MJS Commodities is a leading privately held international trading company and a subsidiary of MJS Global Group.
Our team has 200+ years combined experience in the procurement and delivery of commodity products and services.
We specialize in the handling of every element involved in the international trade of physical commodities with the focus on high-quality agro products, precious metals, polished diamonds and gemstones, solid and liquid fuels, and hydrocarbon-free 100% biodegradable packaging we move soft and hard commodities from remote locations to where they are most needed – reliably, professionally and efficiently.
We operate, market and advice on multiple raw materials to various client segments around the globe, whether they are import-export businesses, financial institutions, governments and private investors, through the supply chain and bringing them wherever needed.
Our thoughtful services, diversified product lines, and relationships are advanced with integrity and honest straightforward dealing and go to great lengths to ensure professionalism, excellence, and peace of mind. Whether you’re a producer, an existing or potential partner in government or business, or an end-user we have the focus, passion, and commitment to get you closer to your markets.
We value the success and accomplishments of our principals as we value our company and people. By combining both of our visions, the results are limitless. Our attitude is making all possible efforts, instead of deeming it impossible, with a conviction to take the business deal to successful completion to enrich both our clients and our societies.
Glossary of terms used in the international jute commodity trade.
It is the weight of fabric per unit area.
The biggest traders and commissioned agents in the secondary marketing channel but are limited number. They often serve as a source of financing and provide storage facilities.
It is the selection and classification of raw jute according to fibre characteristics prior to packing or baling.
Used mainly for shopping, bags are usually fabricated from sacking or hessian cloths. They are often decorated with varied artistic designs and with straps, chains and handles in several dimensions and shapes. Other categories of bags are promotional bags which are manufactured to promote items for sale.
Bag – A Twill
A double warp hemmed twill bag of 112 X 67.5 cm size and weighing 1190 g with three blue stripes woven along the length of the bag and used for packing sugar.
Bag – B Twill
A double warp hemmed twill sacking bag measuring 112 X 67.5 cm and weighing 1020 g has the capacity of holding 95 kg of food grains. With three blue stripes woven along the length of the bag and is used for packing food grain. Due to ILO stipulation, a new type of B.Twill bag has been developed with 50 kg capacity, dimensions 94 X 57 cm and bag weight of 665 g.
Bale (Fabric or Jute Bags)
A rectangular or square pressed, rigid package, containing jute fabrics or bags, covered with bale covering with outer layer stitched and bounded by metal hoops in conformity with the relevant specifications. The bales containing jute bagging do not have bale covering.
Grade-wise selection of Jute/Mesta and followed by morah preparation and segregation of down grade/defective jute/mesta by manual operation.
Bags or Bale processing cloths are pressed compactly according to buyers need.
Bangladesh Jute Association (BJA)
National Representative body of all jute traders and exporters in the private sector of Bangladesh. Member exporters of BJA directly purchase raw jute from the jute growers and bring to terminal market. BJA plays the vital role for regulating the jute market both in home and abroad. They help in ensuring the fair price to the jute growers who produce 100% export oriented product.
Bangladesh Jute Mills Corporation (BJMC)
A public corporation in Bangladesh, is the largest state-owned manufacturing and exporting organisation in the world in the jute sector.
Bangladesh Jute Research Institute (BJRI)
The oldest mono-crop research institute of Bangladesh, located at Sher-e-Bangla Nagar, Dhaka. Their major objectives are (a) to regulate, control and promote agricultural, technological and economic research on jute and allied fibres; (b) to organise production, testing and supply of improved pedigree jute seeds and their multiplication, procurement and distribution to recognized organisations, selected growers, and such other agencies as may be approved by the board; (c) to set up research centres, sub-stations, pilot projects and farms in different regions of the country for carrying out research on different problems of jute and allied fibre crops, jute products and allied materials; and (d) to establish project areas for demonstration of new varieties of jute development by the institute and to train farmers for cultivation of those varieties of jute.
A quantity of raw jute selected from various assortments to produce yarn of desired type of quality.
It is a process of selection and mixing of jute fibres into batches and treating them with oil-in-water emulsion softening the fibre prior to carding operation.
The place where great bulk of the jute assessed, selected, brought and sold for export.
The process that follows after spool winding. In Beaming operation yarn from spool is wounded over a beam of proper width and correct number of ends to weave jute cloth. To increase the quality of woven cloth and weaving efficiency, the wrap yarns are coated with starch paste. Adequate moisture is essential in this process.
Quality characteristic of a beam is width of beam – number of ends and weight of stand and there is a continuous passage of yarn through starch solution from spools to the beam. Strach solution in water contains tamerind kernel powder (TKP), antiseptic – sodium silica flouride (NaSiF4) and its concentration varies with the quality of yarn.
The professional village traders or intermediaries in the raw jute trade primary market. They are big merchants and licensed traders having fixed business premises in the wholesale market and they do business with large volume of product.
Composites which are biodegradable, composed of natural fibre reinforcement embedded into a bioplymeric matrix.
The process of interlacing three or more threads is made in such a way that they cross each other and are laid together in a diagonal formation. Flat, tubular, or solid constructions may be formed together in this way.
Rot and fire-proof hessian fabrics often coated used in mines, wind screens and ventilation purpose.
Breaker Carding Machine
Breaker cards are generally down striking and half-circular. In this machine the primary function of jute carding is done by the action of worker and cylinder and the cleaning and the cleaning actions is done between worker and stripper. It is called breaker card because it breaks up to the long reeds of jute.
A measure of yarn strength calculated as the product of breaking strength times the indirect yarn number.
Sometimes the mixture is not uniform and so in some places it is dense and in others it is light. The defect caused by faulty stirring equipment is called breaking.
The maximum resultant internal force that resists rupture in a tension test.
Counting of bags at 25 number in each bundle to ease of packing. Done manually.
Bureau of Indian Standards
An agency which operates a product certification scheme in India and grants licenses to manufacturers covering practically every industrial discipline from agriculture, textiles to electronics. The certification allows the licensees to use the popular ISI Mark, which has become synonymous with Quality products for the Indian and neighbouring markets for decades.
The hessian, a finer quality of jute is called Burlap. Burlap bags are used to ship and store grain, fruits and vegetables, flour, sugar, animal feeds and other agricultural commodities.
Carpet backing cloth (CBC) is a kind of balanced fabric, weighing between 180 – 407 g/m2 used as a base for making carpets. It is the finest jute item, woven with highly premium grades of fiber. Jute canvas and screen lamination along with paper polythene is widely used in mines and for getting protection against weather.
A process similar to ironing of fabric. After damping the damped fabric passes through pairs of heavy rollers rendering threads in fabric flattened and improve the quality and appearance.
A plain weave cloth wholly of jute and double warp and single weft inter-woven, weighting not less than 407 g/m2 with more than 118 ends per dm and not less than 55 picks per dm.
Carding is the heart of the whole spinning process, which causes convert the reeds of jute into a uniform supply of fibrous material which can then be drafted with a little more fiber breakage and provides further opportunity for removal of non-fibrous matter. This action occurs in jute breaker card and finisher card machine between cylinder and worker.
The process by which long strikes of jute fibers, while passing through high speed pinned rollers, are broken down into an entangled mass and delivered in roll form of uniform weight per unit length. See also Mono Carding, Dual Carding and Tandem Carding.
Central Research Institute for Jute & Allied Fibres (CRIJAF)
Formerly known as Jute Agricultural Research Institute (JARI) which started functioning after the partition of India in 1947. CRIJAF emphasis is on the expansion of jute areas, developing high yielding varieties, development of economically viable and sustainable production technology and cropping systems with jute and allied fibre crops and development of proper post-harvest technology for improving the quality of fibre. They focus on White Jute (Tita pat): Corchorus capsularis L. Tiliaceae; Tossa Jute (Mitha pat): Corchorus olitorius L. Tiliaceae; Mesta/Kenaf (Patsan): Hibiscus cannabinus L. Malvaceae; Roselle (Patwa): Hibiscus sabdariffa L. Malvaceae; Sunnhemp (San): Crotalaris juncea L. Papilionaceae; Ramie (Rheha): Boehmeria nivea (L.) Gaud. Urticaceae; Sisal/Agave (Sisal): Agave sislana Perr. Ex Engelm. Agavaceae and Flax (Alsi): Linum usitatissimum L. Linaceae.
A conical package of yarn, usually wound on a disposable paper core.
Cop Winding machine obtain yarns from the spinning machines. The spinning bobbins is placed on a suitable pin on top of the cop machine and yarn tension is maintained by means of a small leaver. The yarn on the bobbins are converted into hollow cylindrical package said to be cop. The cop is used to form Transverse thread during interlacement of weaving. Generally a cop winding machines consist 120 spindles.
When an emulsion is prepared it is not possible to make all drops exactly same size. The larger droplets move to the surface because they have less density than water. These droplets cause uneven distribution of water and form a layer on the surface and causes uneven distribution of emulsion. This defect is called creaming. This defect increase yarn breakage during spinning.
A defect when the top end of the fibers is rough, black and hard which makes stripping insufficient.
The process where the sacking cloth is cut to the required length for making bags for different size such as A-Twill bags and B-twill bags of 100 kg capacity.
Jute mill brokers.
Dazed Jute Fibers
Jute fibres which have lost its strength and lustre due to over retting or excessive moisture in them.
The vast variety of decorative products are made up of jute fabrics like wall hangings, toys, table lamps, paper, decorative bags, furniture and many more.
Officially, the weight, in grams, of 9000 meters of yarn.
Directorate of Jute Development
A division under the Indian Government’s Ministry of Agriculture to look after the development of raw jute cultivation and application of scientific methods of cultivation both at micro and macro levels.
A process in which a number of jute slivers fed simultaneously as input into a machine for drafting and delivered as a single sliver as output. By this process, the irregularity of input slivers gets reduced.
The amount of attenuation of textile material at different stages of spinning preparatory and spinning process; for example, 1 m of input material when delivered as 5 m is said to have undergone a draft of 5.
Draw Frame Machine
An important machine in jute yarn manufacturing as this straightens and remove impurities from jute fibers in the sliver.
The breaker card and finisher card work separately and are not joined together.
The process in which the rolled woven cloth is unrolled and water is sprinkled on it continuously to provide desired moisture. Each roll is generally104 yards or 95.976 meters. Damping is done manually.
The ability to endure. In terms of product, it represents long-established ‘good’ design qualities, like efficiency and timelessness as well as quality and performance.
This product is majorly used for coverings on a very high multidimensional scale.
The process of adding colour to textile products like fibres, yarns and fabrics. Dyeing is normally done in a special solution containing dyes and particular chemical material.
East India Jute & Hessian Exchange Ltd.
A recognised Indian association to regulate forward trading in raw jute and jute goods.
Emulsion is a mixture of some lubricating agents which is applied on jute fiber to make the fiber soften and flexible for spinning; prepared for spun. It is an intimate mixture of two immiscible liquids where one is dispersed in small globules on the other and addition of a third substance brings stability. Emulsion is made by splitting up oil into minute drops which are prevented from reuniting in water. Ingredients are usually water, oil, emulsifier of the ingredients of emulsion.
Jute goods per buyer requirements.
Export Inspection Agency
An agency that fixes up standard of the jute quality product and providing technical guidance on ISO certification.
Part of the primary market, they purchase their entire volume of jute from producers. They buy loose jute in small quantities from farmers and other small dealers who may not possess any license and market and sell the unsorted jute fibres to the Beparis who usually handle a large volume.
Any substance with a high length to width ratio and suitable characteristics for being processed into fabric.
Finisher Carding Machine
Finisher card is full circular and down striking card. After jute is processed by breaker card, it is send to finisher card. The rollers and cylinder are pinned in the same manner as in breaker card but pins are finer and set closer together in Finisher Card Machine.
A chemical compound that can be incorporated into a textile fiber during manufacture, or applied to a fiber, fabric, or other textile item during processing to reduce its flammability.
Hairy jute fiber defect created due to over retting and careless stripping of Jute.
These textile materials are used by civil engineers to solve many geotechnical problems. These materials are made of synthetics or natural fibres in the form of woven and non-woven or their combination. It is a jute cloth laid along the river embankment sides and hill slopes to prevent soil erosion and landslides.
Highly lustrous jute fiber sometimes creates problems and considered a defect.
Also known as a “gunny shoe”, is an inexpensive bag, historically made of hessian (burlap) formed from jute, hemp, or other natural fibers. The name “gunny” derives from the word goni (“thread, fibre”), a Tulu word from the language spoken in Mangalore. Modern sacks are often made from man-made products such as polypropylene.
Gunny Trades Association
The largest Association in Kolkata and controls practically the whole gunny market. The Gunny Trades Association was established in 1925 as a non-profit sharing company. Today, there are 666 members of this Association including gunny merchants, dealers, shippers, jute mills and jute brokers. The main object of this Association is to regulate the business in manufactured jute goods and to arbitrate in matter of dispute relating to this trade.
The tactile qualities of a fabric, e.g., softness, firmness, elasticity, fineness, resilience and other qualities perceived by touch.
A jute defect caused from badly damaged rotten or tendered fibers.
In Hemming process, the raw edges of sacking cloth cut pieces are shown by folding it with sewing machine.
In Herackle sewing the sides of sacking cloth cut pieces are shown to make a complete bag.
Hessian (or Burlap)
A single warp plain weave jute fabric weighing from 4.5 oz to 18 oz a yard ( 139.5 gm to 434.0 gm per metre) with a normal basic width of 40″ (101.60 cm) being manufactured in various widths and weight / area, up to a maximum of 500 g/m2. The colour of the fabric requires as a rule that it should be manufactured from good quality “white” jute.
Hessian Canvas Tarpaulins
Canvas is a closely woven cloth of fine texture, weighing from 14 oz to 24 oz a yard of 37″ width (434 gm to 744.1 gm a metre of 94.0 cm width). Tarpaulins weigh between 15 oz and 18 oz a yard of 45″ width (465.1 gm and 558.1 gm a metre of 114.3 cm width).
Hessian tapes and gaps
They are made up with hessian cloth, woven with gaps at regular intervals and the cloths cut between the gaps to make small width taps.
These types of yarn are good, clean and free from specks with high lustre. For manufacturing this type of yarn, clean and defect free jute is required. To make this type of yarn clean and defect free jute is required.
Hessian weft yarn is cleaner and softer than hessian warp yarn. So for hessian weft clean fibre is required, but fibre of lower strength can be used to hessian weft yarn.
Hydrocarbon free jute cloth
This cloth is fabricated by treating jute with vegetable oil. It is a hessian fabric, hydrocarbon free cloth, widely used for packing different food materials, cocoa, coffee, peanut beans etc.
It is the resistance to fracture when certain localized load is applied to the specimen. This is of two types Notched and Unnotched.
Indian Jute Industries’ Research Association (IJIRA)
Established in 1937, the first co-operative R & D organisation in India to render services to the Indian Jute Industry and Government Agencies who were promoting Indian Jute in domestic market as well as exporting to the other countries. Today, they are the premier Institution on research and development of Jute and allied fibers in India.
The synergistic improvement of a total system’s strength created by the introduction of a geotextile (good in tension) into a soil (in compression but poor in tension) or into other disjointed and separated material.
Institute of Jute technology (IJT)
Established on 20th February, 1947 and jointly founded by University of Calcutta and Indian Jute Mills’ Association with the main object of imparting knowledge of jute technology and training of students
International Jute Study Group (IJSG)
An intergovernmental body set up under the aegis of UNCTAD to function as the International Commodity Body (ICB) for Jute, Kenaf and other Allied Fibres. The International Jute Study Group (IJSG) is the legal successor to the erstwhile International Jute Organisation (IJO), which was established to administer the provisions and supervise the operations of the Agreement establishing the Terms of Reference of the International Jute Study Group, 2001. The IJSG formally entered into force on and from 27 April 2002 with the completion of the process of Definitive Acceptance/Acceptance by the Governments of Bangladesh, India, Switzerland, and the European Community representing its all member countries.
A long, soft, shiny plant fiber that can be spun into coarse, strong threads. Jute is one of the cheapest natural fibers, and is second only to cotton in amount produced and variety of uses. Jute fibers are composed primarily of the plant materials cellulose and lignin. The fibres are obtained from the bast layer of the plants Corchorus Capsularis and Corchorus Olitorius. Commercially, jute is divided into two main classes, White Jute generally being associated with Corchorus Capsularis, and dark jute with Corchorus Olitorius. Each of The these classes is further sub-divided into numerous grades denoting quality and other characteristics.
Jute Balers’ Association
A recognized association in developing and trading of raw jute at Kolkata (W.B.) in India.
Jute Corporation of India (JCI)
An agency of the government of India that assists jute cultivators in states where this crop is grown, providing minimum price support.
Cuttings are considered the lowest grade of jute. Like other harvested products, cuttings are often the left over jute of other grades and can be a mixture of leftovers. Jute cuttings are most often used to make paper products; less often, jute cuttings are used to make bags, ropes or other goods, as these products are not as strong. Both white raw jute and tossa raw jute cuttings are available in grades A and B.
Jute Manufacturers Development Council (JMDC)
The national agency for promotion of Indian Jute under Ministry of Textiles, Government of India. JMDC was created by an act of Indian Parliament in the year 1983. The Council’s body is composed of Jute experts, producers and exporters of Jute products, growers of Jute, person engaged in production of Jute goods, different departments of Government of India and local governments of Jute growing states chaired by the secretary, Ministry of Textiles, Government of India. JMDC’s prime objective is to provide better marketing of jute product, although it is engaged in several multi-dimentional activities regarding jute.
can be classified in five divisions. They are: Batching, Carding, Drawing, Spinning, Winding. They are the main process, either there are sub process to manufacture jute yarn. There are two types of yarn are produced from jute spinning; sacking yarn and hessian yarn. See also Silver Spinning and Roving Spinning.
Descriptive of staple yarn that has been prepared and spun on machinery originally designed for spinning yarns from jute.
Jute Tarpaulin Fabric
Double warp, single weft, interwoven, plain weave cloth made wholly of jute, weighting not more than 610 g/m2 having not more that 118 ends per dm and not more than 55 picks per dm.
Kenaf is a fast growing plant of the bast fibre group-species Hibiscus cannabinus. It is usually known as Mesta. Kenaf requires a warm, moist climate and grows in well-drained, sandy loam soils. Kenaf is less demanding on the soil than jute and may be grown in rotation with other crops. The fibre strands, about 3 feet long are pale in colour and lustrous leading producers include India, Bangladesh, Thailand and China. It is mainly used for cordage, canvas, sacking and other products such as news print and carpet-backing yarn. Kenaf is lower quality than jute.
A process of joining two broken pieces of yarns by tying together.
A defect caused by insect bite in the jute plants.
A bale packing is used extensively in the internal trade, to the Secondary market from the primary market. A hand-pressed package of raw jute consisting various morahs or bundles bound with jute ropes, usually weighing 130 kg to 150 kg and sometimes only 55 kg. The preliminary pressing is generally carried out manually using heavy weights or steam press. In other instances, jute may be packed into a lightly twisted bundle of four to seven seers of fibre.
Balers mainly operate in the secondary markets, where the sorting into commercial grade takes place.
The process in which Hessian fabrics are folded into the required size used in “Bale press” operation on the lapping machine.
Lengths of fabric, several plies high, ready for cutting.
The process of spreading lengths of fabric on a cutting table to make a lay.
In draw frame process, it is the difference in the surface speed of fallers over the surface speed of retaining r/r to give sufficient tension to the sliver.
Number of minutes, hours, or days that occur to complete an operation or process, or must elapse before a desired action takes place.
Mass per unit length for any textile fibre, sliver or yarn.
Linoleum Backing in another special type of hessian weighing from 7 oz to 15 o per yard (217 gm to 465.1 gm per metre) with the width range 60″ to 100″ (152.4 cm to 254 cm) and above.
Softening or sogginess of cellulose tissues due to retention of excessive moisture.
Jute floor covering fabric woven in plain, stripped, dobby or jacquard designs.
It is a bast fibre obtained from the plant of Hibiscus sabdariffa and Hibiscus cannabinus. It is a substitute for jute with coarseness higher than jute. Mesta is a blend of the mesta plant and raw white jute, and is graded differently than raw white jute and tossa raw jute; the grades are mesta top, mesta mid and mesta bottom. Mesta because a part of jute production in 1947, when India had to partition its land. Since that time, mesta has become a more important part of this blend because mesta is capable of growing in areas where the climate is not appropriate for raw white or tossa jute.
Fibers with strands thinner than one denier. Fabrics made with microfibers are exceptionally soft and hold their shape well.
A fungal growth on any jute material.
Factories that transform fibres (such as cotton fibre, flax fibre and hemp fibre) into yarn or cloth.
A yarn, fabric, or other textile product that has not been inspected, or does not come up to standard quality.
Moisture regain is a measure of the increase in a fiber’s weight due to the absorption of water. The term is usually expressed as a percentage, calculated by dividing the saturated weight by the dry weight.
The breaker and finisher card are to separate machines but the jute is directly delivered from the delivery of the breaker to the feed of the finisher card.
This refers to any single filament of a manufactured fiber, usually of a denier higher than 14. Rather than a group of filaments being extruded through spinnerets to form a yarn, Monofilaments generally are spun individually.
A defect when moss adhere to the jute fibers when the stems stay too long in stagnant of water.
National Institute of Research on Jute & Allied Fibre Technology (NIRJAFT)
A premier institute under Indian Council of Agricultural Research, New Delhi and dedicated to the cause of jute and allied fibres leading to the diversified use and industrial growth.
National Jute Board of India (NJB)
Framed by the Ministry of Textiles, Govt. of India and enacted by the Parliament on February 12, 2009, NJB engages in research and human resource development programmes to explore new and innovative use of jute with the idea of enabling both the organized as well as the decentralized sector to compete and increase the global share of Indian jute goods consumption.
National Jute Manufactures Corporation Ltd.(NJMC)
Apex body for management of all nationalised jute mills in India.
A class name for various genera of fibers of animal (wool and silk), mineral (asbestos) or vegetable (cotton, flax, and jute).
A terminology used for draw framing, it is the distance between the foremost gill where the pins leave the sliver and the bite of the pressing and drawing r/r is known as nip.
A textile structure produced by bonding or interlocking of fibres, or both, accomplished by mechanical, chemical, thermal or solvent means and combinations thereof. Otherwise, fabric made by unconventional method of fabric preparation. Products manufactured through non-woven technology under technical textiles category are used for various end-use applications. A fabric-like textile structure, having wide range of thickness and being produced from an assembly of fibres (with random or parallel orientation) by applying bonding with adhesive/thermal treatment/needle punching.
Office of Jute Commission (Ministry of Textile)
An office which advices the Government of India and the jute industry and trade on allies matters relating to the development of jute industry and to implement the government policies.
A textile’s ability or propensity to absorb oil.
The process by which emulsion applied long jute fibers are kept under a thick fabric for a certain time as a result fiber become soft and flexible. Depending on fiber quality the pilling time is varied.
Pitch of the Faller
Used in draw framing, it is the distance between the one row of pins of one faller bar to pins of next faller bar is called pitch of faller.
The type of weave in a cloth in which each warp thread or a pair of warp threads pass alternatively over and under each weft thread.
An assembly of two / more single yarns twisted together in a direction (say, S, and opposite to that say, Z) in its component single yarns to have a balanced twisted structure.
Initial warp beam to be used in final beaming/sizing where number of threads/yarn are very high (optional).
Prefabricated Drain (PVD)
These geo-composites are generally vertically inserted in the ground with their ends protruding over the ground surface and with underground water being forced out of them under pressure, they resemble a set of giant wicks.
Any treatment which is undertaken before any actual dyeing and printing process.
