Defines basic shipping terms such as Ex-works, FOB and CIF contracts for exporting goods as stated by Incoterms with a simplified explanation
The seller fulfills delivery obligations when the goods are made available at the sellers premises (i.e., works, factory, warehouse, etc.). The seller is not responsible for loading the goods on the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer bears all costs and risks involved in taking the goods from the seller's premises to the desired destination.
Although we quote FOB prices Edis Trading terms are Ex-works since payment is required before shipment, however our FOB prices do include the cost of loading goods into a container, inland transport to exit port, clearance charges and loading the goods on-board a container ship or aircraft but the risk of damage to the goods pass to the buyer as the goods are loaded into a container or collected for airfreight.
According to Incoterms 2000
Seller: the goods are put aboard the ship by the seller. The exportation formalities fall on the seller.
Buyer: the buyer indicates the ship and pays freight. The transfer of the expenses and risks is done when the goods pass the rail of the ship.
Essentially the exporter arranges and pays for all costs to put the goods on-board a ship bound for the port designated by the buyer, and provides shipping documents to the buyer. The Buyer pays for Ocean freight costs, insurance and all other costs, risks and charges after the goods have been loaded on-board the ship.
Please see Ex-works above regarding Edis Trading FOB terms
According to Incoterms 2000
Seller: he chooses the carrier, concludes and bears the expenses by paying freight to the agreed port of destination, unloading not included. The loading of the duty-paid goods on the ship falls on him as well as the formalities of forwarding. On the other hand, the transfer of risks is the same one as in FOB with the additional obligation for the seller to provide a maritime insurance against the risk of loss or damage to the goods. The seller pays the insurance premium.
Buyer: he supports the risk of transport, when the goods are delivered aboard ship at the loading port, he receives it from the carrier and takes delivery of the goods at the agreed port of destination?o:p>
Essentially the exporter arranges and pays for all costs of putting the goods aboard a ship bound for the port designated by the buyer and pays the Ocean Freight costs and Marine Insurance to the port of destination. The buyer arranges collection and Customs clearance of the goods from the carrier at the port of entry and arranges transport to his premises, usually using the services of a Freight forwarder.
A person or business that specializes in the shipment and receiving of goods. Forwarders assume all responsibility for the transportation of the shipment from point of receipt to point of destination, including preparing and executing the necessary documentation.
Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or property by which cargo is transferred, acquired, or held between the points of origin and final destination.
Cargo insurance is a sub-branch of marine insurance, though Marine also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms, pipelines); Hull; Marine Casualty; and Marine Liability.
Edis Trading terms exclude the provision of Marine Insurance since our terms are Ex-works including FOB costs, consequently it is the consignees responsibility to arrange Marine Insurance and they should make certain that it covers the risks involved from the place of manufacture to the final destination.
Someone who prepares goods for shipment, by packaging, labeling, and arranging for transit, or who coordinates the transport of goods
A shipping line is a business that operates ships that it may or may not own, these companies may also own the containers which are used to carry the goods. Containers are booked with a Shippng line and haulage arrangements made to deliver the empty container to a factory or warehouse for stuffing (filling) and then returned to the Shipping line to load on board a vessell (ship).
Defines the main documents used in the Exporting of goods together with common terms used in these documents. Covers Bill of Lading, Pro-forma Invoice, Commercial Invoice, Packing list etc
The person or firm named in a freight contract (Bill of Lading or Airway Bill) to whom goods have been consigned or turned over.
The Pro-Forma Invoice is used primarily to advise the buyer of the cost and terms of sale of a proposed export order. It is used by the buyer as a quotation from the exporter and can also to be used to assist in making payment or applying for a Letter of Credit from his bank if needed. The Pro Forma Invoice serves as the basis for the Commercial Invoice.
See below : Pro-Forma Invoice
Ocean Bill of Lading or Combined Transport Bill of Lading. This document is issued by a "steamship line" or shipping company or it's representative. Each carrier has its own bill of lading form which serves as contract of carriage between the carrier and the shipper, spelling out legal responsibilities and liability limits for all parties to the shipment. The B/L also can be used to transfer title to the goods to a party named in the document (Consignee). It specifies the shipment details, such as number of pieces, weight, destination, etc. Usually there are three signed originals issued and three or more non-negotiable copies.
Usually means the issuance of the three original's and three copies of the ocean Bill of Lading. This term is generally accepted by banks and shippers.
Bill of Lading issued by a freight forwarder or consolidator covering a single shipment containing the names, addresses and specific description of the goods shipped.
