Terminology

Air Waybill - A bill of lading which covers both 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 listed 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 shipper on forms issued by the carrier, it serves as a document of title, a contract of carriage, and a receipt for goods. Also see Air Waybill, Inland Bill of Lading, Ocean Bill of Lading, Through Bill of Lading.

Cash Against Documents (C.A.D.) - Payment for goods in which a bank or other intermediary transfers title documents to the buyer upon payment in cash.

Cash In Advance (C.I.A.) - Payment for goods in which the price is paid in full before shipment is made. This method is usually used only for small purchases or when the goods are built to order.

Cash With Order (C.W.O) - Payment for goods in which the buyer pays when ordering and in which the transaction is binding on both parties.

Certificate of Inspection - A document certifying that merchandise (such as perishable goods) was in good condition immediately prior to its shipment.

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

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

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

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

Clean Bill of Lading - A receipt for goods issued by a carrier with an indication that the goods were received in "apparent good order and condition", without damages or other irregularities. Compare Foul Bill of Lading.

Confirmed Letter of Credit - A letter of credit, issued by a foreign bank, whose validity and payment have been confirmed by an American bank. An exporter whose payment terms are a confirmed letter of credit is assured of payment by the confirming bank, even if the foreign buyer or the foreign bank defaults.

Credit Risk Insurance - Insurance designed to cover risks of non payment for delivered goods. Compare "Marine Insurance.

Distributor - A foreign agent who sells directly for a supplier and maintains an inventory of the supplier's products.

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

Export License - A government document which permits the "Licensee" to engage in the export of designated goods to certain destinations.

F.A.S. - Free Alongside - A pricing term indicating that the quoted price includes the cost of delivering the goods alongside a designated vessel, with other costs, such as loading the goods, freight, insurance, etc., to be payable by the buyer.

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

Freight Forwarder - An independent business which handles exports shipments for compensation. Your freight forwarder can be among the best sources of information and assistance on U.S. export regulations and documentation, shipping methods, and foreign import regulations.

Gross Weight - The full weight of a shipment, including goods and packaging. Compare Tare Weight.

Import License - A document required and issued by some national governments authorizing the importation of goods into their individual countries.

Irrevocable Letter of Credit - A letter of credit in which the specified payment is guaranteed by the bank if all terms and conditions are met by the drawee. The Irrevocable Letter of Credit can only be canceled or altered with the complete agreement of all parties concerned. Compare Revocable Letter of Credit.

Letter of Credit - (L/C) A document, issued by a bank pursuant to instructions of 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. In effect, the bank substitutes its credit for that of its customer (the buyer).

Additional information on Letters of Credit can be found in a later section.

Open Account - A trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment. The obvious risk this method poses to the supplier makes it essential that they buyer's integrity be unquestionable.

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.).

Revocable Letter of Credit - A Letter of Credit which can be canceled or altered by the drawee (buyer) after it has been issued by the drawee's bank. The Revocable Letter of Credit can be cancelled at any time without prior agreement. Compare Irrevocable Letter of Credit.

SIC - Standard Industrial Classification - A standard numerical code system used by the U.S. Government to classify products and services.

Through Bill of Lading - A single bill of lading covering both the domestic and international carriage of an 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.


Reminder: Individual import or export transactions will vary. This information is designed to be provide information of a general nature. It is recommended that you always seek additional specific and detailed information as it pertains to your transaction, prior to making a final decision.