Jute producers are the primary link in the raw jute-marketing channel. Most of the jute farmers belong to the self-financed small and marginal farmer categories.
Hydraulically power-pressed bale of commercial quality jute usually bound with jute ropes coming from the Secondary market to the Terminal Market. The pucca bales are produced in the press mainly for exports. Its standard size is ( 120 X 45 X 50 ) cm and having net weight of 180 kg.
Balers or exporters who receive processed jute sold by Kutcha balers.
A term used to describe how a fabric is supplied. Put-Up is usually described in terms of length, on rolls, or bulk supplied and may have standards as to how many “cuts” are allowed per roll, or box.
In manufacturing, a measure of excellence or a state of being free from defects, deficiencies and malfunctioning. It is brought about by strict and consistent commitment to certain standards that achieve uniformity of a product in order to satisfy specific customer or user requirements.
A terminology used for draw framing, it is the distance from the centre point of the retraining r/r to the bite of the pressing and drawing r/r is known as reach.
Any kind of fibre that undertakes a recycling process. It offers a low-impact alternative to other fibre sources, with reduced level of energy material and chemical consumption possible.
Reduce, Reuse and Recycle (R3)
The three essential components of environmentally-responsible consumer behaviour. Reduce means that the number of purchases made by a single individual should be limited. The concept behind the second R, reuse, is that used items should be reused as much as possible before replacing them. The third R, Recycle, suggests that the items should be used for a new purpose as much as possible.
A process employing the action of micro-organisms and moisture on jute plants to dissolve or rot away much of the cellular tissues and pectins surrounding bast-fibre bundles, and so facilitating separation of the fibre from the stem.
The various ways of Retting jute are: Mechanical retting (hammering), chemical retting (boiling & applying chemicals), steam/vapour/dew retting, and water or microbial retting. Among them, the water or microbial retting is a century old but the most popular process in extracting fine fibers. However, selection of these retting processes depends on the availability of water and the cost of retting process.
A defect which occurs due to various reasons such as under retting of the root ends of jute fibers and if the root portion is not completely under water during ratting.
A long rope of fibers where all of the fibers are going parallel to the roving.
In roving spinning, yarn is produced from roving sliver of roving frame. By this spinning process finer and superior quality jute yarn can be produced. In this spinning process after passing through three drawing frame, sliver are converted into rove by a roving frame and after that a spinning frame is used to produce yarn.
Long hard and broken ribbon-like fibers caused by careless stripping and washing.
Jute fabric made of double warp and single weft with plain or twill weave and mostly used for manufacturing jute bags. Made up of low quality jute fibers, sacking cloth is loosely woven heavy cloth used for packing sugar, food grains, cement etc. Weighing from 15 to 20 ozs, several qualities are available in this category like Twill, heavy Cees, D.W Flour, Cement Bags and many more.
Sacking warp jute yarn is good and strong. Specks and colour is not important when manufacturing this type of yarn. So, 70 to 80% Tossa jute can be used.
Sacking weft yarns are low quality yarn. It is coarse and is made from low grade jute fibre. It may contain line cuttings, bale cuttings, soft and hard waste, rope waste, jute dust, habijabi and entangled jute.
In Safety sewing, the sides of sacking which was sown at the time of Herackle Sewing is again stitched to enhance the strength of the Bags edge.This kind of stitching is generally done on FCI bags.
This is the export quality jute yarns being used mainly by carpet manufacturing mills.
A generic term for low quality plain cloth with traditional cover factors for both warp and weft at above 4. The mass per unit area will vary with the type of fibre used.
The second marketing channel of the jute trade where hanks of fibres are brought by boat, or on men’s heads, to the nearest market, and there sold to the dealers who go into the interior. This is where commercial fibre quality are assessed, selected, bought and sold to the resident merchant, and is generally made up into drums, before forwarding to its destination and conveyed to export marts.
The process by which raw jute bales are opened to find out any defect and to remove the defective portion from the morah by experienced workers. Raw jute bales are of two types i.e. 150 kg weight and 180 kg weight with or without top portion cutting.
It is a light weight hessian cloth, used in felt industry for reinforcing the non-woven fabric and for strengthening paper with lamination.
The long continuous ribbon of fibres, loosely held together, that comes out from the carding and drawing machines.
In sliver spinning, yarn is produced from the sliver of finisher drawing frame. Sliver spinning is used for majority of jute yarn.
In softening process, jute morahs are made soft and pliable. Two methods are used for softening; use of softening machine and use of jute good spreader. Generally an emulsion plant with jute softener machine is used to lubricate and soften the bark and gummy raw jute. The emulsion plant consists of gear pump, motor, vat, jet sprayer, nozzles, emulsion tank and the jacket. In this softening process jute becomes soft and pliable and suitable for carding.
A typical open weave woven jute geotextile used for controlling erosion of soil. Also branded as “anti-Wash” and loosely as “geojute”.
A major defect which lowers the quality of Jute fibers. It’s when the jute fibers are not rotted and washed properly; the barks of jute adhere to the fibers and causes them speck.
A large number of special hessian are at present, manufactured by the Indian industry, These include bright, fine and dyed scrim fabrics, jute, cotton and buckram fabrics.
In Spool Winding yarn is produces for warp (the longitudinal yarn). Spool winding machine consists of a number of spindles. There is wide variation in the number of spindles per machines from one make to another. Productivity of spool winding depends on the surface speed of the spindle and machine utilisation.
Spool winding machine uses the bobbins contain smaller length of yarn. This machine wound the yarn into bigger packages known as ‘spool’. The Spool are used in making sheets of yarn to form warp portion used during interlacement of weaving.
In jute spinning frame flyer is used to insert twist to produced yarn after required draft.
A defect caused by over-retting of the lower part of the jute plant, under-retting of lower part of the plant or under-retting of the top end.
The breaker card and the finisher card are combined together to form one carding machine. The two machines have common parts. The jute passes from doffer of the breaker card to the taker in of the finisher card.
These textile materials are meant for serving some technical or utility functions and not for normal textile uses like apparel, home furnishings, etc.
In general, the strength shown by a specimen subjected to tension as distinct from torsion, compression or shear.
A method of measuring the resistance of yarn, or fabric to a force tending to stretch the specimen in one direction.
The terminal market is where exporters operate and procure loose jute from dealers of jute and baled jute from Kutcha balers and Pucca balers. They also purchase baled jute from the Bangladesh Jute Corporation (BJC), the government owned entity. They sell baled jute to the mills through Dalals, while selling Pucca bales to the foreign buyers. Foreign buyers purchase Pucca bales from exporters and processed jute from mills with the help of international brokers.
This is the universal unit for yarn count; it is the weight in grams per kilometer of yarn.
The number of warp threads per inch plus the number of weft threads.
Thread Per Inch
The measurement of the number of threads per inch of material.
The hard, thready waste left on bobbins or collected during mill operations such as spinning, twisting, and weaving. Un-sized thread waste is chopped and shredded into a fibrous condition and used for spinning, casket pillows and mattresses, non-woven products and more.
Used for wrapping tobacco leaves, tobacco sheets are made up of hessian cloth.
Tow waste is the short or broken fibers, created during the processing of flax, hemp, jute and synthetics, which are gathered and cut up to produce staple fiber for yarn spinning, twine and upholstery stuffing.
Fiber that is purchased from a supplier for resale to a customer without any re-processing in between.
A weave that produces diagonal lines on the surface of the cloth.
A plied yarn formed by twisting together two or more strands of yarns.
Manufacturing of multi-strand yarns known as twine or plied yarn.
A term applied to fabrics that can shed water, but are permeable to air and comfortable to wear.
A defect caused by over-retting and also under-drying and sorting in moist condition.
The type of interlacement of warp and weft to form a fabric.
A process of interlacement of two series of threads called “wrap” and “weft” yarns to produce the fabric of desired quality. There are separate looms for hessian and sacking in weaving section. The Hessian looms, shuttle which contents cops (weft yarn) is manually changed. The sacking looms are equipped with eco-loader to load a cop automatically into the shuttle.
Willowing is a step in the recycling of textiles during which the material is beaten in order to soften and separate the fibers. More importantly, the process enables heavier non-fiber materials such as zippers, button, rivets and stays to be removed.
A process which provides yarn as spools and cops for the requirement of beaming and weaving operations. There are two types of winding: 1. Spool Winding; 2.Cope Winding
A product of substantial length and relatively small cross-section of fibres and/or filaments with or without twist.
A length of yarn in a form suitable for handling, sorting or shipping. Packages may be unsupported as skeins or cakes, or prepared with various winding patterns of bobbins cops, pins, spools, tubes or beams.
Glossary of Trade and Market Protection Related Terms.
A government joining the WTO. As part of the accession to the WTO pursuant to Article XII, the acceding government negotiates concessions and commitments relating to Market Access for Goods and Services with WTO Members.
Countries in Africa, the Caribbean and the Pacific which benefit from a preferential tariff treatment in the E.C., under the Lomé Convention.
In telecoms, the charge made by one country’s telephone network operator for calls originating in another country.
See Contingent Protection.
An ad valorem duty (tariff, charge, and so on) is based on the value of the dutiable item and expressed in percentage terms for example, a duty of 20 percent on the value of automobiles.
Ad Valorem Equivalent (AVE)
An ad valorem equivalent is the equivalent in percentage of a specific duty, mixed, compound or other duty containing a specific element. An ad valorem equivalent is calculated for each customs duty that is not ad valorem. The AVE is calculated from the actual duty collection or from the unit value of imports. For example, the AVE of a specific duty of $1.00 per KG levied on a product with a unit value of $10.00 per KG is equal to 10% ($1.00/$10.00).
The Agenda for the 21st Century – a declaration from the 1992 Earth Summit (UN Conference on the Environment and Development) held in Rio de Janeiro.
See Product Aggregate
AGOA (African Growth and Opportunities Act)
U.S. legislation providing duty-free access for a large number of products for 35 African economies.
Shortcut used in WITS to select all trade partners. When “All Partners? is selected, WITS returns one row of information for each and every partner.
Article VI of the GATT 1994 permits the imposition of anti-dumping duties against dumped goods, equal to the difference between their export price and their normal value, if dumping causes injury to producers of competing products in the importing country.
Asian Pacific Economic Cooperation forum.
An independent seven-person body that, upon request by one or more parties to the dispute, reviews findings in panel reports.
Appellations of origin
Indications of where goods originate with characteristic qualities which are due exclusively or essentially to the geographical environment (for example, “Bordeaux” of “Roquefort”).
Goods are differentiated (imperfect substitutes) by exporting country. This assumption is used in the SMART model included in WITS in order to avoid a big bang solution.
GATT Article listing allowed “exceptions” to the trade rules.
Association of Southeast Asian Nations. The six ASEAN members of the WTO – Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand – usually speak in the WTO as one group on general issues.
The WTO Agreement on Textiles and Clothing which integrates trade in this sector back to GATT rules within a ten-year period.
The “automatic” chronological progression for settling trade disputes in regard to panel establishment, terms of reference, composition and adoption procedures.
See Statutory Duty
A tariff average measures the average level of nominal tariff protection. There are two types of tariff averages: a simple average and a trade-weighted average. The example below illustrates how those two types of tariff averages are calculated.
It should be noted that the trade-weighted average is often lower than the arithmetic average. This is because theoretically, low duties carry more imports than high duties. Subsequently, in the trade-weighted average, low duties are given more weight than high duties, thus introducing a downward bias. In the arithmetic average, each duty carries the same weight, whatever its level.
Consists of converting information from a given nomenclature to an older one. Backward conversion is generally safer (than upward conversion) since the destination nomenclature is made of fewer lines. The conversion mostly consists of line aggregation and reduction of the product structure.
An MEA dealing with hazardous waste.
Treaty, administered by WIPO, for the protection of the rights of authors in their literary and artistic works.
See Tariff Binding.
Statistical measure defined as the number of bound lines divided by the total number of tariff lines.
Often used to describe a situation where there is a large difference between the tariff that is actually applied (MFN Applied) and the level at which the tariff is bound in GATT (the ‘ceiling’).
Encompasses any measure which acts to restrain imports at point of entry.
Border Tax Adjustment
Fiscal measure compensating, in whole or in part, for the different treatment either between imports and similar domestic products or between exports and similar products sold on the domestic market. For example, refunds of domestic indirect taxes on goods destined for export; or changes on imports similar to the taxes levied on like domestic products. Also see Duty Drawback.
See Tariff Binding
Used in WITS when a region (group of countries) is used to produce individual information for each and every country belonging to that region.
Border tax adjustment.
In maritime transport, sea shipping between ports of the same country, usually along coasts.
Coalition of developing and industrialized country exporters of agricultural commodities formed in the Uruguay Round to negotiate stronger multilateral disciplines on agricultural trade policies.
Common Agricultural Policy – comprehensive system of production targets and marketing mechanisms designed to manage agricultural trade within the EC and with the rest of the world.
When an exporting country uses part of the following year’s quota during the current year.
When an exporting country utilizes the previous year’s unutilized quota.
Product categories are defined on an ad hoc basis to compile summary reports by sectors, stages of processing, etc. Product categories are generally defined in terms of four-digit headings of the CCCN or in terms of six-digit groups of the HS.
A binding is “ceiling” if the applied duty is lower than the bound duty. The following example illustrates the difference between “ceiling” bindings and bindings at “prevailing” level. See also Binding overhang.
The CCCN and the HS are structured nomenclatures. The first two digits of CCCN and HS numbers represent the chapter level. The CCCN comprises 99 chapters and the HS 97 chapters. HS chapter 77 is not used at present.
See Cost, Insurance and Freight.
Measures taken by exporters to evade anti-dumping or countervailing duties.
Convention on International Trade in Endangered Species. An MEA.
In WITS, refers to all product categories for a given level of details (or Tier). Cluster selection is used in WITS in order to select many same level product categories in one click.
Having an office, branch, or subsidiary in a foreign country.
In maritime transport, groups of container lines which have anti-trust immunity for the purpose of collectively setting rates.
Refers to the nations which signed the General Agreement on Tariffs and Trade. When the term is capitalized, it means all Contracting Parties acting jointly.
Cost, Insurance and Freight (CIF)
The cost of a good delivered to the importing country’s port.
Unauthorized representation of a registered trademark carried on goods similar to goods for which the trademark is registered, with a view to deceiving the purchaser into believing that he/she is buying the original goods.
Action taken by the importing country, usually in the form of increased duties, measures to offset subsidies given to producers or exporters in the exporting country.
First level sub-category (2-digit) used in the Harmonized System (HS) nomenclature.
The possibility of a service provider to be physically present (a branch or subsidiary, for instance) in the “importing” market.
Common External Tariff
A uniform tariff adopted by a customs union (e.g. the European Communities) to be assessed on imports entering a region from countries outside the union.
A compound duty is a tariff duty comprising an ad valorem duty to which is added or subtracted a specific duty: 10% plus $2.00/KG; 20% less $2.00/KG.
Computable general equilibrium (CGE) models
Mathematical characterizations of the economy, used to predict the impact of policy changes taking into account both direct effects as well as indirect effects that work through labor and other markets.
See UNSD Commodity Trade Statistics Database
A tariff reduction, tariff binding or other agreement to reduce import restrictions: usually accorded pursuant to negotiation in return for concessions by other parties.
Table relating two different nomenclatures, item by item.
It is the “enjoyment’ that consumers are inferred to gain from their consumption. While welfare cannot be measured directly, economists often use a measure of real income or purchasing power as a way of measuring welfare in money terms. The SMART model (included in WITS) does not directly estimate consumer welfare, but the welfare change includes the change in consumer surplus following a tariff reduction.
Content, Domestic or Local
Rules establishing a minimum proportion (by value or volume) of a product that has must be domestically or locally produced in order to obtain a benefit (e.g., a tariff concession or permission to be offered for sale).
Trade barriers that are imposed if certain circumstances (contingencies) are met. Examples include anti-dumping or countervailing duties (to offset subsidies) and safeguards. Also called Administered Protection.
Partnership agreement between the EU and the ACP countries signed in June 2000 in Cotonou, Benin. Replaces the Lomé Convention. Its main objective is poverty reduction, “to be achieved through political dialogue, development aid and closer economic and trade cooperation.”
Duty levied on imports of goods that have benefited from production or export subsidies. The duty is intended to offset the effect of the subsidy.
The WTO Committee on Trade and Development.
The WTO Committee on Trade and Environment.
Council for Trade in Goods – oversees WTO agreements on goods, including the ATC.
Current value of the bound tariff for a given year. Concessions offered in GATT negotiations are sometimes staged over a period of several years before the concession is fully implemented. Until then, there may be a current bound (used as ceiling for the current MFN Applied tariff) higher than the final Bound (final commitment).
Charge levied on imports and listed in importing country’s tariff schedules. Duties may be specific or ad valorem or a combination of the two (ad valorem with a specific minimum, or the greater of the two).
A group of countries forming a single customs territory in which (1) tariffs and other barriers are eliminated on substantially all the trade between the constituent countries for products originating in these countries, and (2) there is a common external trade policy (common external tariff) that applies to nonmembers.
Establishment, according to defined criteria, of the value of goods for the purpose of levying ad valorem customs duties on their importation.
Refers in WITS to the database used to retrieve information.
Inter-governmental cooperation in designing and applying domestic policies such as taxes, health and safety regulations, and environmental standards. May involve either harmonization of policies or mutual recognition; generally occurs in the context of regional integration agreements.
Paid by governments to producers of certain commodities and based on the difference between a target price and the domestic market price or loan rate, whichever is the less.
Mechanism to ensure that the application of a measure gradually becomes less severe over time. For example, a tariff set at 50 percent that is reduced by 10 percentage points each year and becomes zero in year 5.
Alternative nomenclature used to display information via a concordance table between the native and the derived nomenclature.
Differential and more favorable treatment
See Special and Differential Treatment and Enabling Clause.
The tariff dispersion is generally analyzed by compiling tariff profiles. Tariff profiles show a distribution of tariff lines according to duty ranges as follows:
Second level sub-category (2-digit) used in the SITC nomenclature.
Current (9th) round of WTO negotiations.
Dispute Settlement Body – when the WTO General Council meets to settle trade disputes.
The Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes.
A form of price discrimination by which the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade—that is, including transport and related costs—for the like product when destined for consumption in the exporting country (GATT Art. VI). Also defined as sales below the estimated cost of production. The margin of dumping is the difference between the two prices.
A duty drawback scheme (often administratively demanding) is a form of Border Tax Adjustment whereby the duties or taxes levied on imported goods are refunded, in whole or in part, when the goods are re-exported. The idea is to reduce the burden on exporters while maintaining tariffs for revenue or protective purposes.
See Everything But Arms.
Export enhancement programme – programme of US export subsidies given generally to compete with subsidized agricultural exports from the EC on certain export markets.
Effective Rate of Protection
A measure of the protection afforded by an import restriction calculated as a percentage of the value added in the product concerned. Takes into account the protection on output and the cost raising effects of protection on inputs.
Effectively Applied Duty
A customs duty which is lower than the statutory duty. The effectively applied duty can be for an undetermined period of time or for a limited period of time (temporary duty). Effectively applied duties are sometimes passed by Parliament or decided on and put into effect by a government for economic reasons.
European Free Trade Association.
See Safeguard Action.
1971 GATT Decision on “Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries”. One of the so-called Framework agreements, it enables WTO members, notwithstanding the nondiscrimination requirements, to “accord differential and more favorable treatment to developing countries, without according such treatment to other contracting parties.” See also Generalized System of Preferences.
See Tariff Escalation.
Clause in a legal text allowing temporary derogation from its provisions under certain specified emergency conditions. See also Safeguard Action (GATT Art. XIX.)
EST and products.
Ex ante, ex post
Before and after a measure is applied.
Everything But Arms
A 2001 EU initiative to grant least developed countries duty- and quota-free access for their exports.
Also known as fiscal tax or revenue duty. See Fiscal Tax.
Requirement that a certain quantity of production must be exported.
Export Processing Zone (EPZ)
A designated area or region in which firms can import duty-free as long as the imports are used as inputs into the production of exports. Traditional EPZs are fenced-in industrial estates specializing in manufacturing for exports. Modern ones have flexible rules that may permit domestic sales upon payment of duties when leaving the zone. EPZs generally also provide a liberal regulatory environment for the firms involved as well as infrastructure services.
The value of the Bound tariff at the end of the implementation period. Concessions offered in GATT negotiations are sometimes staged over a period of several years before the concession is fully implemented. Until then, there may be a current bound (used as ceiling for the current MFN Applied tariff) higher than the final Bound (final commitment).
The third stage of processing in the measurement of tariff escalation. Finished products are processed products which can be sold to consumers without further processing.
A tax which is levied on imported products as well as on domestically produced goods to generate revenue. A fiscal tax is therefore not equivalent to a customs tariff duty since it has no protective effects. Fiscal taxes are sometimes included in the customs tariff duties. In such cases, the fiscal element of the duty is deducted from the tariff duty. Only the protective part of the duty is recorded in the IDB tariff files.
See Free On Board.
Concept which discourages opening the domestic market to foreign agricultural products on the principle that a country must be as self-sufficient as possible for its basic dietary needs.
Foreign Trade Zone
An area within a country where imported goods can be stored or processed without being subject to import duty. Also called a “free zone,” “free port,” or “bonded warehouse.” See also Export Processing Zone.
Method of negotiating down tariffs or other barriers to trade by applying a general rule (formula). For example, a rule specifying that all tariffs are to be cut to a certain fraction of their initial level, or that an agreement should cover a certain proportion of economic activity (sectors).
Free on board (FOB)
The price of a traded good including its value and the costs associated with loading it on a ship or aircraft, but excluding international transportation (freight) costs, insurance and payments for other services involved in moving the good to the point of final consumption.
A casual term used to infer that a country which does not make any trade concessions but profits, nonetheless tariff cuts and concessions made by other countries negotiating under the most-favoured nation principle.
A group of countries in which the tariffs and other barriers are eliminated on substantially all trade between them. Each member maintains its own external trade policy against nonmembers. Also called free trade agreement or free trade arrangement. Contrasts with Custom Union.
A group of seven major industrialized countries whose heads of state have met annually since 1976 in summit meetings to discuss economic and political issues. The seven are United States, Canada, Japan, Britain, France, Germany, and Italy.
The G7 plus Russia, which have met as a full economic and political summit since 1998.
Group of 15 developing countries acting as the main political organ for the Non-Aligned Movement.
International forum of finance ministers and central bank governors representing 19 countries plus the EU. Created in 1999 by the G-7 with the aim to promote discussion, study and review of policy issues among industrialized and emerging market countries to promote international financial stability. The Managing Director of the IMF, the President of the World Bank, and the Chairpersons of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank participate in G-20 deliberations.
A block of developing countries led by Brazil, China and India that emerged just before the Cancun meeting. It represents half the world’s population and two-thirds of its farmers.
Established in 1971, an inter-governmental group of 24 developing countries that has the objective to concert the position of the developing countries on monetary and development finance issues. The only formal developing country grouping within the IMF and World Bank. Meets twice a year, preceding the Spring and Fall meetings of the two institutions.
A coalition of developing countries within the United Nations, established in 1964 at the end of the first session of UNCTAD, intended to articulate and promote the collective economic interests of its members and enhance their negotiating capacity. Originally with 77 members, it now (in 2002) has 133.
General Agreement on Trade in Services.
General Agreement on Tariffs and Trade, which has been superseded by the World Trade Organisation (WTO).
Refers to the old version of the GATT.
The new version of the General Agreement, incorporated into the WTO, which governs trade in goods.
Obligations which should be applied to all services sector at the entry into force of the agreement.
General tariffs are the customs duties which apply in some countries to partners which are not members of the WTO. The general duties are generally higher than the MFN duties.