A B/L issued by a carrier with an indication that the goods were received in "apparent good order and condition," without damage or other irregularities. If no notation or exception is made, the B/L is assumed to be "cleaned."
A contract for transportation between a shipper and a carrier. It also evidences receipt of the cargo by the carrier. A bill of lading shows ownership of the cargo and, if made negotiable, can be bought, sold or traded while the goods are in-transit. A Combined Transport Bill of Lading is effectively the same but covers more than one mode of transport i.e. maybe ship and road transport.
The forwarding agreement or carrying agreement between shipper and air carrier and is issued only in non-negotiable form. Being non-negotiable also has the effect of not being able to change the consignee's delivery address after the goods have been shipped!
The name and address of a party on the transport document (B/L or AWB) usually the buyer of the goods or a forwarding agent taking care of the goods at place of arrival.
Pre-printed wording on the bill of lading which indicates that the goods have been loaded on board or shipped on a named ship. In the case of received for shipment bills of lading, the following four parties are authorised to add this "0n board" notation:
A B/L bearing an apparently original signature, mark, stamp, or label of the issuer of the document.
This important document describes all items in the box, crate, pallet, or shipping container, plus the type, dimensions, and weight of the container. It is used to determine total shipping weight and volume (cubes - cubic metres) by Customs officials to check the cargo, and by the buyer to check merchandise received. Prices and item values are usually omitted from the Packing List. Shipping marks, reference numbers and carton numbers are important items on the packing list so that items can be identified by customs officials and the buyer.
In foreign trade, a pro forma invoice is a document that states a commitment from the seller to provide specified goods to the buyer at specific prices. It is often used to declare value for customs. It is not a true invoice, because the seller does not record a pro forma invoice as an accounts receivable and the buyer does not record a pro forma invoice as an accounts payable. A pro forma invoice is not issued by the seller until the seller and buyer have agreed to the terms of the order. In few cases, pro forma invoice is issued for obtaining advance payments from buyer, either for start of production or for security of the goods produced.
A commercial invoice is the basic statement of the seller to the buyer for payment of the goods shipped. It must conform to any Letter of Credit requirements, government requirements, and export control requirements regarding destination statements. It is used as one of the primary documents in the collection process, and is the main document used by foreign Customs for control, valuation of the goods, pricing, terms of sale, payment and delivery, credit numbers, import license numbers, shipper and consignee names, and shipping marks and numbers. Commercial invoices are usually signed by the exporter.
The letters, numbers or other symbols placed on the outside of cargo (cartons) to facilitate identification, typically cartons are numbered 1 to however many there are in the container. The same "marks" or numbers identify the goods in the packing list
A short guide to some acronyms used by shipping companies and freight forwarders that may help to resolve some of the gobbledegook
A bill of lading (sometimes referred to as a BOL,or B/L) is a document issued by a carrier to a shipper, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified. A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea. The term derives from the verb "to lade" which means to load a cargo onto a ship or other form of transport.
The Bunker Adjustment Factor (BAF) is a surcharge raised by shipping lines to take account of fluctuations in the price of marine fuel. Sometimes also called "Fuel Adjustment Factor" or FAF.
CAF is an adjustment to the shipping line freight tariff which takes into account variances between the currency in which freight is normally billed and those under which expenses are incurred. It is normally calculated as a percentage surcharge on the basic freight rate. CAF was 13.2% in December 2007 up 7.5% on December 2006
A surcharge, commonly referred to as "fuel surcharge"is applied where goods are transported by air to compensate for fluctuations in the price of aviation fuel or can apply to marine fuel. These surcharges are usually added to the basic freight tariff charged by carriers
Standard (20` or 40`(ft)) container that is stuffed (loaded) and un-stuffed (discharged) under the risk and account of one shipper and only one consignee, in practice it means whole container is intended for one consignee.
FCL container shipment attracts lower freight rates than an equivalent weight of cargo in bulk.
The FCL means the loading reaches its allowable maximum weight or full measurement. In practice, the FCL in the ocean freight does not always mean packing a container to its full payload or full capacity.
Less than container load (LCL) is a shipment that is not large enough to fill a standard cargo container.
Less Than Carload or Less Than Container Load is "a quantity of cargo less than that required for the application of a carload rate. A quantity of cargo less than that that fills the visible or rated capacity of an ocean container."
