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General Trade Terms

Procurement: The purchasing of goods for a company, government, NGO or other organization.

Logistics: The management of the movement and storage of goods from country of origin to final destination.

Solutions: The method or process of solving a problem.


Certificate of Origin: A statement signed by the exporter and attested to by a local Chamber of Commerce, indicating that the goods being shipped, originated and were produced in a particular country.

"Ex": Signifies that the quoted price applies only at the indicated point of origin (e.g. "price ex factory" means that the quoted price is for the goods available at the factory gate of the seller).

Import/Export License: A document secured from a government, authorizing an importer/exporter to import or export a specific quantity of a particular commodity.

Validity: This is the time period for which a proforma is valid for acceptance by a buyer.

Force Majeure: The title of a standard clause found in marine contracts exempting the parties for nonfulfillment of their obligations by reasons of occurrences beyond their control, such as earthquakes, floods or war.

ICC: International Chamber of Commerce

Inspection Certificate: A document certifying that goods were in a particular condition and quantity immediately prior to shipment. Usually issued by qualified independent third party eg SGS, Bureau Veritas etc.

Pre-shipment Inspection: Certain countries require that goods imported into their country have to be inspected prior to shipment by their nominated agent.

ISO: International Standards Organization also referred to as the International Organization for Standardization.

Incoterms: A standardised codification of terms used in foreign trade contracts that is maintained by the International Chamber of Commerce.

Phytosanitary Certificate: A certificate of ‘health’ for agricultural goods being exported. Issued by the National Department of Agriculture indicating that a shipment has been inspected and is free of harmful pests and plant diseases.


Proforma Invoice: A price quotation prepared by the seller indicating the costs of goods, freight, insurance and related charges i.e. an invitation to do business. It is often used by the buyer to secure a letter of credit, an import license or a foreign currency allocation.

Commercial Invoice: The proforma invoice, accepted by the purchaser, effectively becomes a commercial invoice when the seller invoices the purchaser. Forms part of the documents required for transportation of the goods.

Letter of Credit (L/C): A bank generated promise of payment in the event that certain requirements are met. The L/C specifies the goods purchased, the agreed value and by when they must be shipped.

Beneficiary: A firm or person on whom a letter of credit has been drawn. The beneficiary is usually the seller or exporter.

Correspondent Bank: A bank that, in its own country, handles the business of a foreign bank.


Cargo: Merchandise or commodities carried by means of transportation.

Carrier: The entity who, in a contract of carriage, undertakes to perform the transportation.

Transhipment: The act of transferring, goods, from one carrier to another in international trade.

Consignee: Individual or company to whom merchandise is shipped and who, upon presentation of necessary documents, is recognized as merchandise owner for the purpose of declaring and paying customs duties.

Air Waybill: A document that establishes the terms of a contract between a shipper and an airline under which cargo is to be moved by air between specified points for a specified charge. Usually prepared by the carriers agent on forms issued by the carrier, it serves as a document of title, contract of carriage, and a receipt for goods.

Bill of Lading: A document that establishes the terms of a contract between a shipper and a shipping line under which cargo is to be moved by sea between specified points for a specified charge. Usually prepared by the carrier on forms issued by the carrier, it serves as a document of title, contract of carriage, and a receipt for goods.

Roadwaybill: A document that establishes the terms of a contract between a shipper and a road haulier under which cargo is to be moved by road between specified points for a specified charge. Usually prepared by the carrier on forms issued by the carrier, it serves as a document of title, contract of carriage, and a receipt for goods.

Manifest: A list of cargo or passengers carried on a ship or plane.

Short-Shipped: Cargo manifested but not loaded.

Consolidated Shipment: An arrangement whereby various shippers pool their boxed goods on the same shipment, sharing the total weight charge for the shipment.

Cargo Receipt: Is a receipt of cargo for shipment by a consolidator (used in ocean freight).

Stuffing: The process of loading goods into a container.

De-Stuffing: The process of loading goods out of a container.

Container: A steel container used for housing goods during transport by rail road or sea. Commonly come in 20’ (6 meter) and 40’ (12 meter) sizes. Specifications are standardised internationally.

F.C.L.: Full container load.

L.C.L.: Less than container load.

TEU: Twenty foot equivalent. Unit. (1 six meter (20’) container = 1TEU; 1 twelve meter (40’) container = 2 TEU).

Pallet: Load carrying platform to which loose cargo is secured before placing aboard aircraft, truck or container.

Container Seal: A seal with a unique number fixed to the door latch of a container at stuffing. If the seal is in tact at de-stuffing the cargo is guaranteed not to have been tampered with.

Goods Receiving Report: A report issued by the consignee specifying the condition and quantity of goods received.

Net Weight: Weight of goods alone without any immediate wrappings; e.g., the weight of the contents of a tin can without the weight of the can.

Gross Weight: The weight of the goods ready for shipment. Eg. The weight of the contents of the tin can including the can, the carton, strapping material etc.

Demurrage: A charge levied as compensation for the delay of a ship, freight carrier or other cargo beyond its scheduled time of departure or free time allowed.

Charter: Originally meant a flight where a shipper contracted hire of an aircraft from an airline. Has usually come to mean any non-scheduled commercial freight service.

Freight Forwarder: A company that arranges all necessary details of shipping and documentation for an exporter, which includes employing the services of a carrier or carriers.

Perishables: Any cargo that loses considerable value if it is delayed in transportation (Usually refers to fresh fruit and vegetables).


Credit Risk Insurance: Insurance designed to cover risks of non-payment for delivered goods.

Marine Insurance: Insurance against loss of or damage to cargo being transported by land, sea or air.

Open Policy: A cargo insurance policy that is an open contract; i.e., it provides protection for all an exporter's shipments afloat or in transit within a specified geographical trade area for an unlimited period of time, until the policy is cancelled by the insured or by the insurance company. It is "open" because the goods that are shipped are detailed at the time of the establishment of the policy.

War Risk: The possible aggressive actions against a ship, aeroplane, or truck and its cargo by a belligerent government. This risk can be insured by a marine policy with a risk clause.

Pilferage: As used in marine insurance policies, the term denotes petty thievery, the taking of small parts of a shipment, as opposed to the theft of a whole shipment or large unit. Many ordinary marine insurance policies do not cover against pilferage, and when this coverage is desired, it must be added to the policy.


Customs Bonded Warehouse: A warehouse where imported goods may be stored for a specified period without the payment of duty or taxes. i.e. the goods are physically in the country but not yet imported into the country in terms of customs.

In-Bond: Goods in a customs bonded warehouse are said to be in bond.

Bonded Carrier: A transport company that has authority from the national customs authority to transport bonded goods between bonded warehouses within a customs authority or between a bonded warehouse and another customs authority usually by road.

Free Trade Zone: A port designated by the government of a country for duty-free entry of any non-prohibited goods. Merchandise may be stored, displayed, used for manufacturing, within the zone and re-exported without duties being paid. Duties are imposed on the merchandise (or items manufactured from the merchandise) only when the goods pass from the zone into an area of the country subject to the Customs Authority.

Ad Valorem ("according to the value"): A fixed percentage of the value of goods that is used to calculate customs duties and taxes.

Incoterms 2000


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