Generalized System of Preferences (GSP)
The GSP is a system through which industrialized high-income countries grant preferential access to their markets to developing countries. Also called Generalized System of Trade Preferences.
Extension of the SMART model to simulate the partial equilibrium impact of tariff reductions in a multi-market framework.
Concept linking the rights and obligations of a developing country to its level of development. Referred to in WTO Trade Policy Review Mechanism. Generally used in the context of GSP and similar types of preferential treatment of low income countries as a mechanism or set of criteria to determine when countries cease to be eligible for preferences.
Third level sub-category (3-digit) used in the SITC nomenclature.
Informal group of Latin-American members of the WTO.
See Generalized System of Preferences.
The Global Trade Analysis Project, based at PurdueUniversity in the United States. It provides data and models for computable general equilibrium modeling. See Computable general equilibrium
See Global Simulation
Harmonized System (HS)
“Harmonized Commodity Description and Coding System”. Nomenclature developed by the World Customs Organization for customs tariffs and international trade statistics to organize products through hierarchical categories. It is arranged in six digit codes allowing all participating countries to classify traded goods on a common basis. Beyond the six digit level, countries are free to introduce national distinctions for tariffs and many other purposes.
Second level sub-category (4-digit) used in the Harmonized System (HS) nomenclature.
Goods are imperfect substitutes (Assumption used in SMART).
Goods are perfect substitutes.
See Harmonized System.
See WTO Integrated Database
See Stages Of Reduction
A procedure which must be followed by importers before they can import goods.
Trade liberalizing commitments in services which members are prepared to make early on.
Trade in which a country both exports and imports goods that are classified to be in the same industry.
The phasing out of MFA restrictions in four stages starting on 1 January 1995 and programme ending on 1 January 2005.
Ownership of ideas, including literary and artistic works (protected by copyright), inventions (protected by patents), signs for distinguishing goods of an enterprise (protected by trademarks) and other elements of industrial property.
Encompasses any measure which acts to maintain producer prices at levels above those prevailing in international trade; direct payments to producers, including deficiency payments, and input and marketing cost reduction measures available only for agricultural production.
Intellectual property rights.
International Organization for Standardization.
Now operated jointly by the WTO and the UN, the latter acting through UNCTAD. Focal point for technical cooperation on trade promotion of developing countries.
International Textiles and Clothing Bureau – Geneva-based group of some twenty developing country exporters of textiles and clothing.
In WITS, refers to a product selection mode in which product categories may be individually selected.
Requirement, either mandatory or voluntary, to specify whether a product satisfies certain conditions relating to the process by which it was produced.
See Least Developed Country.
Land-locked Least-developed countries.
Least Developed Country (LDC)
A country that satisfies a number of criteria established by the United Nations that together imply a very low level of economic development. As of 2002 the UN had classified 49 countries in the LDC group. Used in WTO Subsidies Agreement, where LDCs are granted differential treatment. Least developed countries are accorded on some countries’ markets a preferential treatment more favorable than GSP (in general duty-free treatment with no limitations).
Land-locked Least-developed countries (LLDC)
Landlocked developing countries are generally among the poorest of the developing countries, with the weakest growth rates, and are typically heavily dependent on a very limited number of commodities for their export earnings. Moreover, of 31 landlocked developing countries 16 are classified as least developed.
Life cycle analysis – a method of assessing whether a good or service is environmentally friendly.
Licensing (of imports or exports)
Practice requiring approval to be granted by the relevant government authority, or by a body designated by such authority, as a prior condition to importing or exporting.
▪ Automatic licensing
Where approval is freely granted for example, licensing for keeping statistical records.
▪ Non-automatic licensing
Where approval is not freely granted. This may be used as a restriction itself, or it may be used to administer a quota. The license may be subject to certain conditions being met
for example, a requirement to export; the use to which the imported good is to be put; the purchase of a specified quantity of the domestically produced like product; or the availability on the domestic market of the domestically produced like product.
▪ Discretionary licensing
Non-automatic licensing (see above).
Treaty, administered by WIPO, for the protection of appellations of origin and their international registration.
Requirement that the investor purchase a certain amount of local materials for measure incorporation in the investor’s product.
Local (or domestic) content requirements
Agreement was between the EU and the ACP countries on trade concessions (GSP treatment), development aid and general cooperation. Replaced by the Cotonou Agreement in 2000.
Treaty, administered by WIPO, for the repression of false or deceptive indications of source on goods.
Margin Of Preference
The difference between the duty paid on an MFN basis and the duty paid under a preferential system.
Refers to the conditions under which imports compete with domestically produced substitutes. These are determined by the extent to which foreign goods are confronted with discriminatory taxes and other regulations.
Maximum (Minimum) Price System (for imports) Price(s)
Decreed by the authorities of the importing country and above (below) which price(s) imports may not enter the domestic market. Actual import prices below the decreed minimums trigger a protective action, such as the imposition of additional duties or of a quantitative restriction. Different terms are used in different countries and different sectors: basic import price, minimum import price, reference price, and trigger price.
In WTO terms sometimes used to indicate the extent to which an applied tariff exceeds the bound rate.
Multilateral environmental agreement.
Multifibre Arrangement (1974-94) under which countries whose markets are disrupted by increased imports of textiles and clothing from another country were able to negotiate quota restrictions.
See Most Favoured Nation.
Used to build data for a non-reported trade flows based on what is reported by all other countries. For example if bilateral import information is missing for a given country, it can be rebuilt using Export information reported by its bilateral partner.
Describes two kinds of practices:
▪ (1) Regulation specifying the proportion of domestically produced content in products offered for sale on the domestic market;
▪ (2) Regulation specifying, for any imports of a given product, the quantity of a domestically produced like product that must be purchased by the importer.
Modes of delivery
Ways in which services may be rendered. They may include sales through establishment, cross-border sales, and the movement of persons involved in the provision of services.
An MEA dealing the depletion of the earth’s ozone layer.
Most Favored Nation (MFN)
MFN (Article I of the GATT 1994) is the ‘normal’, non-discriminatory, tariff charged on imports between goods on the basis of their origin or destination. In commercial diplomacy, exporters seek MFN treatment that is, the promise that they get treated as well as the most favored exporter. Called Normal Trade Relations in the U.S.
See Multilateral Trade Negotiations.
Multifiber Arrangement (MFA)
“Arrangement Regarding International Trade in Textiles.” Negotiated as a temporary exception to the GATT in 1973. Regulates trade in certain textile products between signatories by means of negotiated bilateral quotas. Superceded by the WTO Agreement on Textiles and Clothing in 1995, which specifies that all quotas are to be abolished by 2005. They have been indeed eliminated on January 1st 2005.
Multilateral Trade Negotiations (MTN)
Trade negotiations between GATT (now WTO) Members aiming at eliminating or reducing tariff and non tariff barriers.
Transportation using more than one mode. In the GATS negotiations, essentially door-to-door services that include international shipping.
The equivalent of tariff schedules in GATT, laying down the commitments accepted – voluntarily or through negotiation – by WTO members.
National Tariff Line
National customs tariffs contain a list of all products which can be imported. Within the tariff, products are grouped according to the material they are made of, or according to the industrial sector to which they pertain either as input or as output materials (HS six-digit headings). Within those product groups customs tariffs contain as many tariff lines as there are different levels of customs duties. In other words, each duty rate is attached to a tariff line.
National Tariff Line Level
Most detailed level of tariff information for a given country. The list of tariff lines differs from one country to another one and standard nomenclatures (Harmonized System for example) are used to compare tariff structures among countries. See also National Tariff Line.
Obligation under Article III of the GATT 1994 which requires that imports be treated no less favourably than domestically-produced goods once they have passed customs.
Principle that foreign goods, services, and persons (investors), once they have entered a country and satisfied any formalities that are required, are treated in exactly the same way as national goods, services or persons. In particular, they face the same internal taxes and no additional restrictions.
Nomenclature initially used by a country to report information. In WITS information may be converted in another available (derived) nomenclature.
People, as distinct from juridical persons such as companies and organizations.
Nature Of Duties
Nature of duties or the duty nature refer to the different kinds of customs duty. The duty nature can be an ad valorem, specific, compound, mixed, variable, “tariffied” or unclassified duty.
In an international agreement, a list of those items, entities, products, etc. to which the agreement will not apply, the commitment being to apply the agreement to everything else. Contrasts with Positive List.
Negotiating Group on Basic Telecommunications.
Negotiating Group on Maritime Transport Services.
A nomenclature is an agreed system for classifying goods according to defined criteria, and in given detail and order, by associating to product groups a number which is used by all parties which adopt the nomenclature.
Nominal rate of protection
The proportion by which the (tariff-inclusive) internal price of an import exceeds the border or world price. See also Effective Rate of Protection.
Non-tariff barrier (NTB)
A catch-all phrase describing barriers to international trade other than the tariffs for example, quotas, licensing, voluntary export restraints.
Any government action with a potential effect on the value, volume, or direction of trade. Also see Non-tariff Barrier.
Damage to a country’s benefits and expectations from its WTO membership impairment through another country’s change in its trade regime or failure to carry out its WTO obligations.
See Non Tariff Barrier.
See National Tariff Line
Non-tariff measures such as quotas, import licensing systems, sanitary regulations, prohibitions, etc.
See Non Tariff Measure.
A country’s proposal for further liberalization.
See Rules of Origin
Consisting of three experts, this independent body is established by the DSB to examine and issue recommendations on a particular dispute in the light of WTO provisions.
Trade that is made possible when a good that is protected under intellectual property provisions (patents, copyrights) is sold in different countries for different prices. A parallel import comprises arbitrage activity and occurs when traders import the good from a lower-price market into a higher-price country.
Charges on imports that act as a tariff but are not included in country’s tariff schedule. Examples include a statistical tax, stamp fees, etc.
Treaty, administered by WIPO, for the protection of industrial intellectual property, i.e. patents, utility models, industrial designs, etc.
Partial Equilibrium Analysis
The study of one market in isolation, assuming that anything that happens in it does not materially affect any other market. SMART and GSIM are two Partial Equilibrium tools included in WITS.
Country of origin of imports or of destination of exports.
See Tariff Peaks
Pertaining to the health of plants. See Sanitary and Phytosanitary (SPS) Measure.
Piracy Unauthorized copying of copyright materials for commercial purposes and unauthorized commercial dealing in copied materials.
In an international agreement, a list of those items, entities, products, etc. to which the agreement will apply, with no commitment to apply the agreement to anything else.
Production and processing method. Used in instances where trade policy action by a country is motivated by a desire to ensure that imports have been produced in a way that satisfies a national or international production or process norm. Often these norms will be environmental in nature.
Policy under which measures are motivated by the possibility that use of certain technologies (e.g., biotechnology, genetically modified organisms, pesticides) could be harmful to human or animal health and safety or the environment, although there is no certainty to that effect.
Preference or Preferential treatment
In WTO terms, this represents derogation, in the sense of treatment that is more favorable than MFN. See also Generalized System of Preferences and Special and Differential Treatment.
Mechanism under which goods are inspected and certified in the country of origin by specialized inspection agencies or firms. Often used by importing governments to combat over- or under-invoicing of imports by having the value of consignments determined by independent, foreign entities.
Commitment by an exporter to either raise prices or reduce sales in a market as a way of settling an antidumping suit brought by import-competing domestic firms. Generally has an effect analogous to a quota.
Standardized code identifying a product.
Group of products defined for analysis purpose (all textile products for example). WITS comes with a set of pre-defined aggregates and you can create your own.
Requirement that the investor export to certain countries or region.
All information related to market access and including notably tariff and non-tariff barrier information.
Additional agreements attached to the GATS. The Second Protocol deals with the 1995 commitments on financial services. The Third Protocol deals with movement of natural persons.
Protocol of Accession
Legal document recording the conditions and obligations under which a country accedes to an international agreement or organization.
In financial services, terms used to describe an objective of market regulation by authorities to protect investors and depositors, to avoid instability or crises.
Preshipment inspection – the practice of employing specialized private companies to check shipment details of goods ordered overseas – i.e. price, quantity, quality, etc.
Canada, EC, Japan and the United States.
Quantitative restrictions – specific limits on the quantity or value of goods that can be imported (or exported) during a specific time period.
Refers to the participants in the Quadrilateral meetings, i.e., Canada, the EU, Japan and the U.S.
Quantitative Restriction or Quota
Measure restricting the quantity of a good imported (or exported). Quantitative restrictions include quotas, non-automatic licensing, mixing regulations, voluntary export restraints, and prohibitions or embargoes.
▪ Global Quota
Quota specifying the total volume, or value, of the product to be imported (exported) without regard to the country or countries of origin (destination) of the product.
▪ Bilateral quota
Quota applied to imports from (exports to) a specific country.
▪ Quota by country
Quota which not only specifies the total volume, or value, of the product to be imported (exported), but also allocates the trade between the various countries of origin (destination).
See Quantitative Restriction.
Quantitative Restrictions (QR)
Restriction which limits the value or quantity of goods which can be imported or exported during a given period.
The volume of imports is recorded in the statistical file. The unit used to express import volumes varies according to the product and according to the reporter. The quantity unit used is therefore attached to quantity data in the import statistics. The quantity unit is also used in the normalized code for specific duties.
See Quantitative Restriction
The export of imported goods without appreciable added value. Mostly used for goods which are transported through another country before reaching their final destination.
See Maximum/Minimum Price System.
In WITS, refers to a group of countries used either to produce aggregated statistics or as a shortcut to select all countries belonging to that group.
A country supplying data.
Negotiating procedure based on the tabling, by each party, of a list of concessions requested of other parties, followed by an offer list of the concessions that could be granted if its request were met.
Imposition of a trade barrier in response to another country increasing its level of trade restrictions.
Revealed Comparative Advantage (RCA)
The ratio of a country’s exports of a good to the world’s exports of that good divided by that country’s share of exports of manufactures in the world exports of manufactures. The index for country i good j is RCAij = 100(Xij /Xwj)/(Xit /Xwt) where Xab is exports by country a (w=world) of good b (t=total for all goods). A value of the index above (below) one, is interpreted as a revealed comparative advantage (comparative disadvantage) for the good.
The phasing out of measures inconsistent with the provisions of an agreement.
Treaty, administered by WIPO, UNESCO and ILO, for the protection of the works of performers, broadcasting organizations and producers of phonograms.
In WTO context, a multilateral trade negotiation. There have been 8 rounds
Geneva (1947), Annecy (1949), Torquay (1950-1), Geneva (1955-6), Dillon (1960-1), Kennedy (1963-7), Tokyo (1973-9) and Uruguay (1986-94). A ninth multilateral negotiation was launched in Doha, Qatar at the end of 2001.
Rules of Origin
Regulations to define a country of origin of goods in international trade. A country must satisfy the rules of origin to be considered as the country of origin of goods for the purpose of obtaining MFN treatment or preferential treatment.
Emergency protection to safeguard domestic producers of a specific good from an unforeseen surge in imports (GATT Art. XIX), to protect a country’s external financial position and balance-of-payments (GATT Art. XII, XVIII:B), or to protect an infant industry in a developing country (GATT Art. XVIII:A or C). See also Escape Clause.
Sanitary and Phytosanitary (SPS) Measure
A technical requirement specifying criteria to ensure food safety and animal and plant health. Many international SPS standards are set by the FAO/WHO.
“Schedule of Specific Commitments” – A WTO member’s list of commitments regarding market access and bindings regarding national treatment.
Second-best argument (for protection)
Any argument for protection that can be countered by pointing to a less costly policy that would achieve the same desired result. Also refers to rationales for protection to partially correct a distortion in the economy when the first-best policy for that purpose is not available. For example, if domestic production generates a positive externality and a production subsidy to internalize it is not available, then a tariff may be second-best optimal.
First level sub-category (1-digit) used in the SITC nomenclature.
Reduction or elimination of border barriers to trade. Shallow integration contrasts with Deep Integration.
See Standard International Trade Classification.
Partial equilibrium model embedded in WITS which allows users to estimate the impact of tariff reductions on trade flows, tariff revenue, and consumer surplus for a single market at a time.
Negotiated commitments on market access and national treatment by countries in their national schedules.
Special and differential treatment
The principle in WTO that developing countries be accorded special privileges, either exempting them from some WTO rules or granting them preferential treatment in the application of WTO rules.
In the WTO Agreement on Agriculture, a protectionist measure that can be triggered automatically by a decline in prices or an increase in imports.
A specific duty is a customs duty which is not related to the value of the imported goods but to the weight, volume, surface, etc. of the goods. The specific duty stipulates how many units of currency are to be levied per unit of quantity (e.g. 2.00 Swiss Francs per KG).
See Sanitary and Phytosanitary Measure.
Stages Of Processing
For the analysis of the tariff escalation, products are classified according to their stage of processing. Products can be classified, in general, according to three stages of processing, namely, raw materials, semimanufactures and finished products.
Stages Of Reduction
Concessions offered in GATT negotiations are sometimes staged over a period of several years before the concession is fully implemented. For example, a duty reduction of 10 percentage points can be offered over 5 years with 5 equal stages of 2 points every year.
Rule, regulation or procedure specifying characteristics that must be met by a product (such as dimensions, quality, performance, or safety). When these put foreign producers at a disadvantage, they may constitute a non-tariff barrier. See also Technical Barrier to Trade.
Standard International Trade Classification (SITC)
The SITC is a classification developed by the United Nations for statistical analysis of trade data. In the SITC, articles are grouped by classes of goods such as food, raw materials, chemicals, machinery and transport equipment and also by stage of fabrication and by industrial origin. The SITC was first revised in 1960 (Revision 1) to match the Customs Cooperation Council nomenclature (CCCN). A second revision was established to match the revised version of the CCCN, in 1972. The third revision was established in 1985 to match the HS.
A customs duty which is generally a Customs Tariff Law voted by Parliament. The statutory duty is also referred to as the autonomous or legal duty. The published customs tariff generally report the statutory duty. For WTO Members, the statutory duty cannot be higher than the GATT bound duty.
Fourth level sub-category (4-digit) used in the SITC nomenclature.
Third level and most detailed sub-category (6-digit) used in the Harmonized System (HS) nomenclature.
Fifth level and most detailed sub-category (5-digit) used in the SITC nomenclature.
Assistance granted by government to the production, manufacture or export of specific goods, and taking the form either of direct payments, such as grants or loans (also see Bounty), or of measures having equivalent effect, such as guarantees, operational or support services or facilities, and fiscal incentives.
When an exporting country transfer part of a quota from one product to another restrained product.
See Customs Duty.
Used within the WTO negotiations. Concept used within the tariff reduction process. The tariff base, once cut using a tariff reduction formula becomes the new Bound tariff structure.
Tariff Base Definition
Used within the WTO negotiations. It defines how to build the tariff base before applying the tariff reduction formula.
In GATT context, commitment by countries not to raise particular tariff items above a specific or bound level. Once a rate of duty is bound, it may not be raised without compensating the affected parties. Also referred to as ceiling bindings. The so-called schedule of tariff concessions of each WTO member is annexed to its Protocol of Accession. See also Ceiling Binding.
Measure of the protective effect of an NTB—the tariff that would have the exact same effect on imports as the NTB.
Higher import duties on semi-processed products than on raw materials, and higher still on finished products. Occurs if the tariff increases as a good becomes more processed. Escalation discourages imports of more processed varieties of the good (discouraging foreign processing activity) and offers domestic processors positive levels of effective protection. This practice protects domestic processing industries and discourages the development of processing activity in the countries where raw materials originate. For example, low duties on tomatoes, higher duties on tomato paste, and yet higher duties on tomato ketchup.
Conversion of border measures, other than ordinary customs duties, to tariff equivalents of non-tariff measures. As part of the Uruguay Round Market Access for agricultural products, all non-tariff border measures were “tariffied” by participants before a tariff reduction was made.
Tariffs that are particularly high. Two measures of peaks are used:
▪ International Peaks: duties over 15%.
▪ National Peaks: duties over 3 times the average of the tariff structure.
Tariff rate quotas (TRQs)
Measure under which a good is subject to a MFN tariff, but a certain quantity (the ‘quota’) is admitted at a lower, sometimes zero, tariff. TRQs are mainly applied to agricultural trade and can be seasonal.
Technical Barrier to Trade
Trade restrictive effect arising from the application of technical regulations or standards such as testing requirements, labeling requirements, packaging requirements, marketing standards, certification requirements, origin marking requirements, health and safety regulations, and sanitary and phytosanitary regulations.
A mandatory requirement or standard specifying the characteristics that an imported product must meet. Usually aimed to protect public health or safety. See Technical Barrier to Trade.
Hierarchical level of organization within a given nomenclature. For example the Harmonized System (HS) nomenclature is composed of 3 tiers: Chapter (2-digit code), Heading (4-digit) and Sub-heading (6-digit). The more digits, the more categories and details.
The Textiles Monitoring Body, consisting of a chairman plus ten members acting in a personal capacity, oversees the implementation of ATC commitments.
Waiver Permission granted by WTO members allowing a WTO member not to comply with normal commitments. Waivers have time limits and extensions have to be justified.
The supply-side ability (capacity) of a country to benefit from the opportunities offered by the world market and MFN or preferential access to markets.
Trade Control Measures
See Non Tariff Measures.
Requirement that the investor use earnings from exports to pay for imports.
Occurs when liberalization results in imports displacing less efficient local production and/or expanding consumption that was previously thwarted by artificially high prices due to protection.
Occurs when a trade reform discriminates between different trading partners and a less efficient (higher cost) source displaces a more efficient (lower cost) one. Can arise whenever some preferred suppliers are freed from barriers but others are not.
Process of reducing barriers to trade and increasing participation in the international economy through trade. Also used to describe efforts to integrate trade policy and strengthening of trade-related institutions into a country’s overall development strategy.
See UNCTAD Trade Analysis and Information System.
Allows members to impose restrictions against individual exporting countries safeguard if the importing country can show that both overall imports of a product and mechanism imports from the individual countries are entering the country in such increased quantities as to cause – or threaten – serious damage to the relevant domestic industry.
Degree to which trade policies and practices, and the process by which they are established, are open and predictable.
See Maximum/Minimum Price System.
Trade-Related Aspects of Intellectual Property Rights.
A customs duty rate is unbound if it was never subject to a tariff concession during any GATT round of tariff negotiations (see Tariff Binding).
United Nations Conference on Trade and Development
UNCTAD Trade Analysis and Information System (TRAINS)
HS-based tariff line level database covering tariff, para-tariff and non-tariff measures as well as import flows by origin for more than 140 countries.
United Nations Statistics Division
UNSD Commodity Trade Statistics Database (COMTRADE)
Contains bilateral trade flows (import, export, re-export) information based on SITC and HS nomenclatures.
Consists of converting information from a given nomenclature to a newer one. Upward conversion is generally less accurate (than backward conversion) since the destination nomenclature is made of more lines and the conversion requires an expansion of the product structure.
Customs duty rate which varies in response to domestic price criterion.
Voluntary Export Restraint
Informal agreement between an exporter and an importer, whereby the former agrees to limit exports of a specified good to avoid dislocation of the industry in, and possible imposition of mandatory restrictions by, the importing country. The restraint agreement may be concluded at either industry or government level. In the latter case, sometimes referred to as an orderly marketing arrangement.
Voluntary Restraint Agreement
See Voluntary Export Restraint.
Authorized deviation from a previously undertaken and legally binding obligation. Can be sought by WTO members through invocation of Art. IX WTO. Conditions under which waivers are granted are generally negotiated and limited in time.
Treaty for the protection of intellectual property in respect of lay-out designs of integrated circuits.
World Intellectual Property Organization.