Incoterms or international commercial terms are a series of international sales terms, published by International Chamber of Commerce (ICC) and widely used in international commercial transactions. They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices. They closely correspond to the U.N. Convention on Contracts for the International Sale of Goods. The first version was introduced in 1936 and the present dates from 2000. See also Incoterms 2000 which includes Incoterms 2000 the full set of ICC rules for International Trade
Brief details of common shipping containers and their dimensions and payloads together with definitions of Gross, Tare weight and Demurrage etc
A truck trailer body that can be detached from the chassis for loading into a vessel, a rail car or stacked in a container depot. Containers may be ventilated, insulated, refrigerated, flat rack, vehicle rack, open top, bulk liquid or equipped with interior devices. A container may be 20 feet, 40 feet, 45 feet, 48 feet or 53 feet in length, 8' 0" or 8' 6" in width, and 8' 6" or 9' 6" in height.
An intermodal container or freight container (commonly shipping container) is a reusable transport and storage unit for moving products and raw materials between locations or countries; the terms container or box may be used on their own within the context of shipping. Containers manufactured to ISO specifications may be referred to as ISO containers and the term high-cube container is used for units that are taller than normal (called High Q or HQ in Asia). There are approximately seventeen million intermodal containers in the world and a large proportion of the world's long distance freight generated by international trade is transported inside shipping containers (as opposed to break bulk cargo).
The containerization system developed from a design of an 8-foot (2.438 m) cube units used by the United States' military and later standardised by extension to 10-foot (3.05 m), 20-foot (6.10 m), and 40-foot (12.19 m) lengths. Longer, higher and wider variants are now in general use in various places.
Container variants are available for many different cargo types. Non-container methods of transport include bulk cargo, break bulk cargo and tankers/oil tankers used for liquids. For air freight the alternative and lighter IATA defined Unit Load Device is used.
|'||20′||20′||40′||40′||40′ high-cube||40′ high-cube||45′ high-cube||45′ high-cube|
|length||20′ 0″||6.096 m||40′ 0″||12.192 m||40′ 0″||12.190 m||45′ 0″||13.716 m|
|width||8′ 0″||2.438 m||8′ 0″||2.438 m||8′ 0″||2.438 m||8′ 0″||2.438 m|
|height||8′ 6″||2.591 m||8′ 6″||2.591 m||9′ 6″||2.896 m||9′ 6″||2.896 m|
|length||18′ 10 5⁄16″||5.758 m||39′ 5 45⁄64″||12.032 m||39′ 4″||12.000 m||44′ 4″||13.556 m|
|width||7′ 8 19⁄32″||2.352 m||7′ 8 19⁄32″||2.352 m||7′ 7″||2.311 m||7′ 8 19⁄32″||2.352 m|
|height||7′ 9 57⁄64″||2.385 m||7′ 9 57⁄64″||2.385 m||8′ 9″||2.650 m||8′ 9 15⁄16″||2.698 m|
|width||7′ 8 ⅛″||2.343 m||7′ 8 ⅛″||2.343 m||7′ 6"||2.280 m||7′ 8 ⅛″||2.343 m|
|height||7′ 5 ¾″||2.280 m||7′ 5 ¾″||2.280 m||8′ 5″||2.560 m||8′ 5 49⁄64″||2.585 m|
|volume||1,169 ft³||33.1 m³||2,385 ft³||67.5 m³||2,660 ft³||75.3 m³||3,040 ft³||86.1 m³|
|Maximum gross mass||66,139 lb||30,400 kg||66,139 lb||30,400 kg||68,008 lb||30,848 kg||66,139 lb||30,400 kg|
|Empty weight||4,850 lb||2,200 kg||8,380 lb||3,800 kg||8,598 lb||3,900 kg||10,580 lb||4,800 kg|
|net load||61,289 lb||28,200 kg||57,759 lb||26,600 kg||58,598 lb||26,580 kg||55,559 lb||25,600 kg|
20' Standard Container 20'x 8'x 8'= 33 cu metres with a payload up to 24.85 tonnes often called 20' GP (general purpose container)
40' Standard Container 40'x 8'x 8'= 67 cu metres with a payload up to 28.80 tonnes often called 40' GP
40' High Cube Container 40'x 8'x9' 6" = 78 cu metres with a payload up to 30.2 tonnes often called 40' HQ
but there are many container designs for different goods and loads ie with refrigeration etc
A penalty charge against shippers or consignees for delaying the carrier's equipment beyond the allowed free time. The free time and demurrage charges are set forth in the charter party or freight tariff. Demurrage also applies to carrier owned or leased equipment, such as containers etc.
The total weight of a shipment including the goods and packaging. (see also Tare Weight.)
