontrollable event produced by natural forces, e.g. earthquake tornados.

Arrival Notice

a notification given by a transporter to a buyer that their goods are available for collection and customs clearance at a port or airport

Bill of Lading (B/L)

A bill of lading (BL - sometimes referred to as BOL or B/L) is a document issued by a carrier to a shipper, acknowledging that† goods have been received on board ...


C & F† Or CFR

Sales term to where the seller pays relevant costs and freight charges needed to carry the goods to a stipulated port of destination named in the terms of sale. Once the goods are passed through the ships rails, All risk for the loss of or damage to goods including any additional costs due to the event occurring after the time the goods have been delivered aboard the vessel (Once the goods are passed through the ships rails) at the port of loading, transfers to buyer from the seller. The marine insurance for the cargo is not paid by the shipper/exporter/Seller.


CIF - Cost, Insurance and Freight

CIF means Cost Insurance and Freight. That means shipper/Trader has to pay the Cost of shipment up to the point of destination as per the terms of the sale.

Like in the case of CFR all seller obligations remain, only in the case of CIF marine insurance costs are also paid by the seller.


FOB - Free On Board

This term is an international term of trade to where the sellerís obligation ends when the goods are delivered to the point/port of departure of shipment, and is passed over the ships rails.† Buyer from this point on then bears all costs and risk for any damages / loss to cargo along with marine insurance and freight costs. It is the sellerís responsibility to make available the cargo for shipment.


Ro/Ro

A vessel that is also known as a car carrier. This vessel uses a method to where automobiles with wheels can be loaded in and taken out without the use of crane type equipment. Thus the term Ro- Ro, an abbreviation to the term roll on roll off.