World Integrated Trade Solution—database and software package developed by UNCTAD and World Bank to allow analysis of market access conditions and the impact of own and partner country liberalization.
Country group used in WITS to aggregate all partner countries in one row of information.
World Trade Organization – established on 1 January 1995.
WTO Consolidated Tariff Schedules
The CTS database contains all WTO Members’ concessions (final bounds) on goods at the national tariff line level in a standardized format. The database was established as a working tool only, without implications as to the legal status of the information therein.
WTO Integrated Database (IDB)
The IDB contains annual tariff information (current MFN Bound and Applied tariffs) and import statistics on goods at the national tariff line level in a standardized format.
The Kimberley Process started when Southern African diamond-producing states met in Kimberley, South Africa, in May 2000, to discuss ways to stop the trade in ‘conflict diamonds’ and ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments.
In December 2000, the United Nations General Assembly adopted a landmark resolution supporting the creation of an international certification scheme for rough diamonds. By November 2002, negotiations between governments, the international diamond industry and civil society organisations resulted in the creation of the Kimberley Process Certification Scheme (KPCS) . The KPCS document sets out the requirements for controlling rough diamond production and trade. The KPCS entered into force in 2003, when participating countries started to implement its rules.
Who is involved?
The Kimberley Process (KP) is open to all countries that are willing and able to implement its requirements. The KP has 54 participants, representing 81 countries, with the European Union and its Member States counting as a single participant. KP members account for approximately 99.8% of the global production of rough diamonds. In addition, the World Diamond Council, representing the international diamond industry, and civil society organisations, such as Partnership-Africa Canada, participate in the KP and have played a major role since its outset.
How does the Kimberley Process work?
The Kimberley Process Certification Scheme (KPCS) imposes extensive requirements (*) on its members to enable them to certify shipments of rough diamonds as ‘conflict-free’ and prevent conflict diamonds from entering the legitimate trade. Under the terms of the KPCS, participating states must meet ‘minimum requirements’ and must put in place national legislation and institutions; export, import and internal controls; and also commit to transparency and the exchange of statistical data. Participants can only legally trade with other participants who have also met the minimum requirements of the scheme, and international shipments of rough diamonds must be accompanied by a KP certificate guaranteeing that they are conflict-free.
The Kimberley Process is chaired, on a rotating basis, by participating countries. So far, South Africa, Canada, Russia, Botswana, the European Union, India, Namibia, Israel, the Democratic Republic of the Congo, the United States of America, South Africa, the Republic of China have chaired the KP, and Angola is the Chair in 2015. KP participating countries and industry and civil society observers gather twice a year at inter-sessional and plenary meetings, as well as in working groups and committees that meet on a regular basis. Implementation is monitored through ‘review visits’ and annual reports as well as by regular exchange and analysis of statistical data.
Below are definitions of some of the most commonly used terms in the commodity world.
Accumulate: When traders buy a commodity heavily and “take it out of the market”.
Actuals: Commodities on hand, ready for shipment, storage, or manufacture.
Afloats: Commodities loaded on vessels and on way to destination. It may refer to loaded boats in the harbor and about to sail, but not to cargoes already at the destination.
Arbitrage: Simultaneous purchase and sale of the same quantity of the same commodity in two different markets, either in the same country or in different countries. Used to take advantage of what is believed to be a temporary disparity in prices.
At the market: An order to buy or sell at the best price obtainable at the time the order reached the trading pit or ring.
Basis: The price difference over or under a designated future at which a commodity of a certain description is sold or quoted.
Basis grade: Specified grade, or grades, named in the exchange’s futures contract. Other grades are tenderable, subject to price differentials from the basis, or “contract” grade.
Bid: A bid subject to immediate acceptance, made on the floor of an exchange to buy a definite quantity of a commodity future at a specified price; opposite of offer. See also Offer.
Break: A quick, extensive decline in prices.
Bulge: A rapid advance in prices.
Buy on close: To buy at the end of a trading session at a price within the closing range.
Buy on opening: To buy at the beginning of a trading session at a price within the opening range.
C&F (cost and freight): Cost and freight paid to the port of destination.
Carrying charge: Usually refers to warehouse charges, insurance, and other incidentals, often including interest charge and estimated loss (or gain) in weight. When used in connection with delivery against futures, this term includes weighing, sampling, taring, checking of weights, repairing, repiling, labour to scales, and so on.
Cash commodity: The actual physical product, as distinguished from the “future.” See also Spot commodity.
CCC: Commodity Credit Corporation.
Certified stocks or certified supplies: Supplies that have been approved as deliverable grades and often graded as to quality. Such gradings hold good for a specified period or for an indefinite time. Some exchanges list established deterioration schedules.
CFTC: Commodities Futures Trading Commission.
CIF: Cost, insurance, and freight paid or included to the port of destination.
Clearances: Total marine shipments of a specified commodity as of a given date from domestic and foreign ports.
Close: The period at the end of the trading session officially designated by the exchange during which all transactions are considered made “at the close.”
Closing price or range: The price or price range recorded during the period designated by the exchange as the official close.
Commission house: A concern that buys and sells actual commodities or futures contracts for the accounts of customers.
Contract grades: Those grades of a commodity that have been officially approved by an exchange as a deliverable in settlement of a futures contract.
Cover: The cancellation of a short position in any future by the purchase of an equal quantity of the same future. See also Liquidation.
Crop year: Period from the harvest of a crop to the corresponding period in the following year, as used statistically. U.S. wheat crop year begins June 1 and ends May 31; cotton, August 1 to July 31; varying dates for other commodities.
Day orders: Orders at a limited price are understood to be good for the day only unless expressly designated as an open order or good till cancelled order.
Deliverable grades: See Contract grades.
Delivery: The tender and receipt of the actual commodity, or warehouse receipts covering such commodity, in settlement of a futures contract.
Delivery month: A specified month within which delivery may be made under the terms of a futures contract.
Delivery notice: A notice of a clearing member’s intention to deliver a stated quantity of a commodity in settlement of a futures contract.
Delivery points: Those points designated by futures exchanges at which the physical commodity covered by a futures contract may be delivered in fulfilment of such contract.
Differentials: The premiums paid for the grades better than the basis grade, and the discounts allowed for the grades lower than the basis grades. These differentials are fixed by the contract terms on most exchanges; but in cotton, commercial differentials or differences apply.
Evening up: When for any reason traders are completing their transactions by selling in the case of longs or by purchasing in the case of shorts, they are said to be “evening up.”
EX-store: Selling term for commodities in a warehouse.
FAQ: Fair average quality.
Farm prices: The prices received by farmers for their products, as published by the U.S. Department of Agriculture, as of the 15th of each month.
First notice day: First day on which transferable notices can be issued for delivery in a specified delivery month.
FOB: Free on board. Usually, covers the cost of putting commodities on board whatever shipment conveyance is being used.
Forward shipment: This type of contract covers actual commodities to be shipped at some future specified date.
Futures: A term used to designate any or all contracts covering the sale of commodities for future delivery made on an exchange and subject to its rules.
Grades: Various qualities according to accepted trade usage.
Grading certificates: Certificates attesting to the quality of a commodity graded by official inspectors, testers, graders, and so on.
Growths: Description of a commodity according to an area of growth; refers to a country, district, or place of semi-manufacture.
GTC: Good till cancelled. Usually, refers to open orders to buy or sell at a fixed price.
Hedge: A sale of any commodity for further delivery on or subject to the rules of any futures market to the extent that such sales are offset in quantity by the ownership or purchase of the same cash commodity; or, conversely, purchases of any commodity for future delivery on or subject to the rules of any futures market to the extent that such purchases are offset by sales of the same cash commodity.
Invisible supply: Usually refers to uncounted stocks in hands of wholesalers, manufacturers, and ultimate consumers; sometimes to producers’ stocks that can- not be accurately counted.
Life of delivery: Period between first and last trade in any futures delivery contract.
Limited order: An order given to a broker by a customer that has some restrictions upon its execution, such as price or time.
Liquidation: A transaction made in reducing or closing out a long or short position, but more often used in the trade to mean a reduction or closing out of a long position. See also Cover.
Loan prices: The prices at which producers may obtain loans from the government for their crops.
Long: (1) The buying side of an open futures contract. (2) A trader whose net position in the futures market shows an excess of open purchases over open sales.
Lot: Usually any definite quantity of a commodity of uniform grade; the standard unit of trading in the futures market.
Margin: Cash or equivalent posted as a guarantee of fulfilment of a futures contract (not a part payment or purchase). Can be designated as original or variation margin.
Margin call: Demand for additional funds, or equivalent, because of adverse price movement or some other contingency.
Market order: An order for immediate execution at the best available price.
Negotiable warehouse receipt: Document issued by warehouse, which guarantees the existence and often specifies the grade of a commodity stored. Facilitates transfer of ownership by the endorsement of receipt’s owner.
Net position: The difference between the open contracts long and the open contracts short held in any one commodity by any individual or group.
Nominal price or nominal quotation: Price quotations on a future and for a period in which no actual trading took place.
Offer: The willingness to sell at a given price; the opposite of bid. See also Bid.
On opening: A term used to specify execution of an order during the opening.
Open contracts: Contracts that have been bought or sold without the transaction having been completed by subsequent sale, or repurchase, or actual delivery or receipt of a commodity.
Open interest: The number of “open contracts.” It refers to unliquidated purchases or sales and never to their combined total.
Open order: An order that is good until cancelled.
Opening, The: The period at the beginning of the trading session officially designated by the exchange during which all transactions are considered made “at the opening.”
Opening price or range: The price or price range recorded during the period designated by the exchange as the official opening.
Pit: An octagonal platform on the trading floor of an exchange, consisting of steps upon which traders and brokers stand while executing futures trades. See also Ring.
Point: The minimum unit in which changes in futures price may be expressed. (Minimum price fluctuation may be in multiples of points.)
Position: An interest in the market in the form of open commitments.
Premium: The amount by which a given future or quality of a spot commodity sells over another future or quality of a spot commodity.
Price limit: The maximum fluctuation in price of a futures contract permitted during one trading session, as fixed by the rules of a contract market.
Primary markets: When used in connection with foreign-produced commodities, refers to country of production. In domestic commodities, refers to centers that receive commodities directly from country shippers.
Purchase and sale statement (P&S): A statement sent by a commission merchant to a customer when his or her futures position has been reduced to closed out. It shows the amount involved; the price at which the position was acquired and reduced or closed out, respectively; the gross profits or loss; the commission charged; and the net profit or loss on the transaction.
Range: The difference between the high and the low price of the future during a given period.
Reaction: The downward tendency of a commodity after an advance.
Realizing: When a profit is realized either by a liquidating sale or the repurchase of a short sale.
Resting order: Instruction to buy or sell at figures away from the current level.
Ring: A circular platform on the trading floor of an exchange, consisting of steps upon which traders and brokers stand while executing futures trades. See also Pit.
Round lot: The trading unit in which the major portion of trading occurs on those exchanges that make provisions for trading in two different units; prices of transactions in such units only are registered as official quotations.
Round turn: The execution of the same principal of a purchase transaction and a sales transaction that offset each other.
Short: (1) The selling of an open futures contract. (2) A trader whose net position in the futures market shows all excess of open sales over open purchases. See also Long.
Spot commodity: The actual physical commodity, as distinguished from the futures. See also Cash commodity.
Spot price: The price at which the spot or cash commodity is selling. In grain trading, it is called the “cash” price.
Stop loss order or stop: An order that only takes place when the market reaches the level mentioned in the order. Its purpose is to limit losses. It may be either a buying order or a selling order An example would be “Sell Two October Cotton at 37.50 Stop.” This indicates the person has bought at a price higher than 37.50 and wants to limit his or her loss to around the 37.50 level.
Straddle: Usually, refers to purchase in one market and simultaneous sale of the same commodity in some other market. It can refer to purchase of one commodity against the sale of a different commodity, both of which should normally be closely allied in price movements.
Switching: Simultaneously buying a contract for futures delivery in one month while selling a contract of the same commodity in another delivery month on the same exchange.
Tenders: Issuance of transferable notices announcing the intention of tendering or delivering the actual commodity.
Transferable notice: Notice given by the seller of a futures contract that he or she has made preparation for actual delivery.
Visible supply: Usually refers to supplies of a commodity in recognized distribution centres, which have been moved from production areas to shipping centres. It varies with different commodities and often includes afloats and all other supplies “in sight.”
Volume of trading or sales: Represents a simple addition of successive futures transactions. (A transaction consists of a purchase and a matching sale.)
Wire house: A firm operating a private wire to its own branch offices or to other firms.
Below are definitions of some of the most commonly used terms in the shipping and logistics world.
ABI-AUTOMATED BROKER INTERFACE: A system available to brokers with the computer capabilities and customs certification to transmit and exchange customs entries and other information, facilitating the prompt release of imported cargo.
ABS: American Bureau of Shipping: A U.S.-based private classification, or standards setting society for merchant ships and other marine systems.
AD VALOREM: Latin for “according to the value.”(1) An ad valorem duty is an import duty based on the value of an article as defined in the customs law of a particular country, rather than on weight or volume. A percentage of that value is charged, for example, 5% ad valorem. (2) A freight rate set at a certain percentage of the value of an article is known as an ad valorem rate.
ADMEASUREMENT: The confirmed or official dimensions of a ship.
ADMIRALTY COURT: A court having jurisdiction over maritime questions pertaining to ocean transport, including contracts, charters, collisions, and cargo damages.
ADVISING BANK: A bank operating in the exporter’s country that handles letters of credit for a foreign bank by notifying the exporter that the credit has been opened in his favor.
AFFREIGHTMENT, CONTRACT OF: An agreement by a steamship line to provide cargo space on a vessel at a specified time and for a specified price to accommodate an exporter or importer who then becomes liable for payment even though he is later unable to make the shipment. AFTIn, near, or toward the stern of the vessel.
AGENCY AGREEMENT: An agreement whereby the steamship line appoints the steamship agent and defines the specific duties and areas of responsibility of that agent.
AHT (ANCHOR-HANDLING TUG): Moves anchors and tow drilling vessels, lighters and similar.
AHTS (ANCHOR-HANDLING TUG/SUPPLY): Combined supply and anchor-handling ship. Seismic ship: Conducts seismic surveys to map geological structures beneath the seabed.
AMIDSHIPS: Generally speaking the word amidships means in the middle portion of a vessel.
ANTI-TRUST EXEMPTION: The immunity from prosecution under the Sherman Act, granted to steamship companies in 1916, in recognition of the special services and value American Flag merchant vessels provide in the defense of the country in time of war.
ARBITRATION CLAUSE: A standard clause to be included in the contracts of exporters and importers, as suggested by the American Arbitration Association. It states that any controversy or claim will be settled by arbitration in accordance with the rules of the American Arbitration Association.
ARTICLES OF AGREEMENT: The document containing all particulars relating to the terms of agreement between the Master of the vessel and the crew. Sometimes called ship’s articles, shipping articles.
ASBA: American Shipbrokers Association
ASTERN: A backward direction in the line of a vessel’s fore and aft line; behind. If a vessel moves backwards it is said to move astern; opposite to ahead.
AT SEA: In marine insurance, this phrase applies to a ship which is free from its moorings and ready to sail.
AUTOMATED BROKER INTERFACE: (See ABI)
AUTOMATED COMMERCIAL SYSTEM (ACS): The electronic system of the U.S. Customs Service, encompassing a variety of industry sectors, that permits online access to information in selected areas.
AUTOMATED MANIFEST SYSTEM (AMS): The electronic system allowing a manifest inventory to be transmitted to the U.S. Customs Service data centre by carrier, port authority, or service centre computers.
B/B (BREAKBULK): (See Breakbulk Cargo)
B/D: Barrels per day (measure of petroleum production)
B/L (BILL OF LADING): (See Bill of Lading)
B/S: Bags; bales.
B/S (BUNKER SURCHARGE): (See BAF)
BACKHAUL: (1) Part or all of the return portion of a route over which a trailer or container has travelled; (2) A deviation to move cargo on the return leg of a voyage for the purpose of minimizing ballast mileage and thereby reducing transportation costs.
BACKFREIGHT: The owners of a ship are entitled to payment as freight for merchandise returned through the fault of either the consignees or the consignors. Such payment, which is over and above the normal freight, is called back freight.
BACKLETTER: Where a seller/shipper issues a ‘letter of indemnity’ in favour of the carrier in exchange for a clean bill of lading. May have only a limited value. Example: P & I problems.
BAF (BUNKER ADJUSTMENT FACTOR): An adjustment in shipping charges to offset price fluctuations in the cost of bunker fuel. Also known as a Bunker Surcharge (B/S).
BAGGED CARGO: Various kinds of commodities usually packed in sacks or in bags, such as sugar, cement, milk powder, onion, grain, flour, etc.
BALLAST: Heavy substances loaded by a vessel to improve stability, trimming, sea keeping and to increase the immersion at the propeller. Seawater ballast is commonly’ loaded in most vessels in ballast tanks, positioned in compartments right at the bottom and in some cases on the sides, called wing tanks. On a tanker, the ballast is seawater that is taken into the cargo tanks to submerge the vessel to a proper trim.
BALLAST BONUS: Compensation for relatively long ballast voyage
BALLAST MOVEMENT: A voyage or voyage leg made without any paying cargo in a vessel’s tanks. To maintain proper stability, trim, or draft, seawater is usually carried during such movements.
BALLAST TANK: Compartments at the bottom of a ship or on the sides which are filled with liquids for stability and to make the ship seaworthy. Any shipboard tank or compartment on a tanker normally used for carrying salt-water ballast. When these compartments or tanks are not connected with the cargo system, they are called segregated ballast tanks or systems.
BAREBOAT CHARTER: (1) A charter in which the bare ship is chartered without crew; the charterer, for a stipulated sum taking over the vessel for a stated period of time, with a minimum of restrictions; the charterer appoints the master and the crew and pays all running expenses. See Demise Charter. (2) Vessel contracts where charterers take overall responsibility for the operation of the vessel and expenses for a certain period.
BARGE: Flat-bottomed boat designed to carry cargo on inland waterways, usually without engines or crew accommodations. Barges can be lashed together and either pushed or pulled by tugs, carrying cargo of 60,000 tons or more. Small barges for carrying cargo between ship and shore are known as lighters.
BARGE ABOARD CATAMARAN: A way of loading cargo into large barges and then, in turn, loading the barges into a ship.
BARGE CARRIERS: Ships designed to carry either barges or containers exclusively, or some variable number of barges and containers simultaneously. Currently, this class includes two types of vessels, the LASH, and the SEABEE.
BBB: Before breaking bulk. Refers to freight payments that must be received before discharge of a vessel commences.
BEAM: The width of a ship. Also called breadth.
BELLY CARGO: Freight accommodation below the main deck.
BENEFICIAL OWNER: The actual owner of the lading who is using a consolidator
BERTH: The place beside a pier, quay, or wharf where a vessel can be loaded or discharged.
BERTH C/P: A term used in a voyage charter party, e.g. vessel shall proceed to Berth 2 at Falmouth.
BERTH CARGO: When a liner cargo vessel accepts extra cargo to fill the empty space remaining.
BERTH LINER SERVICE: A regularly scheduled steamship line with regularly published schedules (ports of call) from and to defined trade areas.
BERTH OR LINER TERMS: An expression covering assessment of ocean freight rates generally implying that loading and discharging expenses will be for the ship owner’s account, and usually applying from the end of the ship’s tackle in the port of loading to the end of the ship’s tackle in the port of discharge.
BILL OF LADING: A document by which the Master of a ship acknowledges having received in good order and condition (or the reverse) certain specified goods consigned to him by some particular shipper, and binds himself to deliver them in similar condition, unless the perils of the sea, fire or enemies prevent him, to the consignees of the shippers at the point of destination on their paying him the stipulated freight. A bill of lading specifies the name of the master, the port and destination of the ship, the goods, the consignee, and the rate of freight.
BILL OF LADING: A document issued by a common carrier to a shipper that serves as:(1) A receipt for the goods delivered to the carrier for shipment. (2) A definition of the contract of carriage of the goods from the port of shipment to the port of destination listed in the bill of lading. (3) Evidence of title to the relative goods. When in order form, a bill of lading is negotiable. (See specific types of Bill of Ladings below)
BILL OF LADING, CLAUSED: A bill of lading which has exemptions to the receipt of merchandise in “apparent good order” noted.
BILL OF LADING, CLEAN: (1) A bill of lading which bears no superimposed clause or notation which expressly declares a defective condition of the goods and/or the packaging (Article 18, Uniform Customs and Practice for Documentary Credits). A bill of lading that contains a clause declaring defective goods is called a Foul Bill of Lading. (2) A bill of lading that is silent as to the place of storage, indicating that the goods have been stowed under deck. (See Bill of Lading, Unclean)
BILL OF LADING, FORWARDER’S: A bill of lading issued by a forwarder to a shipper as a receipt for merchandise that the forwarder will consolidate with cargo obtained from other exporters and ship to his agent at the port of destination. In most cases, the Forwarder’s Bill of Lading has legal standing for banking purposes. Also called House Bill of Lading.
BILL OF LADING, FOUL: A receipt for goods issued by a carrier bearing a notation that the outward containers or the goods have been damaged.
BILL OF LADING, INLAND: A bill of lading used in transporting goods overland to the exporter’s international carrier.
BILL OF LADING, OCEAN: A document defining the terms and conditions of carriage for transport of cargo by sea freight.
BILL OF LADING, ON BOARD: A bill of lading acknowledging that the relative goods have been received on board for shipment on a specified vessel.
BILL OF LADING, ORDER: A negotiable bill of lading. There are two types:(1) A bill drawn to the order of a foreign consignee, enabling him to endorse the bill to a third party. (2) A bill drawn to the order of the shipper and endorsed by him either “in blank” or to a named consignee. The purpose of the latter bill is to protect the shipper against the buyer’s obtaining the merchandise before he has paid or accepted the relative draft. (See also Endorsement in Blank)
BILL OF LADING, RECEIVED FOR SHIPMENT: A bill of lading acknowledging the receipt of goods by a carrier for shipment on a specified vessel. This type of bill of lading is not acceptable under a letter of credit unless it is specially authorized. English law does not regard these bills as a valid tender under CIF contracts because the CIF seller is obligated to ship the goods, and a Received for Shipment Bill of Lading is not considered proof of shipment.
BILL OF LADING, STRAIGHT: A non-negotiable bill of lading whereby the consignee named in the bill is the owner of the relative goods.
BILL OF LADING, THROUGH: A bill of lading that covers transportation by more than one carrier from the point of issue to the final destination (e.g., a bill from New York, via Kurabo, to Pampatar, Venezuela).
BILL OF LADING, THROUGH RAILWAY EXPORT: A bill of lading showing the place of receipt by the carrier at an inland point, with transport to the port of exit accomplished using rail/intermodal connections.
BILL OF LADING, UNCLEAN: A bill containing reservations as to the good order and condition of the goods or the packaging or both. Examples: bags torn, drums leaking, one case damaged, and rolls chafed.
BILL OF SIGHT: A written description of goods given by an importer to a customs officer in the event shipping documents have not arrived in time and the importer wishes to avoid delayed entry charges. When an importer enters goods on a bill of sight, he usually must make a cash deposit covering the estimated amount of duty. When the shipping documents are received and a correct entry is made, the exact amount of duty is levied.
BILLING CARRIER (BILL ROAD): The carrier performing the first line haul service of the movement. This carrier is responsible for preparing the waybill document.
BLACK CARGO: Cargo banned by general cargo workers for some reason. This ban could be because the cargo is dangerous or hazardous to health.
BOGIE: A frame with wheels on which a container rides, more commonly referred to as a chassis
BONDED WAREHOUSE: A warehouse authorized by customs authorities for storage of goods on which payment of duties is deferred until the goods are removed.