The weight of a shipment excluding the goods being shipped ie the weight of the shipping container.
Containerization for transport has spurred the use of pallets because the shipping containers have the clean, level surfaces needed for easy pallet movement. Most pallets can easily carry a load of 1,000 kg (about 2,000 lb). Today, over half a billion pallets are made each year and about two billion pallets are in use across the United States alone.
Pallets makes it easier to move heavy stacks. Loads with pallets under them can be hauled by forklift trucks of different sizes, or even by hand-pumped and hand-drawn pallet jacks. Movement is easy on a wide, strong, flat floor: concrete is excellent. A forklift truck can cost the same as a luxury automobile, but a good reconditioned hand-drawn pallet jack costs only a few hundred dollars. The greatest investment is thus in the construction of commercial or industrial buildings where the use of pallets could be economical. Passage through doors and buildings must be possible. To help this issue, some later pallet standards (the europallet and the U.S. Military 35×45.5") are designed to pass through standard doorways.
The International Organization for Standardization (ISO) sanctions six pallet dimensions, detailed in ISO Standard 6780: Flat pallets for intercontinental materials handling—Principal dimensions and tolerances
|Dimensions, mm (W × L)||Dimensions, in (W × L)||Wasted floor, ISO container||Region most used in|
|1219 × 1016||48.00 × 40.00||3.7%||North America|
|1000 × 1200||39.37 × 47.24||6.7%||Europe, Asia; similar to 48"x40".|
|1165 × 1165||44.88 × 44.88||8.1%||Australia|
|1067 × 1067||42.00 × 42.00||11.5%||North America, Europe, Asia|
|1100 × 1100||43.30 × 43.30||14%||Asia|
|800 × 1200||31.50 × 47.24||15.2%||Europe; fits many doorways|
In Europe, the EURO pallet, also called a CEN pallet, is widely used in many industries. It measures 800 by 1200 by 120 mm. Manufacturers of EURO pallets must be sanctioned by the European Pallet Association (EPAL), which governs the smallest details, even which types of nails and lumber may be used. The strict standardization is based on the existence of europool pallet swap organizations - their mutual swap agreements across country boundaries does only include EURO pallets of a specific EPAL/EUR type (mostly restricted to type 1). Most freight forwarders will accept pool palettes handling the cost clearing between sender and receiver even for international transport to countries that take part in the europool system. The ongoing harmonization of freight handling within the European Economic Area has led to a decline of the europool system. The EURO pallet does not fit efficiently within the ISO shipping container and slightly wider containers are often used for this reason. The four common sizes of EURO pallets (alongside with ISO alternative sizes)are:
|EURO pallet type||Dimensions, mm (W × L)||ISO pallet alternative|
|EUR, EUR 1||800 × 1200||ISO1, same size as EUR|
|EUR 2||1200 × 1000||ISO2|
|EUR 3||1000 × 1200|
|EUR 6||800 × 600||ISO0, half the size of EUR|
|600 × 400||quarter the size of EUR|
|400 × 300||one-eighth the size of EUR|
Some descriptions of common terms used by Customs officers and Customs Brokers for importing goods
International procedure of declaring goods at a Customs Office to gain authorized entry of those goods into a country. Goods are cleared when Customs and Excise have accepted a declaration for them and formally released them for import or export.
An assessment of the value of manufactured goods including production costs, packaging, shipping, overhead and profit margin; used by customs officials to determine the duty to be paid on imported goods.
A tax charged on goods imported into the European Union (EU). It is based on the value of the imported goods and the description of the goods. Remember that imported goods may be liable to other charges, such as Anti-Dumping Duty (ADD) or Common Agricultural Policy (CAP) charges. They may also be liable to Excise Duty and VAT.
The Customs Tariff sets out the duties and measures affecting the import, export and transit of goods across International borders . The UK Tariff, for instance, consolidates UK specific data with the EU TARIC data. Integrated Customs Tariff of the Community (TARIC) - useful website to determine the codes and tariffs payable on goods at point of entry TARIC website TARIC website
A UK duty charged on both UK produced and imported goods. Goods subject to excise duty include beer, wine, spirits and other alcoholic drinks; hydrocarbon oils (including fuel oil); and tobacco goods. The rate of duty is set separately for each product.