BOW THRUSTERS: A propeller at the lower sea-covered part of the bow of the ship which turns at right angles to the fore-and-aft line and thus provides transverse thrust as a maneuvering aid.
BREADTH: See Beam
BREAK BULK: The process of assimilating many small shipments into one large shipment at a central point so that economies of scale may be achieved; to commence discharge of cargo.
BREAK BULK CARGO: Cargo which is shipped as a unit (e.g., palletized cargo, boxed cargo, large machinery, trucks, and pre-slung cargo)
BREAKBULK VESSEL: (1) A vessel designed to handle palletized, pre-slung, boxed, and unitized cargo. Holds can be at the open bay or between deck type. Between deck means, the hold can be converted from multi levels to open bay. This type of vessel is usually self-sustaining. (2) A general, multipurpose, cargo ship that carriers cargoes of non-uniform sizes, often on pallets, resulting in labor-intensive loading and unloading; calls at various ports to pick up different kinds of cargoes.
BREAKPOINT: The weight at which freight charges change, e.g., 100 kilos.
BRIDGE: Used loosely to refer to the navigating section of the vessel where the wheel house and chart room are located; erected structure amidships or aft or very rarely fore over the main deck of a ship to accommodate the wheelhouse.
BROKER: A person or firm that establishes a connection between a buyer and a seller. Brokers operate in many fields: insurance, steamship transport, securities, drafts, and other phases of foreign trade. Not only do brokers bring buyers and sellers together, but they help to negotiate and close contracts and agreements between them.
BROKERAGE: Percentage of freight payable to broker (by owners in c/p’s) or applicable to sale or purchase.
BULK: Cargo shipped in loose condition and of a homogeneous nature. Cargoes that are shipped unpackaged either dry, such as grain and ore, or liquid, such as petroleum products. Bulk service generally is not provided on a regularly scheduled basis, but rather as needed, on specialized ships, transporting a specific commodity.
BULK CARGO: Loose cargo that is loaded directly into a ship’s hold.
BULK CARRIER: There are two types of bulk carriers, the dry-bulk carrier, and the liquid-bulk carrier, better known as a tanker. Bulk cargo is a shipment such as oil, grain, or one which is not packaged, bundled, bottled, or otherwise packed and is loaded without counting or marking.
BULK SOLIDS: Dry cargo shipped in containers, loose and in bulk, without counting or marking.
BUNKERS: Fuel consumed by the engines of a ship; compartments or tanks in a ship for fuel storage.
BUOY: A floating object employed as an aid to mariners to mark the navigable limits of channels, their fairways, sunken dangers, isolated rocks, telegraph cables, and the like; floating devices fixed in place at sea, lake or river as reference points for navigation or for other purposes.
C.I.F.: Cost, Insurance and Freight: Export term in which the price quoted by the exporter includes the costs of ocean transportation to the port of destination and insurance coverage.
CABOTAGE: The carriage of goods or passengers for remuneration taken on at one point and discharged at another point within the territory of the same country.
CABOTAGE: Where cargo is carried on what is essentially a domestic flight and therefore not subject to international agreements that fix set rates. Cabotage rates are negotiable between shipper and airline and apply on flights within a country and to its overseas territories.
CAF (CURRENCY ADJUSTMENT FACTOR): A surcharge on freight charges by a carrier to offset foreign currency fluctuations.
CARGO: Merchandise/commodities carried by means of transportation.
CARGO HANDLING: The act of loading and discharging a cargo ship.
CARGO INSURANCE: Insurance to protect the financial interest of the cargo owner during transportation in case of a loss.
CARGO PLAN: A plan giving the quantities and description of the various grades carried in the ship’s cargo tanks, after the loading is completed.
CARGO PREFERENCE: Reserving a portion of a nation’s imports and exports to national-flag vessels.
CARGO RECEIPT: Receipt of cargo for shipment by a consolidator (used in ocean freight).
CARGO RETENTION CLAUSES: Clauses introduced by charterers based on shortage of delivered cargo because of increased oil prices.
CARNET: A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries without paying duties or posting bonds.
CARRIAGE OF GOODS BY SEA ACT: A law enacted in 1936 covering the transportation of merchandise by sea to or from ports of the United States and in foreign trades.
CARRIER: Any person who, through a contract of carriage, undertakes to perform or procure the performance of carriage by rail, road, sea, air, inland waterway, or by a combination of modes. (See also Common Carrier)
CARRIER CONTAINER/SHIPPER CONTAINER: A container over which the carrier or the shipper has control either by ownership or by the acquisition thereof under lease or rental from container companies or container suppliers or from similar sources. Carriers are prohibited from purchasing, leasing, or renting a shipper-owned container.
CARRIERS: Owners or operators of vessels providing transportation to shippers. The term is also used to refer to the vessels.
CARTEL: An association of several independent national or international business organizations that regulates competition by controlling the prices, the production, or the marketing of a product or industry
CATWALK: A raised bridge running fore and aft from the midship, and called “walkway.” It affords safe passage over the pipelines and other deck obstructions.
CCF: Capital Construction Fund: A tax benefit for operators of U.S.-built, U.S.-flag ships in the U.S. foreign, Great Lakes, or noncontiguous domestic trades, by which taxes may be deferred on income deposited in a fund to be used for the replacement of vessels.
CDS: Construction Differential Subsidy: A direct subsidy paid to U.S. shipyards building U.S.-flag ships to offset high construction costs in American shipyards. An amount of subsidy (up to 50 percent) is determined by estimates of construction cost differentials between U.S. and foreign yards.
CERTIFICATE OF INSPECTION: A certificate usually required for industrial equipment and meat products. There are companies in every port city that specialize in issuing certificates of inspection for machinery. The Meat Inspection Division of the U.S. Department of Agriculture issues certificates of inspection for meat products that are recognized throughout the world.
CERTIFICATE OF MANUFACTURE: A document used under a letter of credit containing an affidavit that goods have been manufactured and are being held for the account and risk of the buyer. In war times when transportation facilities are disrupted, it is common for letters of credit to be paid against presentation of a certificate of manufacture. This is rare in ordinary times, except in the case of specially manufactured goods.
CERTIFICATE OF ORIGIN: A document containing an affidavit to prove the origin of imported goods. It is used for customs or foreign exchange purposes or both. Certificates of origin are commonly certified by an official organization in the country of origin such as a consular office or a chamber of commerce.
CERTIFICATE OF REGISTRY: A document specifying the nation registry of the vessel.
CFS (CONTAINER FREIGHT STATION): The term CFS at loading port means the location designated by carriers for the receiving of cargo to be packed into containers by the carrier. At discharge ports, the term CFS means the bonded location designated by carriers in the port area for unpacking and delivery of cargo.
CFS CHARGE (CONTAINER FREIGHT CHARGE): The charge assessed for services performed at the loading or discharging port in the packing or unpacking of cargo into/from containers at CFS.
CFS RECEIVING SERVICES: The service performed at the loading port in receiving and packing cargo into containers from CFS to CY or shipside. “CFS Receiving Services” referred herein are restricted to the following:(1) Moving empty containers from CY to CFS (2) Drayage of loaded containers from CFS to CY and/or ship’s tackle. (3) Tallying. (4) Issuing dock receipt/shipping order (5) Physical movement of cargo into, out of, and within CFS (6) Stuffing, sealing, and marking containers (7) Storage. (8) Ordinary sorting and stacking. (9) Preparing carrier’s internal container load plan.
CFS/CFS (PIER TO PIER): The term CFS/CFS means cargo delivered by breakbulk to carrier’s container freight station (CFS) to be packed by carrier into containers and to be unpacked by carrier from the container at carrier’s destination port CFS.
CFS/CY (PIER TO HOUSE): The term CFS/CY means cargo delivered breakbulk to carrier’s CFS to be packed by carrier into containers and accepted by consignee at carrier’s CY and unpacked by the consignee off carrier’s premises, all at consignee’s risk and expense.
CHARTER AGREEMENT/CHARTER PARTY: A lease or agreement to hire an airplane, vessel, or other means of conveyance to transport goods to one or more designated locations. Among other specifications, the contract usually stipulates the exact obligations of the vessel owner (loading the goods, carrying the goods to a certain point, returning to the charterer with other goods, etc.), or it provides for an outright leasing of the vessel to the charterer, who then is responsible for his own loading and delivery. In either case, the charter party sets forth the exact conditions and requirements agreed upon by both sides.
CHARTER PARTY: A contractual agreement between a ship owner and a cargo owner, usually arranged by a broker, whereby a ship is chartered (hired) either for one voyage or a period of time.
CHARTER PARTY BILL OF LADING: A bill of lading issued under a charter party. It is not acceptable by banks under letters of credit unless so authorized in the credit.
CHARTER RATES: The tariff applied for chartering tonnage in a particular trade.
CHARTERER: The person to whom is given the use of the whole of the carrying capacity of a ship for the transportation of cargo or passengers to a stated port for a specified time.
CHASSIS: (1) A wheel assemble including bogies constructed to accept mounting of containers. (2) A frame with wheels on which a container rides
CHEMICAL TANKER: Specially designed for the transport of chemicals.
CHIEF ENGINEER: Head of engineer department. Keeps records of all engine parts and repairs. Generally tends to the functioning of all mechanical equipment on ship. Calculates fuel and water consumption and requirements. Coordinates operations with shoreside port engineer.
CHIEF ENGINEER: The senior engineer officer responsible for the satisfactory working and upkeep of the main and auxiliary machinery and boiler plant on board ship.
CHIEF MATE: The officer in the deck department next in rank to the master; second in command of a ship. He is next to the master, most especially in the navigation and as far as the deck department is concerned. The chief mate assumes the position of the Master in his absence.
CHIEF STEWARD: Orders food. Prepares menus. Assists chief cook in food preparation.
CIA (CASH IN ADVANCE): A method of payment for goods whereby the buyer pays the seller before shipping the goods.
CLASS RATES: A class of goods or commodities is a large grouping of various items under one general heading, and all items in the group make up a class. The freight rates that apply to all items in the class are called class rates.
CLASSIFICATION: A customs term for the placement of an item under the correct number in the customs tariff for duty purposes. At times, this procedure becomes highly complicated; it is not uncommon for importers to resort to litigation over the correct duty to be assessed by customs on a given item.
CLASSIFICATION SOCIETY: Worldwide experienced and reputable societies which undertake to arrange inspections and advise on the hull and machinery of a ship. A private organization that supervises vessels during their construction and afterward, in respect to their seaworthiness, and the placing of vessels in grades or “classes” according to the society’s rules for each particular type. It is not compulsory by law that a shipowner have his vessel built according to the rules of any classification society; but in practice, the difficulty in securing satisfactory insurance rates for an unclassed vessel makes it a commercial obligation.
CLEAN DRAFT: A draft to which no documents have been attached.
CLEAN SHIP: Refers to tankers which have their cargo tanks free of traces of dark persistent oils which remain after carrying crudes and heavy fuel oils.
CNS (CARGO NETWORK SERVICES): An agency to which IATA forwarders pay their freight bills.
COA: Contract of affreightment
COASTWISE: Domestic shipping routes along a single coast.
CODE OF LINER CONDUCT (UNCTAD): A convention drafted under the auspices of the United Nations Conference on Trade and Development which provides that all shipping traffic between two foreign countries is to be regulated as far as the quantities of shipments are concerned on the following percentages – 40% for owners of the country of origin, 40% for owners of country of destination, and 20% for owners of the country which is neither the origin nor the destination
COFC: (container on flat car); a type of rail freight service involving the shipment of containers without chassis
COGSA: Carriage of Goods by Sea
COLLECTIVE PAPER: All documents (commercial invoices, bills of lading, etc.) submitted to a buyer for the purpose of receiving payment for a shipment.
COLLIER: Vessel used for transporting coal.
COLLISION AVOIDANCE SYSTEM: Electronic system commonly used to prevent collisions in inland navigable waterways.
COLREG: Convention on International Regulations for Preventing Collisions at Sea
COMBI: Combination passenger/cargo vessel; a vessel specifically designed to carry both containers and conventional cargoes.
COMBINATION VESSELS: A type of ship that accommodates both container and breakbulk cargo. It can be either self-sustaining or non-self sustaining. Also known as a Container/Breakbulk Vessel.
COMBINED SHIPS: Ships that can carry both liquid and dry bulk cargoes.
COMMERCIAL INVOICE: An itemized list of goods shipped that is usually included among an exporter’s collection papers.
COMMISSION: See “Brokerage.”
COMMODITY SPECIALIST: An official authorized by the U.S. Treasury to determine the proper tariff and value of imported goods.
COMMON CARRIER: (1) A publicly or privately owned firm or corporation that transports the goods of others over land, sea, or through the air, for a stated freight rate. By government regulation, a common carrier is required to carry all goods offered if accommodations are available and the established rate is paid. (2) A transportation company engaged in the business of handling persons or goods for compensation and for all persons impartially
COMMON CARRIER: Holds himself out for hire to the public. Must post rates and cannot discriminate against customers whose cargo he is equipped to carry.
COMMON EXTERNAL TARIFF (CET OR CXT): A uniform tariff adopted by a customs union or common market on imports from countries outside the union. It is often a required part of the entry process.
COMPLEMENT: The number of officers and crew employed upon a vessel for its safe navigation and operation.
CONFERENCE: A group of vessel operators joined together for establishing freight rates.
CONFERENCE: An affiliation of shipowners operating over the same route(s) who agree to charge uniform rates and other terms of carriage. A conference is “closed” if one can enter only by the consent of existing members of the conference. It is “open” if anyone can enter by meeting certain technical and financial standards. Conference members are common carriers.
CONFIRMED LETTER OF CREDIT: (See Letter of Credit, Confirmed)
CONFISCATION: The taking and holding of private property by a government or an agency acting for a government. Compensation may or may not be given to the owner of the property.
CONGESTIONS: Port/berth delays
CONNECTING CARRIER: A carrier that has a direct physical connection with another or forming a connecting link between two or more carriers
CONSIGNEE: (1) The receiver of freight shipped by the shipper (consignor) (2) -The individual or company to whom a seller or shipper sends merchandise and who, upon presentation of necessary documents, is recognized as the merchandise owner for the purpose of declaring and paying customs duties.
CONSIGNEE: The person to whom cargo is consigned as stated on the bills of lading.
CONSIGNEE MARK: A symbol placed on packages for identification purposes generally consisting of a triangle, square, circle, diamond, or cross, with letters or numbers as well as the port of discharge.
CONSIGNMENT: The physical transfer of goods from a seller (consignor) with whom the title remains until the goods are sold, to another legal entity (consignee) that acts as a selling agent. Only if there is a subsequent sale does the seller receive any payment.
CONSIGNOR: (1) The person by whom freight is shipped; shipper (2) A term used to describe any person who consigns goods to himself or to another party in a bill of lading or equivalent document. A consignor might be the owner of the goods, or a freight forwarder who consigns goods on behalf of his principal.
CONSIGNOR: The person named in the bill of lading as the one from whom the goods have been received for shipment.
CONSOLIDATED SHIPMENT: An arrangement whereby various shippers pool their boxed goods on the same shipment, sharing the total weight charge for the shipment.
CONSOLIDATOR: An agent who brings together a number of shipments for one destination to qualify for preferential rates
CONSORTIUM: The name for an agreement under which several nations or nationals (usually corporations) of more than one nation join together for a common purpose (e.g., a shipping consortium).
CONSTRUCTION UNIT: Equipped to assist during offshore construction and maintenance work.
CONSUL: A government official residing in a foreign country charged with representing the interests of his or her country and its nationals.
CONSULAR DOCUMENTS: Special forms signed by the consul of a country to which cargo is destined.
CONSULAR INVOICE: A document required by some countries describing a shipment of goods and showing information such as the consignor, consignee, and value of the shipment. Certified by a consular official, the country’s customs officials to verify the value, quantity, and nature of the shipment use a consular invoice.
CONTAINER: (1) An open or enclosed structural unit designed for intermodal transport of commodities; many have standard corner fittings to secure them to highway chassis, rail cars, or ocean vessels, facilitating interchange among carriers in international trade; (2) A single, rigid, sealed, reusable metal “box” in which merchandise is shipped by vessel, truck, or rail. Container types include standard, high cube, hardtop, open top, flat, platform, ventilated, insulated, refrigerated, or bulk. Containers (except for flat-rack vehicle rack and portable liquid tank types) have a closure or permanently hinged door that allows ready access to cargo. All containers have constructions, fittings, and fastenings able to withstand, without permanent distortion, all stresses that may be applied in normal service use of continuous transportation. Containers must bear the manufacturer’s specifications.
CONTAINER (OCEAN): (1) Designed to be moved inland on its own chassis, an ocean container can be loaded at the shipper’s plant for shipment overseas. The average outside dimensions are generally 20, 35, and 40 feet in length, 8 feet wide, and 8 feet high. (2) A van, flatrack, open top trailer or other similar trailer body on or into which cargo is loaded and transported without chassis aboard ocean vessels; a large rectangular or square container/box of a strong structure that can withstand continuous rough handling from ship to shore and back. It opens from one side to allow cargo to be stacked and stowed into it.
CONTAINER SHIP: A ship constructed in such a way that she can easily stack containers near and on top of each other as well as on deck. A vessel designed to carry standard intermodal containers enabling efficient loading, unloading, and transport to and from the vessel. Oceangoing merchant ship designed to transport a unit load of standard-sized containers 8 feet square and 20 or 40 feet long. The hull is divided into cells that are easily accessible through large hatches, and more containers can be loaded on deck atop the closed hatches. Loading and unloading can proceed simultaneously using giant traveling cranes at special berths. Container ships usually carry in the range of 25,000 to 50,000 deadweight tons. Whereas a general-cargo ship may spend as much as 70 percent of its life in port loading and discharging cargo, a container ship can be turned around in 36 hours or less, spending as little as 20 percent of its time in port. This ship type is the result of American design innovation. Specialized types of container ships are the LASH and SeaBee which carry floating containers (or “lighters,”) and RoRo ships, which may carry containers on truck trailers.
CONTAINERIZATION: A concept for the ultimate unitizing of cargo used by both steamship lines and air cargo lines. Containers allow a greater amount of cargo protection from weather, damage, and theft.
CONTINUOUS BOND: An annual customs bond insuring compliance with all regulations and requirements.
CONTRACT OF AFFREIGHTMENT (COA): A service contract under which a ship owner agrees to transport a specified quantity of fuel products or specialty products, at a specified rate per ton, between designated loading and discharge ports. This type contract differs from a spot or consecutive voyage charter in that no particular vessel is specified.
CONTRACT RATE: This can refer to “service contract” rates which are low, favorable rates fixed over an extended period of time in exchange for which the carrier receives a volume commitment from the shipper.
COOK AND BAKER (CHIEF COOK): Cooks and bakes.
COUNTERTRADE: A reciprocal trading arrangement in which the seller is required to accept goods or other instruments or trade in partial or whole payment for its products. Common transactions include barter, buyback, counterpurchase, offset requirements, swap, switch; or triangular trade, evidence, or clearing accounts.
COUNTERVAILING DUTIES: Special duties imposed on imports to offset the benefits of subsidies to producers or exporters of the exporting country.
CROSS-TRADES: Foreign-to-foreign trade carried by ships from a nation other than the two trading nations.
CUSTOMS BROKER: An individual or service company that transacts customhouse formalities on behalf of an importer. In the U.S.A., a customs broker must be licensed by the Treasury Department and pass a government examination covering a broad range of knowledge, including all phases of import regulations, rates of duties, and customs law. Licensing and requirements vary from country to country, so check with your local United Shipping Partner for details.
CUSTOMS COURT: The court to which importers must appeal or protest decisions made by customs officers.
CUSTOMS UNION: An agreement between two or more countries in which they arrange to abolish tariffs and other import restrictions on each other’s goods and establish a common tariff for the imports of all other countries.
CUT-OFF TIME: The time a vehicle must be tendered at the terminal to meet a scheduled train departure
CWO (CASH WITH ORDER): A method of payment for goods where cash is paid at the time of order and the transaction becomes binding on both buyer and seller.
D.W. (DEADWEIGHT): The maximum carrying capacity of a ship expressed in tons of cargo, stores, provisions, and bunker fuel.
D.W.C. (DEADWEIGHT CARGO): Cargo of such weight and volume that a long ton (2,240 lbs) is stowed in an area of less than 70 cubic feet.
DANGEROUS CARGO: All substances of an inflammable nature which are liable to spontaneous combustion either in themselves or when stowed adjacent to other substances and, when mixed with air, are liable to generate explosive gases or produce suffocation or poisoning or tainting of foodstuffs.
DANGEROUS GOODS: Articles or substances capable of posing a significant risk to health, safety or property and that ordinarily require special attention when being transported.
DAVITS: Two radial cranes on a ship which hold the lifeboats. They are constructed in such a way as to lower and lift the lifeboats the easiest way possible and are unobstructed in case of an emergency.
DCA (DEPARTMENT OF CIVIL AVIATION): Denotes the government department of any foreign country that is responsible for aviation regulation and granting traffic rights.
DDU (DELIVERED DUTY UNPAID): This reflects the emergence of “door-to-door” intermodal or courier contracts or carriage where only the destination customs duty and taxes (if any) are paid by consignee.
DEAD FREIGHT: Freight charges paid by the charterer of a vessel for the contracted space that is left partially unoccupied.
DEADFREIGHT: Space booked by shipper or charterer on a vessel but not used
DEADFREIGHT FACTOR: Percentage of a ship’s carrying capacity that is not utilized.
DEADWEIGHT/DWAT/DWCC: A common measure of ship carrying capacity. The number of tons (2240 lbs.) of cargo, stores and bunkers that a vessel can transport. It is the difference between the number of tons of water a vessel displaces “light” and the number of tons it displaces “when submerged to the ‘deep load line'”. A vessel’s cargo capacity is less than its total deadweight tonnage. The difference in weight between a vessel when it is fully loaded and when it is empty (in general transportation terms, the net) measured by the water it displaces. This is the most common, and useful, measurement for shipping as it measures cargo capacity.
DECK CARGO: Cargo carried on deck rather than stowed under deck. On-deck carriage is required for certain commodities, such as explosives.
DECK GANG: The officers and seamen comprising the deck department aboard ship. Also called deck crew, deck department, or just deck.
DECK HOUSE: Small superstructure on the top deck of a vessel that contains the helm and other navigational instruments.
DECK LOG: Also called Captain’s Log. A full nautical record of a ship’s voyage, written up at the end of each watch by the deck officer on watch. The principal entries are: courses steered; distance run; compass variations, sea and weather conditions; ship’s position, principal headlands passed; names of lookouts, and any unusual position, principal headlands passed; names of lookouts, and any unusual happenings such as fire, collision, and the like.
DECK OFFICER: As distinguished from engineer officer, refers to all officers who assist the master in navigating the vessel when at sea, and supervise the handling of cargo when in port.
DECKHAND: Seaman who works on the deck of a ship and remains in the wheelhouse attending to the orders of the duty officers during navigation and maneuvering. He also comes under the direct orders of the bosun.
DEDICATED TRAIN: One that exclusively carries intermodal equipment (containers and trailers)
DEEP SEA TRADES: The traffic routes of both cargo and passenger vessels which are regularly engaged on the high seas or on long voyages.
DEEP STOWAGE: Any bulk, bagged or other type of cargo stowed in single hold ships.
DEFERRED REBATE: The return of a portion of the freight charges by a carrier or a conference shipper in exchange for the shipper giving all or most of his shipments to the carrier or conference over a specified period of time (usually six months). Payment of the rate is deferred for a further similar period, during which the shipper must continue to give all or most of his shipments to the rebating carrier or conference. The shipper thus earns a further rebate that will not, however, be paid without an additional period of exclusive or almost exclusive patronage with the carrier of conference. In this way, the shipper becomes tied to the rebating carrier or conference. Although the deferred rebate system is illegal in U.S. foreign commerce, it generally is accepted in the ocean trade between other countries.
DEMISE CHARTER: See Bareboat Charter.
DEMURRAGE: (1) A charge made on cars or other equipment held by or for consignor or consignee for loading or unloading, for forwarding directions or for any other purpose (2) A penalty for exceeding free time allowed for loading or unloading at a pier or freight terminal. Also a charge for undue detention of transportation equipment or carriers in port while loading or unloading.
DEMURRAGE: A fee levied by the shipping company upon the port or supplier for not loading or unloading the vessel by a specified date agreed upon by contract. Usually, assessed on a daily basis after the deadline.
DENSITY: Density means pounds per cubic foot. The cubage of loose articles or pieces, or packaged articles of a rectangular, elliptical, or square shape on one plane, shall be determined by multiplying the greatest straight line dimensions of length, width, and depth in inches, including all projections, and dividing the total by 1728 (to obtain cubic feet). The density is the weight of the article divided by the cubic feet thus obtained.
DESPATCH: Time saved, reward for quick turnaround – in dry cargo only.
DETENTION: Penalty assessed to the consignor or consignee for using railroad-owned equipment more than allotted free time
DEVIATION: Vessel departure from specified voyage course
DIM WEIGHT (DIMENSIONALIZED WEIGHT): An international airfreight formula determined by calculating length x width x height and dividing by 166. It is charged when the actual weight is less than the dimensionalized weight.
DISABLED SHIP: When a ship is unable to sail efficiently or in a seaworthy state as a result of engine trouble, lack of officers or crew, damage to the hull or ship’s gear.
DISCHARGES: An essential document for officers and seamen as it serves an official certificate confirming sea experience in the employment for which he was engaged.
DIVERSION: A change made in the route of a shipment in transit
DOCK RECEIPT: When cargo is delivered to a steamship company at the pier, the receiving clerk issues a dock receipt.
DOMESTIC CONTAINERIZATION: Movement of domestic freight in ocean containers, (to assist in repositioning of those containers) or in dedicated domestic containers
DOMESTIC OFFSHORE TRADES: Domestic shipping routes serving Alaska and non-continental U.S. States and territories.
DOT (U.S. DEPARTMENT OF TRANSPORTATION): U.S. Department of Transportation, whose purpose is to provide a dynamic federal system of transportation to meet the country’s needs
DOUBLE-STACK: The movement of containers on specialized articulated rail cars that enable the vertical stacking of the containers on each platform of the car
DRAFT: (1) An unconditional order in writing from one person (the Drawer) to another (the Drawee), directing the drawee to pay a specified amount to a named drawer on a fixed date. Also known as a Bill of Exchange. (2)The depth of a ship in the water. The vertical distance between the waterline and the keel, in the U.S. expressed in feet, elsewhere in meters.
DRAWBACK: A remission of duty or charges paid, in whole or in part, when imported goods are re-exported or used in the manufacture of exported goods.
DRAWEE: The individual or firm on whom a draft is drawn and who owes the stated amount to the drawer.
Synonym: Connecting Road Haulage(1) The hauling of a load by a cart with detachable sides. (dray) (2) Road transportation between the nearest railway terminal and the stuffing place (3) (pick-up and/or delivery) the truck portion of an intermodal move
DRILL SHIP: Regular ship shaped vessel, production ship. Positioned by anchors or dynamic positioning. Has its own propulsion machinery.
DRILLING UNIT: Fitted with drilling rig (oil derrick with rotary drill and a mud pumping system), drilling for petroleum.
DRY CARGO: Merchandise other than liquid carried in bulk.
DRY CARGO SHIP: Vessel which carriers all merchandise, excluding liquid in bulk.
DRY DOCK: An enclosed basin into which a ship is taken for underwater cleaning and repairing. It is fitted with water tight entrance gates which when closed permit the dock to be pumped dry.
DST (DOUBLE STACK TRAIN): The transport by rail between two points of a trainload of containers with two containers per chassis, one on top of the other.
DUAL PURPOSE SHIP: Specially constructed ship able to carry different types of cargoes such as ore and/or oil.
DUNNAGE: The material used to protect or support freight in or on railcars or trailers
DUNNAGE: A term applied to loose wood or other material used in a ship’s hold for the protection of cargo.
EDI OR EDIFACT (ELECTRONIC DATA INTERCHANGE FOR ADMINISTRATION, COMMERCE AND TRANSPORT): (1) From the United Nations-backed electronic data interchange standards body, this is used to create electronic versions of common business documents that will work on a global scale. (2) Electronic Data Interchange; easy communication of commercial data via computer connections via mainframe links, PC to mainframe links or using the Internet
EMBARGO: To resist or prohibit the acceptance and handling of freight
ENDORSEMENT IN BLANK: (1) Commonly used on a bank check, an endorsement in blank is an endorsement to the bearer. It contains only the name of the endorser and specifies no particular payee. (2) Also, a common means of endorsing bills of lading dawn to the order of the shipper. The bills are endorsed “For…” (See Bill of Lading, Order)
ENGINE DEPARTMENT (Q.M.E.D.): Trained in all crafts necessary to engine maintenance (welding, refrigeration, lathe operation, die casting, electricity, pumping, water purification, oiling, evaluating engine gauges, etc.) Usually watchstanders but on some ships day workers.
ENTRY: A customs form used for the clearance of ships or merchandise.
EVEN KEEL: When the draft of a ship fore and aft are the same.
EXIMBANK (Export-Import Bank): A Federal agency that aids in financing exports of U.S. goods and services through direct loans, loan guarantees, and insurance.
EXPORT BROKER: The individual who brings together buyer and seller for a fee, eventually withdrawing from any transaction.
EXPORT DECLARATION: A form completed by the exporter or its authorized agent and filed in triplicate by a carrier with the U.S. Collector of Customs at the point of exit. It serves a twofold purpose:(1) Primarily, it is used by the U.S. Bureau of Census for the compilation of export statistics on U.S. foreign trade. (For this reason, an export declaration is required for practically all shipments from the U.S.A. to foreign countries and the U.S. possessions, except for mail shipments of small value or for those of a non-commercial character.) (2) The declaration also serves as an export control document because it must be presented, together with the export license, to the U.S. Customs at the port of export. If the goods may be exported under general export license, this fact must be stated on the export declaration.
EXPORT LICENSE: A document secured from a government authorizing an exporter to export a specific quantity of a particular commodity to a certain country. An export license is often required if a government has placed embargoes or other restrictions upon exports. (See General Export License.)
EXPORT TRADING COMPANY: A corporation or other business unit organized and operated primarily for the purpose of exporting goods and services, or of providing export-related services to other companies.
EXPRESS: Premium-rated service for urgent deliveries.
FAK (FREIGHT ALL KINDS): A carrier’s tariff description for products pooled and all shipped at one rate. FAK cargo is usually shipped in a container filled with different merchandise or commodities.
FATHOM: A nautical measurement with the following conversion equivalents: 6 feet; 1.83 meters.
FCL: Full Container Load, Full Car Load.
FEDERAL MARITIME COMMISSION (FMC): The U.S. Federal agency responsible for overseeing rates and practices of ocean carriers that handle cargo at U.S. ports.
FEEDER: A grain container or reservoir constructed around the hatchway between two decks of a ship which when filled with grain automatically feeds or fills in the vacant areas in the lower holds.
FEEDER VESSEL: A vessel that connects with a line vessel to service a port not directly served by that line vessel.
FEU: Forty Foot Equivalent Units (Containers).
FIO: Free in and out.
FIOST: Free in and out, stowed and trimmed
FLAG CARRIER: An airline or vessel of one national registry whose government gives it partial or total monopoly over international routes. Flat Bed Chassis – A semi-trailer with a level bed and no sides or tops. The floor is a standard height from the ground.
FLAGS OF CONVENIENCE: The registration of ships in a country whose tax on the profits of trading ships is low or whose requirements concerning manning or maintenance are not stringent. Sometimes referred to as flags of necessity; denotes registration of vessels in foreign nations that offer favorable tax structures and regulations; also the flag representing the nation under whose jurisdiction a ship is registered. Ships are always registered under the laws of one nation but are not always required to establish their home location in that country.
FLAT CAR: A freight car having a floor without any housing or body above. Frequently used to carry car trailers (TOFC) or oversized/odd-shaped commodities
FLAT RACK: A container without sides or frame members at the front and back. It can be loaded from the sides and top.
FLOATING OIL STORAGE: Oil stored on floating vessels. It has been the practice for oil to be stored in large laid-up oil tankers in order to offset the loss involved while the tankers are inactive.
FMC: Federal Maritime Commission.
FOB (Free on Board): Export term in which the price quoted by the exporter does not include the costs of ocean transportation, but does include loading on board the vessel.
FORCE MAJEURE: Clause limiting responsibilities of charterers, shippers and receiver of cargo. 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.
FORECASTLE: The raised part of the forward end of a ship’s hull. The inside space may be used for crew accommodation or quarters, though on new ships this space is being used for the storage of paints, tackle, deck and engine stores, tarpaulins, etc.
FOREIGN EQUIPMENT: Equipment owned and controlled by a railroad other than CSXT
FOREIGN TRADE ZONE (FTZ): A port designated by the government for duty-free entry of any non-prohibited goods. Merchandise may be stored, displayed, and used for manufacturing within the zone and re-exported without duties being paid. Duties are imposed only when the original goods or items manufactured from those goods pass from the zone into an area of the country subject to customs authority. Also called a Free Trade Zone.
FOREIGN TRADE ZONE ENTRY: A form declaring goods which are brought duty free into a Foreign Trade Zone for further processing or storage and subsequent exportation from the zone into the commerce of another country.
FORWARD: At or in the direction of the bow. Also the fore part of the ship.
FORWARDED SHIPMENT: Move that originates on CSXT and is then delivered to another carrier
FORWARDER, FREIGHT FORWARDER, FOREIGN FREIGHT FORWARDER: An independent business that dispatches shipments for exporters for a fee. The firm may ship by land, air, or sea, or it may specialize. Usually it handles all the services connected with an export shipment, including preparation of documents, booking cargo space, warehousing, pier delivery, and export clearance. The firm may also handle banking and insurance services on behalf of a client. The U.S. forwarder is licensed by the Federal Maritime Commission for ocean shipments.
FRA: Federal Railroad Administration – The FRA deals specifically with transportation policy as it affects the nation’s railroads and is responsible for enforcement of rail safety laws
FREE IN (FI): Means the cost of loading a vessel is borne by the charterer.
FREE IN AND OUT (FIO): Means the cost of loading and unloading a vessel is borne by the charterer.
FREE OF CAPTURE AND SEIZURE (FC&S): An insurance clause providing that loss is not insured if due to capture, seizure, confiscation, and like actions, whether legal or not, or from such acts as piracy, civil war, rebellion, and civil strife.
FREE OF PARTICULAR AVERAGE (FPA): A marine insurance clause relating to the recoverability of partial and total losses from perils of the sea. The American and English coverages vary as follows:(1) American Conditions (FPAAC). The underwriter does not assume responsibility for partial losses unless caused by sinking, stranding, burning, or colliding with another vessel. (2) English Conditions (FPAEC). The underwriter assumes responsibility for partial losses if the vessel is sunk, stranded, burned, on fire, or in collision, even though such an event did not actually cause the damage suffered by the goods.
FREE OUT (FO): The cost of unloading a vessel is borne by the charterer.
FREE PORT: A port which is a Foreign Trade Zone open to all traders on equal terms, or more specifically a port where merchandise may he stored duty-free pending reexport or sale within that country.
FREE PRATIQUE: Clearance by the Health Authorities
FREE TIME: The time between notification and when trailer use or premise use charges begin
FREIGHT: Money payable on delivery of cargo in a mercantile condition.
FREIGHT FORWARDER: Arranges shipments for customers usually break bulk. Does not actually carry the cargo or conduct business for the ship.
FREIGHT RATE: The charge made for the transportation of freight.
FRUSTRATION: Charterers when canceling agreement sometimes quote ‘doctrine of frustration’ i.e. vessel is lost, extensive delays.
GANG: A group of longshoremen, usually four to five members, with a supervisor assigned to a hold or portion of the vessel being loaded or unloaded.
GANGWAY: A narrow portable platform used as a passage, by persons entering or leaving a vessel moored alongside a pier or quay.
GAS TANKER: Specially designed for the transport of condensed (liquefied) gases. The most important gases are: ammonia, ethylene, LNG (Liquefied Natural Gas), which consists mainly of methane, and is cooled to a temperature of minus 163 degrees Celcius, and LPG (Liquefied Petroleum Gas) such as butane and propane.
GATEWAY: (1) A port of entry into a country or region. (2) A point through which freight commonly moves from one territory or carrier to another
GATT (GENERAL AGREEMENT ON TARIFFS AND TRADE): A multilateral treaty intended to help reduce trade barriers and promote tariff concessions.
GDP (Gross Domestic Product): The total value of goods and services produced by a nation over a given period, usually 1 year.
GENERAL CARGO: A non-bulk oil cargo composed of miscellaneous goods.
GENERAL EXPORT LICENSE: Any of various export licenses covering export commodities for which validated export licenses are not required.
GENERAL ORDER WAREHOUSE: A government contract warehouse for the storage of cargoes left unclaimed for a designated number of days after availability. Unclaimed cargoes may later be auctioned publicly.
GEOGRAPHICAL ROTATION: Ports in order of calling
GNP (Gross National Product): GDP plus the net income accruing from foreign sources.
GOVERNMENT IMPELLED: Cargo owned by or subsidized by the Federal Government.
GR WT./GW: Gross Weight.
GRAIN CAPACITY: Cubic capacity in “grain”.
GREAT LAKES SHIP: Cargo ship developed to carry raw materials and manufactured goods on the Great Lakes. Most carry bulk cargoes of grain, iron ore, or coal.
GROSS AND NET TONNAGE (GT AND NT): Gross tonnage is the basis on which manning rules and safety regulations are applied, and registration fees are reckoned. Port fees are also often reckoned on the basis of GT and NT. GT and NT are defined according to formulas which take account, among other things, of the volume of the vessel’s enclosed spaces (GT) and the volume of its holds (NT).
GROSS FREIGHT: Freight money collected or to be collected without calculating the expenses relating to the running cost of the ship for the voyage undertaken.
GROSS REGISTERED TONS: A common measurement of the internal volume of a ship with certain spaces excluded. One ton equals 100 cubic feet; the total of all the enclosed spaces within a ship expressed in tons each of which is equivalent to 100 cubic feet.
GROSS WEIGHT: The full weight of a shipment, including containers and packaging materials.
GROUNDING: Deliberate contact by a ship with the bottom while she is moored or anchored as a result of the water level dropping.
HAGUE RULES: Code of minimum conditions for the carriage of cargo under a bill of lading
HARBOR DUES: Various local charges against all seagoing vessels entering a harbor, to cover maintenance of channel depths, buoys, lights, etc. all harbors do not necessarily have this charge.
HARBOR MASTER: A person usually having the experience of a certificated master mariner and having a good knowledge of the characteristics of the port and its whole area. He administers the entire shipping movements that take place in and within reach of the port he is responsible for.
HARD AGROUND: A vessel which has gone aground and is incapable of refloating under her own power.
HARD CURRENCY: A currency which is sound enough to be accepted internationally and which is usually fully convertible.
HARMONIZED CODE: An internationally accepted and uniform description system for classifying goods for customs, statistical, and other purposes.
HARMONIZED SYSTEM (HS): A key provision of the international trade bill, effective January 1, 1989, that established international uniformity for classifying goods moving in international trade under a single commodity code.
HARTER ACT: (1893) This U.S. statute refers to merchandise or property transported from or between ports of the United States and foreign ports. Now partially superseded by the US Carriage of Goods by Sea Act of 1936.
HATCH: The cover of, or opening in, the deck of a vessel through which cargo is loaded.
HAZARDOUS MATERIAL (HAZ MAT): Substance or combination of substances which, because of its quantity, concentration, or physical or chemical characteristics, may cause or significantly pose a substantial hazard to human health or the environment when improperly packaged, stored, transported, or otherwise managed
HAZARDOUS WASTE: Any material, whether solid, liquid or containing gaseous material, identified in the Resource & Conservation Recovery Act (RCRA) either by name (listed) or by characteristics
HEAVY LIFT VESSEL: A vessel specifically designed to be self-sustaining with heavy lift cranes to handle unusually heavy or outsized cargoes.
HEAVY LIFTS: Freight too heavy to be handled by regular ship’s tackle.
HELM: A tiller or a wheel generally installed on the bridge or wheelhouse of a ship to turn the rudder during maneuvering and navigation. It is in fact the steering wheel of the ship.
HI (OR HIGH) CUBE: Any container exceeding 102 inches in height.
HOLD: A general name for the spaces below the main deck designated for stowage of general cargo. A hold on a tanker is usually just forward of #1 cargo tank. Some newer tankers have no hold.
HUB: A central location to which traffic from many cities is directed and from which traffic is fed to other areas.
HULL: Shell or body of a ship.
HUNDREDWEIGHT (CWT.): Short ton hundredweight = 100 pounds. Long ton hundredweight = 112 pounds.
HUSBANDING: A term used by steamship lines, agents, or port captains who are appointed to handle all matters in assisting the master of the vessel while in port to obtain such services as bunkering, fresh water, food and supplies, payroll for the crew, doctors appointments, and ship repair.
ICC (2) (INTERNATIONAL CHAMBER OF COMMERCE): A non-governmental organization serving as a policy advocate on world business.
ICTF (INTERMODAL CONTAINER TRANSFER FACILITY): An on-dock facility for moving containers from ship to rail or truck.
IMO: International Maritime Organization: Formerly known as the Inter-Governmental Maritime Consultative Organization (IMCO), was established in 1958 through the United Nations to coordinate international maritime safety and related practices.
IMPORT LICENSE: A certificate issued by countries exercising import controls that permits importation of the articles stated in the license. The issuance of such a permit frequently is collected with the release of foreign exchange needed to pay for the shipment for which the import license has been requested.
IN-BOND: A customs program for inland ports that provides for cargo arriving at a seaport to be shipped under a customs bond to a more conveniently located inland port where the entry documents have been filed. Customs clears the shipment there and the cargo is trucked to its destination, which normally is close to the inland port.
INDEPENDENT ACTION: A move whereby a member of a shipping conference elects to depart from the specific freight rates, terms, or conditions set forth by the conference. No prior approval of the conference is needed.
INDUCEMENT: When steamship lines publish in their schedules the name of a port and the words “by inducement” in parentheses, this means the vessel will call at the port if there is a sufficient amount of profitable cargo available and booked.
INERT GAS SYSTEM: A system of preventing any explosion in the cargo tanks of a tanker by replacing the cargo, as it is pumped out, by an inert gas, often the exhaust of the ship’s engine. Gas-freeing must be carried out subsequently if worker have to enter the empty tanks.
INFLAMMABLE LIQUIDS: Liquids liable to spontaneous combustion which give off inflammable vapors at or below 80 degrees F. For example, ether, ethyl, benzine, gasoline, paints, enamels, carbon disulfide, etc.
INLAND CARRIER: A transportation company which hauls export or import traffic between ports and inland points
INLAND WATERS: Term referring to lakes, streams, rivers, canals, waterways, inlets, bays, and the like.
INMARSAT: International Maritime Satellite System.
INSPECTION CERTIFICATE: A document certifying that merchandise (such as perishable goods) was in good condition immediately prior to shipment.
INTEGRATED TUG BARGE: A large barge of about 600 feet and 22,000 tons cargo capacity, integrated from the rear on to the bow of a tug purposely constructed to push the barge.
INTELLECTUAL PROPERTY: Ownership of the legal rights to possess, use, or dispose of products created by human ingenuity, including patents, trademarks and copyrights.
INTERCHANGE AGREEMENT: Agreement with a drayage company for use of railroad-controlled equipment
INTERCOASTAL: Domestic shipping routes serving more than one coast.
INTERLINE: A mutual agreement between airlines to link their route network.
INTERLINE HAUL: Move involving more than one rail carrier
INTERLINE PRICE: The price published for an origin/destination pair that uses more than one carrier and results in one bill for the whole move; see “through price.”
INTERMODAL: (1) This refers to the capacity to go from ship to train to truck or the like. The adjective generally refers to containerized shipping or the capacity to handle the same. (2) Transport by more than one transportation mode, usually truck and rail
INTERMODALISM: The concept of transportation as a door-to-door service rather than port-to-port. Thus efficiency is enhanced by having a single carrier coordinating the movement and documentation among different modes of transportation.
INTERNATIONAL LOAD LINE CERTIFICATE: A certificate which gives details of a ship’s freeboards and states that the ship has been surveyed and the appropriate load lines marked on her sides. This certificate is issued by a classification society or the Coast Guard.
INTERNATIONAL OIL POLLUTION COMPENSATION FUND: An inter-governmental agency designed to pay compensation for oil pollution damage, exceeding the shipowner’s liability. It was created by an IMO Convention in 1971 and started its operations in October 1978. Contributions come mainly from the oil companies of member states.
INTERNATIONAL TONNAGE CERTIFICATE: A certificate issued to a shipowner by a government department in the case of a ship whose gross and net tonnages have been determined in accordance with the International Convention of Tonnage Measurement of Ships. The certificate states the gross and net tonnages together with details of the spaces attributed to each.
INTERNATIONAL WATERWAYS: Consist of international straits, inland and interocean canals and rivers where they separate the territories of two or more nations. Provided no treaty is enforced both merchant ships and warships have the right of free and unrestricted navigation through these waterways.
INTRACOASTAL: Domestic shipping routes along a single coast.
ISO 9000: A series of voluntary international quality standards.
ITF: International Transport Workers Federation (Trade Unions)
J&WO: Jettison and Washing Overboard.
JACKUP: A deck with legs that can be jacked up or down. During operations, the legs rest on the sea-bed. When the rig is moved, the legs are retracted, leaving the rig floating. A backup has normally no propulsion machinery of its own.
JETSAM: Goods from a ship’s cargo or parts of its equipment that have been thrown overboard to lighten the load in time of danger or to set a stranded ship adrift.
JOINT VENTURE: A term of business partnership involving joint management and the sharing of risks and profits between enterprises sometimes based in different countries.
JONES ACT: Merchant Marine Act of 1920, Section 27, requiring that all U.S. domestic waterborne trade be carried by U.S.-flag, U.S.-built, and U.S.-manned vessels.
An act of the U.S. Congress prohibiting foreign flag carriers from participating in the U.S. intercoastal trade by water. It currently is applicable in such trade lanes as the U.S. continental states to and from Hawaii and Alaska.
JUST IN TIME (JIT): The principle of production and inventory control in which goods arrive when needed for production or use.
KANBAN: The Japanese word referring to the manufacturing control system in which suppliers deliver needed parts just in time to the assembly line for use.
KD FLAT: An article taken apart, folded, or telescoped to reduce its bulk at least 66-2/3% below its assembled size.
KDCL: Knocked Down in Carload Lots.
KDLCL: Knocked Down in Less than Carload Lots.
KEEL: The lowest longitudinal timber of a vessel, on which framework of the whole is built up; combination of iron plates serving same purpose in iron vessel.
KNOCKED DOWN (KD): An article taken apart, folded, or telescoped in such a manner as to reduce its bulk at least 33-l/3% below its assembled bulk.
KNOT, NAUTICAL: The unit of speed equivalent to one nautical mile: 6,080.20 feet per hour or 1.85 kilometers per hour.