The Harmonized Commodity Description and Coding System (or Harmonized System, HS) is a system for classifying goods in international trade, developed under the auspices of the Customs Cooperation Council. The Harmonised codes are used to classify the import duties to be paid. Integrated Customs Tariff of the Community (TARIC) - useful website to determine the codes and tariffs payable on goods at point of entry TARIC website We have created a list of the most common codes used for our products in this section : Harmonised Commodity Codes for Edis Products
The code that identifies the description of individual goods or items in the Customs Tariff. The full code is either 10 or 14 digits long, but for many purposes only the first 4 or 8 digits are used. Also referred to as Combined Nomenclature (CN) code in the UK. Import Duties and Excise payments are paid against the commodity code as stated in the Tariff, for the goods being imported into Europe, these codes are not so easy to resolve and are best left to an experienced Customs Broker or Freight Forwarder to deal with.
Regulations regarding Import Licences vary by country so it is important to check before shipment. You will not be able to clear controlled goods if the goods require an Import Licence until you have submitted the correct licence forms, this can take time (several weeks whilst demurrage costs are being charged, if not arranged beforehand) There are normally controls on imports including firearms, plants and animals, foods, medicines, textiles and chemicals. Whether you need a licence can also depend on where the goods are coming from. Exporting or importing controlled goods without the right licence is a criminal offence, so it's important to check first. UK Import Licence details can be found here.
Generally speaking, VAT is payable on all imports at the same rate that would apply to the product or service if supplied in the UK or EU. VAT is normally paid at the border when goods enter the EU this can be paid through a deferment account especially set up with Customs and Excise to hold funds for VAT payments or you may be able to use your forwarding agent's deferment account. The deferment account is used to reduce payment delays for clearance
Brief descriptions of terms such as Telegraphic transfer and Letter of Credit used in Export and Import transactions
The International Bank Account Number (IBAN) is an international standard for identifying bank accounts across national borders in a way that would minimise the risk of propagating transcription errors. It was originally adopted by the European Committee for Banking Standards, and was later adopted as an international standard under ISO 13616:1997 and now as ISO 13616-1:2007 The official IBAN registrar under ISO 13616-2:2007 is SWIFT
The standard IBAN now carries all the routing information needed to get a payment from one bank to another wherever it may be. IBAN contains check digits which can be validated in any country according to a single standard procedure. It also contains all the key bank account details such as Bank Identifier Codes, branch codes (known as sort codes in the United Kingdom) and account numbers.
Telegraphic Transfer nowadays is simply the electronic transfer of funds through banks. A SWIFT Code or Bank Indentifier Code (BIC) is needed to identify the overseas bank and the IBAN code (Internantional Bank Account Number) is needed to identify the account number in addition to the payees Account Name. Often just the SWIFT code, Account name and Account Number is all that is needed to make payments by T/T online to China. Our SWIFT Code and bank account bank details are shown in the footer of our Invoices
A Letter of Credit (or Documentary Credit) is a letter issued by an importer's bank (opening bank, on behalf of the importer). The opening bank provides its own credit in substitute for that of the importer, and undertakes a commitment to a designated beneficiary (the exporter) to pay an agreed amount within a stated time period, provided that the exporter complies with all the terms and conditions of the Letter of Credit. A useful means of payment where the supplier and buyer are unknown to each other but can be very cumbersome to change if shipping documents, quantities, product description or delivery dates are in error or change after the L/C is issued by the opening bank, which believe it or not is frequently the case. Sometimes referred to as Documentary Credits, particularly by banks.
Permissible documents include: bill of lading, insurance documents, trading invoice, consular invoice, certificate of origin, weight and quality certificates. A letter of credit (documentary credit) can be revocable or irrevocable, normally the letter of credit is irrevocable unless stipulated otherwise.
A letter of credit, issued by a foreign bank, whose validity has been confirmed by a domestic bank. An exporter with a confirmed letter of credit is assured of payment even if the foreign buyer or the foreign bank defaults.
An L/C that, once established, cannot be modified or cancelled without the agreement of all parties concerned. Sometimes referred to as Documentary Credits, particularly by banks
Under letters of credit, one or more shipments are allowed by the phrase "partial shipments permitted."
The description of the goods in the commercial invoice must correspond to that in the documentary credit. In all other documents it may be expressed in general terms, not inconsistent with the description of the goods in the documentary credit
ISO 9362 (also known as SWIFT-BIC, BIC code, SWIFT ID or SWIFT code) is a standard format of Bank Identifier Codes approved by the International Organization for Standardization (ISO). It is the unique identification code of a particular bank. These codes are used when transferring money between banks, particularly for international wire transfers, and also for the exchange of other messages between banks. The codes can sometimes be found on account statements. SWIFT codes are used in China together with the beneficiaries account name and account number