L&D: Loss and Damage.
L/C: Letter of credit
L/T: Long tons (2,240 lbs.).
LAGAN: Cargo or equipment to which an identifying marker or buoy is fastened and thrown overboard in time of danger to lighten a ship’s load. Under maritime law, if the goods are later found they must be returned to the owner whose marker is attached. The owner must make a salvage payment.
LAID-UP TONNAGE: Ships not in active service; a ship which is out of commission for fitting out, awaiting better markets, needing work for classification, etc.
LAKER: Type of ship which trades only in the Great Lakes of North America. They usually carry grain and ore cargoes.
LANDBRIDGE: (1) A system of through rates and service offered by a carrier for cargo shipments from a foreign port to a U.S. port, across U.S. land to another U.S. port and finally by sea to a foreign port destination. (2) Containers moving from a foreign country by vessel, transiting the United States by railroad, and then loaded aboard another vessel for delivery to a second foreign country
LASH (Lighter Aboard Ship): A specialized container ship carrying very large floating containers, or “lighters.” The ship carries its own massive crane, which loads and discharges the containers over the stern. The lighters each have a capacity of 400 tons and are stowed in the holds and on deck. While, the ship is at sea with one set of lighters, further sets can be made ready. Loading and discharge are rapid at about 15 minutes per lighter, no port or dock facilities are needed, and the lighters can be grouped for pushing by towboats along inland waterways.
LASH VESSELS: Barges specifically designed to load on a vessel internally and for quick vessel turnaround. The concept is to quickly float the barges to the vessel (using tugs or ships wenches), load the barges through the rear of the vessel, then sail. Upon arrival at the foreign port, the reverse happens. Barges are quickly floated away from the vessel and another set of waiting barges quickly are loaded. Usually crane-equipped, these barges handle mostly breakbulk cargo.
LAY DAYS: The dates between which a chartered vessel is to be available in a port for loading of cargo.
LAYTIME: Time allowed by the shipowner to the voyage charterer or bill of lading holder in which to load and/or discharge the cargo. It is expressed as a number of days or hours or as a number of tons per day.
LAY-UP: Temporary cessation of trading of a ship by a shipowner during a period when there is a surplus of ships in relation to the level of available cargoes. This surplus, known as overtonnaging, has the effect of depressing freight rates to the extent that some shipowners no long find it economical to trade their ship, preferring to lay them up until there is a reversal in the trend.
LEGAL WEIGHT (LCL)
LESS THAN CONTAINER LOAD: (1) A consignment of cargo which is inefficient to fill a shipping container. It is grouped with other consignments for the same destination in a container at a container freight station. (2) The weight of the goods plus any immediate wrappings that are sold along with the goods, e.g., the weight of a tin can as well as its contents. (See also Gross Weight)
LESS THAN TRUCKLOAD (LTL): Rates applicable when the quantity of freight is less than the volume or truckload minimum weight.
LETTER OF CREDIT (L/C): A document issued by a bank per instructions by a buyer of goods authorizing the seller to draw a specified sum of money under specified terms. Issued as revocable or irrevocable.
LETTER OF CREDIT, CONFIRMED: A letter of credit containing a guarantee on the part of both the issuing and advising banks of payment to the seller, provided the seller’s documentation is in order and the terms of the letter of credit are met.
LIEN: Retention of property until outstanding dept is paid
LIFEBOAT: A specially constructed double ended boat which can withstand heavy, rough seas.
LIFEBOAT DRILL: The master of every vessel is bound by international law to make the officers, crew and passengers adequately acquainted with the procedures of lowering and the use of lifeboats in case of emergency.
LIGHT DISPLACEMENT TONNAGE: The weight of a ship’s hull, machinery, equipment, and spares. This is often the basis on which ships are paid for when purchased for scrapping. The difference between the loaded displacement and light displacement is the ship’s deadweight.
LIGHTER: (1) General name for a broad, flat-bottomed boat used in transporting cargo between a vessel and the shore. The distinction between a lighter and a barge is more in the manner of use than in equipment. The term “lighter” refers to a short haul, generally in connection with loading and unloading operations of vessels in harbor while the term “barge” is more often used when the cargo is being carried to its destination over a long distance. (2) An open or covered barge equipped with a crane and towed by a tugboat. Used mostly in harbors and inland waterways.
LIGHTER ABOARD SHIP: An ocean ship which carries barges. These barges are loaded with cargo, often at a variety of locations, towed to the ocean ship, sometimes referred to as the mother ship, and lifted or, in some cases, floated on board. After the ocean crossing, the barges are off-loaded and towed to their various destinations. The ocean ship then receives a further set of barges which have been assembled in readiness. This concept was designed to eliminate the need for specialized port equipment and to avoid transshipment with its consequent extra cost.
LIGHTERAGE: (1) Charge for conveying cargo by lighters or barges. (2) The cost of loading or unloading a vessel by means of barges alongside.
LIGHTERING: Conveying cargo with another vessel known as a lighter from ship to shore, or vice versa.
LINEHAUL: The management of freight between cities, usually more than 1000 miles.
LINER: The word “liner” is derived from the term “line traffic,” which denotes operation along definite routes on the basis of definite, fixed schedules. A liner thus is a vessel that engages in this kind of transportation, which usually involves the haulage of general cargo as distinct from bulk cargo.
LINER SERVICE: Vessels operating on fixed itineraries or regular schedules and established rates available to all shippers. The freight rates which are charged are based on the shipping company’s tariff or if the company is a member of a liner conference, the tariff of that conference.
LIQUIDATION: The finalization of a customs entry.
LIVESTOCK: Common farm animals.
LKG. & BKG.: Leakage and Breakage.
LLOYD’S REGISTER OF SHIPPING: British classification society.
LNG: Liquefied Natural Gas, or a carrier of LNG.
LNG CARRIER: Liquefied natural gas carrier, perhaps the most sophisticated of all commercial ships. The cargo tanks are made of a special aluminum alloy and are heavily insulated to carry natural gas in its liquid state at a temperature of -2850F. The LNG ship costs about twice as much as an oil tanker of the same size.
LO/LO (LIFT-ON/LIFT-OFF): Denotes the method by which cargo is loaded onto and discharged from an ocean vessel, which in this case is by the use of a crane.
LOAD FACTOR: Percentage of cargo or passengers carried e.g. 4000 tons carried on a vessel of 10000 capacity has a load factor of 40%
LOAD LINE: The line on a vessel indicating the maximum depth to which that vessel can sink when loaded with cargo. Also known as marks.
LOADED LEG: Subdivision of a ship’s voyage during which the ship is carrying cargo.
LOCAL MOVE: A railroad movement in which only one road haul carrier participates. The one carrier serves both the origin and destination station
LOGISTICS MANAGEMENT: The efficient and cost-effective management of the physical movement of goods from supply points to final sale and the associated transfer and holding of such goods at various intermediate storage points.
LOI: Letter of indemnity
LONG TON: 2,240 pounds.
LONGSHOREMAN: Ocean carrier cargo handler that loads and unloads freight at the harbor.
LOOKOUT: A member of the crew stationed on the forecastle, or on the bridge, whose duty it is to watch for any dangerous objects or for any other vessels heaving into sight.
LPG: Liquefied Petroleum Gas, or a carrier of LPG.
LSA: Liner Shipping Agreements.
LT (Long Ton): 1016.05 kilogram
LTL: (See Less than Truckload)
LUMPER: A person hired to help unload a trailer
LUMPSUM FREIGHT: Money paid to shipper for charter of a ship (or portion) up to stated limit irrespective of quantity of cargo
M/R: Mate’s Receipt.
M/T (Metric Ton): 2204.6 lbs.
M/V OR MV: Motor Vessel.
MAIN DECK: The main continuous deck of a ship running from fore to aft; the principle deck; the deck from which the freeboard is determined.
MAINTENANCE OF WAY: The process of maintaining roadbed (rail, ties, ballast, bridges etc.) These materials are hauled in special maintenance of way cars, which also include cars that are equipped with heavy equipment, such as cranes and tie replacing machines
MANIFEST: A document containing a full list of the ship’s cargo, extracted from the bills of lading.
MANNING SCALES: The minimum number of officers and crew members that can be engaged on a ship to be considered as sufficient hands with practical ability to meet every possible eventuality at sea.
MAQUILADORA: A foreign plant operating under an in-bond program whereby components may be shipped into Mexico duty-free for assembly and subsequent re-export. Maquiladora plants are also known as Twin Plants.
MARITIME ADMINISTRATION (MARAD): A U.S. government agency, while not actively involved in vessel operation, that administers laws for maintenance of merchant marine for the purposes of defense and commerce.
MARITIME LIEN: A claim which attaches to the res, i.e., the ship, freight, or cargo.
MARITIME SUBSIDY BOARD (MSB): A branch within the Maritime Administration which deals with Operating Differential Subsidy and Construction Differential Subsidy.
MARK: (See Consignee Mark, Markings, Port Marks)
MARKINGS: The physical markings on a product indicating the country of origin where the article was produced.
MARPOL 73/78: The International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978.
MASTER (CAPTAIN): Highest officer aboard ship. Oversees all ship operations. Keeps ships records. Handles accounting and bookkeeping. Takes command of vessel in inclement weather and in crowded or narrow waters. Handles communications. Receives and implements instructions from home office.
MATE’S RECEIPT: Receipt of cargo by the vessel, signed by the mate (similar to a dock receipt).
MEASUREMENT TON: The measurement ton (also known as the cargo ton or freight ton) is a space measurement, usually 40 cubic feet or one cubic meter. Cargo is assessed a certain rate for every 40 cubic feet or one cubic meter it occupies.
MERCOSUR: A trade alliance between Argentina, Brazil, Paraguay and Uruguay, with Chile and Bolivia as associate members.
MICROBRIDGE: A system of through rates and service offered by a carrier for cargo shipments from any inland U.S. location to a port, by sea to a foreign port and finally overland to a foreign inland destination.
MIN. B/L: Minimum Bill of Lading.
MINILAND BRIDGE: The process of taking inland cargo bound for export to the coast by rail and loading it directly to the ship.
MINI-LANDBRIDGE: Imported traffic movement from an origin port to an inland point that is not a port on an ocean bill of lading
MIRAID: Maritime Institute for Research and Industrial Development.
MIXED SHIPMENT: A shipment consisting of more than one commodity, articles described under more than one class or commodity rate item in a tariff.
MM: Mercantile Marine.
MOA: Memorandum of agreement
MODU: Mobile Offshore Drilling Unit.
MOORING LINE: A cable or line to tie up a ship.
MSB: Maritime Subsidy Board.
MTC: Maritime Transport Committee, OECD
MULTIPURPOSE SHIP: Any ship capable of carrying different types of cargo which require different methods of handling. There are several types of ships falling into this category, for example, ships which can carry roll on/roll off cargo together with containers.
MW: Minimum Weight Factor.
N.E.M.: Not elsewhere mentioned.
N.E.S.: Not elsewhere specified.
NAFTA (NORTH AMERICAN FREE TRADE AGREEMENT): A free trade agreement comprising the U.S.A., Canada, and Mexico.
NATIONAL CARGO BUREAU: A private organization having representatives throughout the main harbors in the U.S. It is empowered to inspect cargoes of a hazardous nature and issue certificates which are automatically approved by the Coast Guard.
NATIONAL CARRIER: A flag carrier owned or controlled by the state.
NATIONAL FLAG: The flag carried by a ship to show her nationality.
NEOBULK: Shipments consisting entirely of units of a single commodity, such as cars, lumber, or scrap metal.
NESTED: When three or more different sizes of an article are placed within each other so that each article will not project above the next lower article by more than 33-1/3% of its height.
NESTED SOLID: When three or more different sizes of an article are placed within each other so that each article will not project above the next lower article by more than 1/4 inch.
NET CAPACITY: The number of tons of cargo which a vessel can carry when loaded in salt water to her summer freeboard marks. Also called cargo carrying capacity, cargo deadweight, and useful deadweight.
NET TERMS: Free of charters’ commission.
NET TONNAGE: Equals gross tonnage minus deductions for space occupied by crew accommodations, machinery, navigation equipment, and bunkers. It represents space available for cargo (and passengers). Canal tolls are based on net (registered) tonnage.
NET WEIGHT (ACTUAL NET WEIGHT): The weight of the goods alone without any immediate wrappings; e.g., the weight of the contents of a tin can without the weight of the can.
NMFC: National Motor Freight Classification.
NO OBJECTION CERTIFICATE: A document provided by scheduled or national airlines of many countries declaring no objection to a proposed charter flight operated by another airline. It is often demanded by government authorities before they grant permission for a charter flight to take place.
NO OBJECTION FEE: A sum of money normally paid by a charter airline to a scheduled airline in order that it waives its right of objection to its government, thus allowing a charter to take place. The amount is usually a fixed percentage of the gross cost of a charter. Tantamount to a bribe, this is common practice in the Middle East and Africa.
NOE: Not Otherwise Enumerated.
NOHP: Not Otherwise Herein Provided.
NOI: Not Otherwise Indicated.
NOIBN: Not Otherwise Indicated By Number; Not Otherwise Indicated By Name.
NON-CONFERENCE LINE: A shipping line which operates on a route served by a liner conference but which is not a member of that conference.
NONCONTIGUOUS: Domestic shipping routes serving Alaska and non-continental U.S. States and territories.
NON-VESSEL OPERATING COMMON CARRIER (NVOCC): An FMC-Licensed cargo consolidator of small shipments in ocean trade, generally soliciting business and arranging for or performing containerization functions at the port.
NOR: Notice of readiness
NORSKE VERITAS: Norwegian classification society.
NOS: Not Otherwise Specified.
NRT (Net Registered Tons): This tonnage is frequently shown on ship registration papers; it represents the volumetric area available for cargo at 100 cubic feet = 1 ton. It often is used by port and canal authorities as a basis for charges.
NT: Net Tons.
NVO: Non-vessel-operating common carrier, a ships agent, conducts business for the ship but does not operate the vessel.
NVOCC: (See Non-Vessel-Operating Common Carrier)
O&R: Ocean and Rail.
O.R. DET.: Owner’s Risk of Deterioration.
O.R.B.: Owner’s risk of breakage.
O/N: Order Notify; Own Name.
O/O: Order of.
O/R: Owner’s Risk.
OBO: Ore/bulk/oil vessel
OBO SHIP: A multipurpose ship that can carry ore, heavy dry bulk goods and oil. Although more expensive to build, they ultimately are more economical because they can make return journeys with cargo rather than empty as single-purpose ships often must.
OCEAN WAYBILL: A document, issued by a shipping line to a shipper which serves as a receipt for the goods and evidence of the contract carriage.
ODS (OPERATING DIFFERENTIAL SUBSIDY): (1) A payment to an American-flag carrier by the U.S. federal government to offset the difference in operating costs between U.S. and foreign vessels. (2) A direct subsidy paid to U.S.-flag operators to offset the high operating cost of U.S.-flag ships when compared to foreign-flag counterparts.
OFF-HIRE CLAUSE: In a time charter, the owner is entitled to a limited time for his vessel to be off hire until such time as the vessel may be repaired or dry-docked.
OFFICER: Any of the licensed members of the ship’s complement.
OFF-LINE: An airline that sells in a market to which it does not operate. An off-line carrier will use another operator to link with its network.
OFF-LOAD: Discharge of cargo from a ship.
OFFSHORE SERVICE VESSELS: Special vessels employed in exploration for, development of or continuous production of, subsea oil and gas.
OIL RECORD BOOK: A book or log kept by the master of an oil tanker wherein every discharge or escape of oil is recorded.
OIL TANKER: A ship designed for the carriage of oil in bulk, her cargo space consisting of several or many tanks. Tankers load their cargo by gravity from the shore or by shore pumps and discharge using their own pumps.
OILER: An unlicensed member of the engine room staff who oils and greases bearings and moving parts of the main engine and auxiliaries. Most of this work is now done automatically and the oiler merely insures it operates correctly.
OPEN ACCOUNT: A trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment such as a note, mortgage, or other formal written evidence of indebtedness.
OPEN POLICY: A cargo insurance policy that is an open contract; e.g., it provides protection for all of 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 also detailed at that time. This usually is shown in a document called a marine insurance certificate.
OPEN RATES: Pricing systems that are flexible and not subject to conference approval. Usually applied to products in which tramps are substituted for liners.
OPEN REGISTRY: A term used in place of “flag of convenience” or “flag of necessity” to denote registry in a country which offers favorable tax, regulatory, and other incentives to ship owners from other nations.
ORDINARY SEAMAN: (1) A deck crew member who is subordinate to the Able Bodied Seamen. (2) An apprentice AB, assists AB’s bosun, and officers, keeps facilities clean.
ORE CARRIER: A large ship designed to be used for the carnage of ore. Because of the high density of ore, ore carriers have a relatively high center of gravity to prevent them being still when at sea, that is, rolling heavily with possible stress to the hull.
ORE-BULK-OIL CARRIER: A large multi-purpose ship designed to carry cargoes wither of ore or other bulk commodities or oil so as to reduce the time the ship would be in ballast if restricted to one type of commodity. This type of ship is sometimes called bulk-oil carrier.
ORF: Owner’ Risk of Fire or Freezing.
ORL: Owner’s Risk of Leakage.
ORW: Owner’s Risk of Becoming Wet.
OS&D: Over, Short and Damaged.
OUARTERMASTER/HELMSMAN: An able-bodied seamen entrusted with the steering of a vessel.
OVERHEAD SHIPMENT: A railroad movement involving at least three railroad carriers at which CSXT is neither the first nor the last carrier
OVERTONNAGING: A situation where there are too many ships generally or in a particular trade for the level of available cargoes.
P & I: Protection and indemnity insurance
P.L. 480: Agricultural Trade Development and Assistance Act of 1954.
P.L. 664: Mandates that 50 percent of government impelled cargoes be carried under U.S. flag. Known as the 50/50 shipping law.
PA: (See Particular Average)
PAIRED (PORT OF ARRIVAL IMMEDIATE RELEASE AND ENFORCEMENT DETERMINATION): A U.S. Customs program that allows entry documentation for an import shipment to be filed at one location, usually an inland city, while the merchandise is cleared by customs at the port of entry, normally a seaport. May be ineffective with certain types of high-risk cargoes, such as quota-regulated textiles or shipments from drug production regions. Cities where there is a natural flow of cargo are actually “paired” in the program; e.g., Atlanta, an inland city, is linked with Savannah, a seaport.
PANAMAX: A vessel designed to be just small enough to transit the Panama Canal
PAPERLESS RELEASE: Under ABI, certain commodities from low-risk countries not designated for examination may be released through an ABI-certified broker without the actual submission of documentation.
PART CHARTER: Where part of an airline’s scheduled flight is sold as if it were a charter in its own right. Often incorrectly used as a synonym for split charter.
PARTICULAR AVERAGE (PA): Partial loss or damage to goods.
PASSENGER SHIP: A passenger ship that its authorized to carry over twelve passengers.
PER CONTAINER RATE: Rates and/or changes on shipments transported in containers or trailers and rated on the basis of the category of the container or trailer.
PERILS OF THE SEA: Fortuitous accidents or casualties peculiar to transportation on navigable water, such as sinking, collision of vessel, striking a submerged object, or encountering heavy weather or other unusual forces of nature.
PERISHABLES: Any cargo that loses considerable value if it is delayed in transportation. This usually refers to fresh fruit and vegetables.
PERSONAL FLOATATION DEVICE: Approved floats meant as life preservers and carried on board American ships.
PHYTOSANITARY INSPECTION CERTIFICATE: A certificate issued to attest that a shipment has been inspected and is free of harmful pests and plant diseases, and is undertaken by an NPPO (National Plant Protection Organization). A phytosanitary certificate for export or for re-export can be issued only by a public officer who is technically qualified and duly authorized by an NPPO (ISPM 12).
A phytosanitary certificate for export is usually issued by the NPPO of the country where the plants, plant products or regulated articles were grown or processed (1). Phytosanitary certificates are issued to indicate that consignments of plants, plant products or other regulated articles meet specified phytosanitary import requirements and are in conformity with the certifying statement of the appropriate model certificate. Phytosanitary certificates should only be issued for this purpose.
PIGGYBACK: An ocean container or trailer riding on a rail car (COFC or TOFC)
PIGS: A railroad term for trailers loaded on flat cars
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.
PILOT: A person who is qualified to assist the master of a ship to navigate when entering or leaving a port.
PILOT HOUSE: The enclosed space on the navigating bridge from which a ship is controlled when under way.
PILOTAGE: The act carried out by a pilot of assisting the master of a ship in navigation when entering or leaving a port. Sometimes used to define the fee payable for the services of a pilot.
PILOTAGE DUES: A fee payable by the owner or operator of a ship for the services of a pilot. This fee is normally based on the ship’s tonnage.
PIVOT WEIGHTS: That weight of a ULD above which a higher tariff applies. In effect, it is an incentive to maximize cargo density.
PLACE: A particular street address or other designation of a factory, store, warehouse, place of business, private residence, construction camp, or the like at a point.
PLACE OF REST: This term, as used in the Containerized Cargo Rules, means the location of the floor, dock, platform, or doorway at the CFS to which cargo is first delivered by the shipper or agent thereof.
PMA: Pacific Maritime Association.
POINT: A particular city, town, village, or other community or area which is treated as a unit for the application of rates.
POOL TRAILERS: Free-running trailers owned by leasing companies
POOLING: The sharing of cargo or the profit or loss from freight by member lines of a liner conference. Pooling arrangements do not exist in all conferences.
PORT AUTHORITY: A government body (city, county, or state) which in international shipping maintains various airports and/or ocean cargo pier facilities, transit sheds, loading equipment, or warehouses for air cargo. It has the power to levy dockage and wharfage charges, landing fees, and other costs.
PORT MARKS: An identifying set of letters, numbers, or geometric symbols followed by the name of the port of destination that are placed on export shipments. Foreign government requirements may be exceedingly strict in the matter of port marks.
PORT OF DISCHARGE: A port where a vessel is off-loaded and cargo discharged.
PORT OF ENTRY: A port at which foreign goods are admitted into the receiving country.
PORT OF LOADING: A port where cargo is loaded aboard the vessel, lashed, and stowed.
PR-17: Public Resolution which requires that U.S. Government financed cargoes (Eximbank) must be shipped 100% in U.S. flag ships, but that the requirement may be waived up to 50% in some cases.
PREMISE: Use penalty assessed to shippers or consignees for holding private trailers or containers at the origin or destination terminal in excess of allotted free time
PREPAID FREIGHT: Generally speaking, freight charges both in ocean and air transport may be either prepaid in the currency of the country of export or they may be billed collect for payment by the consignee in his local currency. On shipments to some countries, however, freight charges must be prepaid because of foreign exchange regulations of the country of import or rules of steamship companies or airlines.
PRE-SLUNG CARGO: Cargo shipped already in a cargo sling or net, such as coffee in bags or coconut shells. It is usually prepared and loaded at the pier, ready for the vessel’s arrival and subsequent loading.
PRIMA FACIE: A Latin term frequently encountered in foreign trade that means “on first appearance.” When a steamship company issues a clean bill of lading, it acknowledges that the goods were received “in apparent good order and condition” and this is said by the courts to constitute prima facie evidence of the conditions of the containers; that is, if nothing to the contrary appears, it must be inferred that the cargo was in good condition when received by the carrier.
PRO NUMBER: (1) A number assigned by the carrier to a single shipment, used in all cases where the shipment must be referred to. (2) The number used in identifying waybills and freight bills. Pro means progressive and agents use progressive numbers for this identification
PRODUCT CARRIER: A tanker which is generally below 70,000 deadweight tons and used to carry refined oil products from the refinery to the consumer. In many cases, four different grades of oil can be handled simultaneously.
PRODUCTION UNIT: Equipped to extract petroleum, e.g. oil production ship.
PROFORMA: When used with the title of a document, the term refers to an informal document presented in advance of the arrival or preparation of the required document, in order to satisfy a customs requirement.
PROOF OF DELIVERY (POD): The delivery receipt copy of a freight bill indicating the name of the person who signed for a package with the date and time of delivery.
PROPANE CARRIER: A ship designed to carry propane in liquid form. The propane is carried in tanks within the holds; it remains in liquid form by means of pressure and refrigeration. Such ships are also suitable for the carriage of butane.
PROPORTIONAL PRICE: Price from or to an intermediate point; may be used only to construct an interline price; i.e., a combination of two prices
PROTEST: U.S. Customs Form 19 allows for a refund of an overpayment of duty if filed within 90 days of liquidation.
QUALIFIED MEMBER OF THE ENGINE DEPARTMENT (OMED): Unlicensed members of the engine department who attend to a fully automated engine room.
RADIO DEPARTMENT – RADIO OPERATOR: Maintains and monitors radio, sends, and receives messages. Often maintains electronic navigation equipment.
RAMP: A structure, permanent or temporary, from which trailers are driven onto or off of a railroad flatcar. Also used in reference to any city or location where piggyback loading and unloading can be performed
REBATE: A deduction taken from a set payment or charge. Because a rebate is given after payment of the full amount has been made, it differs from a discount which is deducted in advance of the payment. In foreign trade, a full or partial rebate may be given on import duties paid on goods which are later re exported.
RECAP: Recapitulation of the terms and conditions agreed
RECIPROCITY: A practice by which governments extend similar concessions to one another.
REEFER: Refrigerator ship; a vessel designed to carry goods requiring refrigeration, such as meat and fruit. A reefer ship has insulated holds into which cold air is passed at the temperature appropriate to the goods being carried.
REEFER BOX: An insulated shipping container designed to carry cargoes requiring temperature control. It is fitted with a refrigeration unit which is connected to the carrying ship’s electrical power supply.
REFG: Refrigerating; Refrigeration.
REGS.: Registered Tonnage.
RELEASED VALUE: Value assigned a shipment with a maximum value per pound; used for liability purposes
RETALIATION: An action taken by a country to restrain imports from another country that has increased a tariff or imposed other measures that adversely affect the first country’s exports.
RETURN CARGO: A cargo which enables a ship to return loaded to the port or area where her previous cargo was loaded.
REVERSE ROUTE: The exact reverse of the route a loaded car traveled from its destination, including all carriers and junctions involved
REVERSIBLE TIME: Option for charterers to add together time allowed for loading & discharging relative to terms of a particular charter party
RO/RO (ROLL-ON/ROLL-OFF) VESSEL: (1) A ship designed to accommodate cargo that is rolled on and rolled off. Some Ro/Ro vessels can accommodate containers and/or breakbulk cargo. A Ro/Ro Vessel can be self-sustaining. (2) Freight ship or ferry with facilities for vehicles to drive on and off (roll-on roll-off); a system of loading and discharging a ship whereby the cargo is driven on and off on ramps. Equipped with large openings at bow and stern and sometimes also in the side, the ship permits rapid loading and discharge with hydraulically operated ramps providing easy access. Fully loaded trucks or trailers carrying containers are accommodated on the deck.
ROLLING CARGO: Cargo which is on wheels, such as truck or trailers, and which can be driven or towed on to a ship.
ROYALTY: A charge on charter flights levied by some governments before traffic rights are granted. Sometimes called a “no objection fee.” It is usually a fixed proportion of a total charter value.
SALVAGE: (1) The rescue of goods from loss at sea or by fire. Also, goods so saved, or payment made or due for their rescue. (2) The property which has been recovered from a wrecked vessel, or the recovery of the vessel herself.
SCHEDULE B: Refers to “Schedule B, Statistical Classification of Domestic and Foreign Commodities exported from the U.S.A.” This is being replaced under the Harmonized System.
SCHEDULED FLIGHT: Any service that operates under a set timetable.
SCR (SPECIFIED COMMODITY RATE): A rate applied to narrowly specified commodities and usually granted on relatively large shipments. Theoretically, it is of limited time duration.
SEA TRIALS: A series of trials conducted by the builders during which the owner’s representatives on board act in a consulting and checking capacity to determine if the vessel has met the specifications.
SEABEE: Sea-barge, a barge carrier design similar to “LASH” but which uses rollers to move the barges aboard the ship; the self-propelled loaded barges are themselves loaded on board as cargo and are considerably larger than those loaded on LASH ships.
SEAL: A device fastened to the doors on a railcar or trailer used to secure its contents and to insure the integrity of a shipment
SEAWORTHINESS: (1) Statement on the condition of the vessel. It has valid certificates, is fully equipped and manned (2) The sufficiency of a vessel in materials construction, equipment, crew and outfit for the trade in which it is employed. Any sort of disrepair to the vessel by which the cargo may suffer – overloading, untrained officers, etc., may constitute a vessel unseaworthy.
SEAWORTHINESS CERTIFICATE: A certificate issued by a classification society surveyor to allow a vessel to proceed after she has met with a mishap that may have affected its seaworthiness. It is frequently issued to enable a vessel to proceed, after temporary repairs have been effected, to another port where permanent repairs are then carried out.
SECTOR: The distance between two ground points within a route.
SELF-SUSTAINING: A vessel that has its own cranes and equipment mounted on board for loading and unloading. Used in ports where shore cranes and equipment are lacking.
SELF-SUSTAINING SHIP: A containership which has her own crane for loading and discharging shipping containers enabling the ship to serve ports which do not have suitable lifting equipment.
SELF-UNLOADER: A bulk carrier which is equipped with gear for unloading cargo.
SEMISUBMERSIBLE: Deck supported by pillars, fastened to pontoons. The pontoons are half submerged during operations. Kept in position by anchors (or by dynamic positioning). Normally equipped with its own propulsion machinery.
SERVICE: The defined, regular pattern of calls made by a carrier in the pick-up and discharge of cargo.
SERVICE CONTRACT: A contract between a shipper and an ocean carrier of conference, in which the shipper makes a commitment to provide a minimum quantity of cargo over a fixed time period.
SHIFTING: This refers to movements or changing positions of cargo from one place to another. This can easily endanger the seaworthiness or cargoworthiness of the ship.
SHIPMENT: Freight tendered to a carrier by one consignor at one place at one time for delivery to one consignee at one place on one bill of lading.
SHIPPER: Term used to describe an exporter (usually a manufacturing company).
SHIPPERS: Individuals or businesses who purchase transportation services or commodities.
SHIPPER’S COUNCIL: An organization of shippers formed to collectively and services with the conferences of ship operators.
SHIPPER’S EXPORT DECLARATION (SED): A form required by the U.S. Treasury Department and completed by a shipper showing the value, weight, consignee, and destination of export shipments as well as the Schedule B identification number.
SHIPPING ACT: Created in 1916 and revised in 1984, the Shipping Act is a comprehensive legislative act defining the U.S. ocean freight industry. This legislation defines the rules and regulations governing the business practices of steamship companies, non-vessel operating carriers, and freight forwarders.
SHIP’S AGENT: A person or firm who transacts all business in a port on behalf of shipowners or charterers. Also called shipping agent; agent.
SHIP’S MANIFEST: An instrument in writing containing a list of the shipments constituting the ship’s cargo.
SHORT TON: 2,000 pounds.
SHORT-SHIPPED: Cargo manifested but not loaded.
SIGHT DRAFT: A draft payable upon presentation to the drawee. (Compare with Date Draft and Time Draft.)
SINGLE-LINE HAUL: Shipment over one railroad
SLOP TANK: A tank in a tanker into which slops are pumped. These represent a residue of the ship’s cargo of oil together with the water used to clean the cargo tanks. They are left to separate out in the slop tank.
SOFT CURRENCY: Currency which is not fully convertible to all currencies but only to some other soft currencies.
SPINE CAR: Skeletonized, lightweight, three or five-unit, fully articulated rail car, designed to carry single-stack containers and trailers
SPLC (STANDARD POINT LOCATION CODE): An industry wide standard used to identify a location served by a common carrier
SPOT (VOYAGE): A charter for a particular vessel to move a single cargo between specified loading port(s) and discharge port(s) in the immediate future. Contract rate (“spot” rate) covers total operating expenses, i.e., bunkers, port charges, canal tolls, crew’s wages and food, insurance and repairs. Cargo owner absorbs, in addition, any expenses specifically levied against the cargo.
STANDARD INTERNATIONAL TRADE CLASSIFICATION (SITC): A standard numerical code system developed by the United Nations to classify commodities used in international trade.
STAND-BY VESSEL: Stationed near an offshore in-stallation, responsible for evacuating its crew in emergencies. Also performs continuous guard function, warning other vessels to keep their distance from installations, etc.
STARBOARD: The right-hand side of a ship when facing the front or forward end. The starboard side of a ship during darkness is indicated by a green light.
STCC (Standard Transportation Commodity Codes): The STCC system is a 7 digit coding structure designed to classify all commodities or articles which move or may move in freight transportation
STEAMSHIP AGENT: A duly appointed and authorized representative in a specified territory acting on behalf of a steamship line or lines and attending to all matters relating to the vessels owned by his principals.
STEAMSHIP LINE: A company usually having the following departments: vessel operations, container operations, tariff department, booking, outbound rates, inward rates, and sales. The company can maintain its own in-country offices to handle regional sales, operations, or other matters, or appoint steamship agents to represent them doing the same. Some lines have liner offices in several regions and appointed agents in others.
STEM (Noun): The upright post or bar of the bow of a vessel.
STERNWAY: The reverse movement of a vessel.
STEWARD ASSISTANT: Clean galley and mess halls, set tables, prepare salads, and clean living quarters.
STORAGE CHARGE: A penalty assessed to shippers or consignees for holding private trailers or containers at the origin or destination terminal in excess of allotted free time
STORE: A general term for provisions, materials and supplies used aboard ship for the maintenance of the crew, and for the navigation, propulsion, and upkeep of the vessel and its equipment.
STOWAGE: (a) The loading of cargo in a vessel in such a manner as to provide the utmost safety and efficiency for the ship and the goods it carries. (b) The placing of goods in a ship in such a way as to ensure the safety and stability of the ship not only on a sea or ocean passage but also in between ports when parts of the cargo have been loaded or discharged.
STOWAGE FACTOR: Cubic space ratio (measured in cubic feet per long ton, cubic meter per metric ton or cubic per metric ton)
SUBSIDY: An economic benefit granted by a government to producers of goods or services, often to strengthen their competitive position. Sue & Labor Cause. A provision in marine insurance obligating the assured to do things necessary after a loss to prevent further loss and to act in the best interests of the insurer.
SURETY BOND: A bond insuring against loss or damage or for the completion of obligations.
T/C: Time charter
T/C EQUIVALENT: Revenue per day
TAIL SHAFT: The extreme section at the aft end of a ship’s propeller shaft.
TALLY SHEET: A list of incoming and outgoing cargo checked by the tally clerk on the dock.
TANK-BARGE: A river barge designed for the carriage of liquid bulk cargoes.
TANKER: A tanker is a bulk carrier designed to transport liquid cargo, most often petroleum products. Oil tankers vary in size from small coastal vessels of 1,500 tons deadweight, through medium-sized ship of 60,000 tons, to the giant VLCCs (very large crude carriers).
TARE WEIGHT: The weight of packing and containers without the goods to be shipped.
TARIFF: (1) A general term for any listing of rates or charges. The tariffs most frequently encountered in foreign trade are: tariffs of international transportation companies operating on sea, land, and in the air; tariffs of international cable, radio, and telephone companies; and the customs tariffs of the various countries that list goods that are duty free and those subject to import duty, giving the rate of duty in each case. There are various classes of customs duties.
TARIFF ACT OF 1930 (P.L. 361): Imposes a 50-percent tariff on maintenance and repair work done on U.S.-flag vessels in foreign shipyards. Also, U.S.-flag vessels either must be built in the United States or have been a U.S.-flag vessel for at least 3 years to be eligible to carry preference cargo.
TEMPERATURE CONTROLLED CARGO: Any cargo requiring carriage under controlled temperature.
TERRITORIAL WATERS: That portion of the sea up to a limited instance which is immediately adjacent to the shores of any country and over which the sovereignty and exclusive jurisdiction of that country extend.
T.E.U. (Twenty Foot Equivalent Unit): A measurement of cargo-carrying capacity on a containership, referring to a common container size of 20 ft in length.
T.E.U.: A twenty-foot equivalent unit (6.1m). A standard unit for counting containers of various lengths and for describing container ship or terminal capacity. A standard 40′ container equals 2 TEUs.
THC (TERMINAL HANDLING CHARGE): A charge made for certain handling services performed at terminals.
THIRD ASSISTANT ENGINEER: In charge of eight to twelve watch. Maintains lighting fixtures. Repairs malfunctioning accessories in living quarters. Assist other engineers as directed.
THIRD MATE: In charge of eight to twelve watch. Makes sure emergency survival equipment (lifeboats, life rings, etc.) is in order. Assists other officers as directed.
THIRD PARTY: An independent retailer of intermodal transportation, may be a shipper agent or association
THROUGH PRICE: The price applicable from point of origin to destination; may be a joint price or a combination of two or more prices
TIB (TEMPORARY IMPORTATION UNDER BOND): A U.S. Customs’ temporary admission into the U.S.A. under a conditional bond for articles not imported for sale or for sale on approval.
TITLE, PASSING: The passing of title to exported goods is determined in large measure by the selling terms and must be clearly specified and understood by both parties.
TOFC (Trailer On Flat Car, also known as piggyback): a container with chassis or rail trailer transported on a rail car
TON: 2,240 pounds – Freight rates for liner cargo generally are quoted based on a certain rate per ton, depending on the nature of the commodity. This ton, however, may be a weight ton or a measurement ton.
TON MILE: A measurement used in the economics of transportation to designate one ton being moved one mile. This is useful to the shipper because it includes the distance to move a commodity in the calculation.
TON-DEADWEIGHT: The carrying capacity of the ship in terms of the weight in tons of the cargo, fuel, provisions, and passengers which a vessel can carry.
TON-DISPLACEMENT: The weight of the volume of water, which the fully loaded ship, displaces.
TONNAGE: A quantity of cargo normally expressed as a number of tons.
TOP-OFF: To fill a ship which is already partly loaded with cargo.
TOW: When one or more vessels are being towed; when a tug is towing one or more floating objects; to pull an object in the water by means of a rope.
TOWAGE: Charges for the services of tugs assisting a ship or other vessels in ports or other locations; the act of towing a ship or other objects from one place to another.
TRACKING: A carrier’s system of recording movement intervals of shipments from origin to destination.
TRADE: A term used to define a geographic area or specific route served by carriers.
TRADING LIMITS: Maritime area usually specified by range of ports in which a vessel may operate
TRAMP: A vessel that does not operate along a definite route on a fixed schedule, but calls at any port where cargo is available.
TRAMP SERVICE: Vessels operating without a fixed itinerary or schedule or charter contract.
TRANSPORT INDEX: The number expressing the maximum radiation level in a package or ULD.
TRANSPORTATION DATA COORDINATION COMMITTEE: Sets the standards for interchange of transportation data
TRANSSHIPMENT: The transfer of a shipment from one carrier to another in international trade, most frequently from one ship to another. Because the unloading and reloading of delicate merchandise is likely to cause damage, transshipments are avoided whenever possible.
TRIM: The relationship between a ship’s draughts forward and aft.
TRUCKLOAD: Truckload rates apply where the tariff shows a truckload minimum weight. Charges will be at the truckload minimum weight unless weight is higher.
TRUST RECEIPT: The release of merchandise by a bank to a buyer for manufacturing or sales purposes in which the bank retains title to the merchandise.
TUG: A small vessel designed to tow or push large ships or barges. Tugs have powerful diesel engines and are essential to docks and ports to maneuver large ships into their berths. Pusher tugs are also used to push enormous trains of barges on the rivers and inland waterways of the U.S. Oceangoing salvage tugs provide assistance to ships in distress and engage in such work as towing drilling rigs and oil production platforms.
U.S. EFFECTIVE CONTROLLED FLEET: That fleet of merchant ships owned by United States citizens or corporations and registered under flags of “convenience” or “necessity” such as Liberia or Panama. The term is used to emphasize that, while the fleet is not U.S.-flag, it is effectively under U.S. control by virtue of the ship’s owners and can be called to serve U.S. interests in time of emergency.
U.S.- FLAG VESSELS: Are registered in the United States and are subject to additional U.S. laws and regulations to which foreign-flag vessels are not. They must be owned by U.S. citizens, corporations, or governments and must be crewed mainly by U.S. citizens.
ULCC: Ultra Large Crude Carriers. Tankers larger than 300,000 dwt.
ULD (UNIT LOAD DEVICE): A pallet or container for freight.
UMLER (Universal Machine Language Equipment Register): A computer readable file of vital statistics for each railroad car in service. It applies to all railroads, types of cars, and data processing machines
UNCLEAN BILL OF LADING: (See Bill of Lading, Unclean)
UNCTAD: United Nations Conference on Trade and Development
UNIFORM COMMERCIAL CODE: The Uniform Commercial Code, or Uniform Customs and Practice for Documentary Credits ICC Publication No. 500, was first established and published in 1933 by the International Chamber of Commerce. Revisions were made in 1951, 1962, 1974, 1983, and 1993. The code defines documentation standards to be followed by international banks when negotiating letters of credit. The code is binding, and seeks to define a worldwide standard applicable to all involved in international trade, exchanging goods, and money using the international letter of credit.
UNITIZATION: The packing of single or multiple consignments into ULDs or pallets.
UNIVERSAL POSTAL UNION: The organization which negotiates international mail charges.
UNMANNED MACHINERY SPACES: A space where alarm bells are installed on the bridge of a ship to trace or rectify any machinery faults. The computerized devices will report any fault immediately it appears and the engineers on board can attend to the necessary ramifications.
UNSEAWORTHINESS: The state or condition of a vessel when it is not in a proper state of maintenance, or if the loading equipment or crew, or in any other respect is not ready to encounter the ordinary perils of sea.
VALUATION CHARGES: Transportation charges assessed shippers who declare a value of goods higher than the value of carriers’ limits of liability.
VLCC (Very Large Crude Carriers): Tankers between 200,000 and 300,000 dwt.
VOYAGE CHARTER: A contract whereby the shipowner places the vessel at the disposal of the charterer for one or more voyages, the shipowner being responsible for the operation of the vessel.
WAR RISK: The possible aggressive actions against a ship and its cargo by a belligerent government. This risk can be insured by a marine policy with a risk clause.
WAR RISK INSURANCE: Insurance issued by marine underwriters against war-like operations specifically described in the policy. In former times, war risk insurance was taken out only in times of war, but currently many exporters cover most of their shipments with war risk insurance as a protection against losses from derelict torpedoes and floating mines placed during former wars, and also as a safeguard against unforeseen warlike developments. In the U.S.A., war risk insurance is written in a separate policy from the ordinary marine insurance; it is desirable to take out both policies with the same underwriter in order to avoid the ill effects of a possible dispute between underwriters as to the cause (marine peril or war peril) of a given loss.
WAREHOUSE RECEIPT: A receipt of commodities deposited in a warehouse identifying the commodities deposited. It is non-negotiable if permitting delivery only to a specified person or firm, but it is negotiable if made out to the order of a person or firm or to a bearer. Endorsement (without endorsement if made out to bearer) and delivery of a negotiable warehouse receipt serves to transfer the property covered by the receipt. Warehouse receipts are common documents in international banking.
WAREHOUSE-TO-WAREHOUSE: A clause in marine insurance policy whereby the underwriter agrees to cover the goods while in transit between the initial point of shipment and the point of destination with certain limitations, and also subject to the law of insurable interest. The warehouse-to-warehouse clause was once extremely important, but marine extension clauses now often override its provisions.
WARRANTIES (1) EXPRESSED WARRANTY: An agreement written in a marine underwriter’s insurance policy which must be strictly and literally complied with. A violation voids the insurance, e.g., trading warranties. (2) Implied Warranty: – Fundamental conditions implied in a contract of marine insurance are seaworthiness of the vessel and the legality of the venture.
WATCH: The day at sea is divided into six four-hour periods. Three groups of watchstanders are on duty for four hours and then off for eight, then back to duty. Seamen often work overtime during their off time.
WAYBILL: A document covering a shipment and showing the forwarding and receiving station, the names of consignor and consignee, the car initials and number, the routing, the description and weight of the commodity, instructions for special services, the rate, total charges, advances and waybill reference for previous services, and the amount prepaid
WEATHER PERMITTING: That time during which weather that prevents working shall not count as laytime
WEIGHT: (1) GrossThe weight of the goods including packing, wrappers, or containers, both internal and external. The total weight as shipped. (2) Net – The weight of the goods themselves without the inclusion of any wrapper. (3) Tare – The weight of the packaging or container. (4) Weight/Measurement Ton – In many cases, a rate is shown per weight/measurement ton, carrier’s option. This means that the rate will be assessed on either a weight ton or measurement ton basis, whichever will yield the carrier the greater revenue. For example, the rate may be quoted based on 2,240 pounds, 40 cubic feet, one metric ton, or one cubic meter. (5) Weight Ton There are three types of weight ton: the short ton, weighing 2,000 pounds; the long ton, weighing 2,240 pounds; and the metric ton weighing 2,204.68 pounds. The last is frequently quoted for cargo being exported from Europe.
WEIGHT LOAD FACTOR: Payload achieved as against available, expressed as a percentage. Volume rather than weight frequently limit cargo; load factors of 100 percent are rarely achieved.
WEIGHT, LEGAL: Net weight of goods plus the inside packing.
WHARFAGE: A charge assessed by a pier or dock owner against the cargo or a steamship company for use of the pier or dock.
WITH AVERAGE (WA): A marine insurance term meaning that shipment is protected for partial damage whenever the damage exceeds a stated percentage.
WITH PARTICULAR AVERAGE (WPA): An insurance term meaning that partial loss or damage of goods is insured. The damage generally must be caused by sea water, and many terms specify a minimum percentage of damage before payment. It may be extended to cover loss by theft, pilferage, delivery, leakage, and breakage.
WITHOUT RESERVE: A term indicating shipper’s agent or representative is empowered to make definitive decisions and adjustments abroad without approval of the group or individual represented. (See Advisory Capacity)
WORLDSCALE: An index representing the cost of time chartering a tanker for a specific voyage at a given time. The index is given at Worldscale 100, which represents the price in dollars per ton for carrying the oil at that rate. The negotiated rate will be some percentage of the index value.
No entries at present.
YIELD: Revenue, not necessarily profitable, per unit of traffic.
No entries at present.
Due to the fact that countries have different business cultures and languages, it’s wise to have a clearly-written contract to reduce any misunderstandings. Thus, the main benefit of Incoterms is reduced risk in a transaction.
By specifying the exporting seller’s and importing buyer’s obligations, there is no confusion with regards to rules of transportation from point A to point B. Incoterms do not cover, however, ownership or title transfer of the goods. These terms are agreed upon separately between the two transacting parties.
‘Incoterms’ has become a stock term in the international freight world. In fact, it is a word that is copyrighted by the International Chamber of Commerce (ICC). Following some years of discussion and drafting within the ICC, they issued the first International Commercial Terms (Incoterms) in 1936. There have been 5 revisions since then, up to the latest – Incoterms 2010.
What is meant by Incoterms is a set of rules governing the distinct types of transportation around the World. It codifies what is meant by each of the (currently) 11 identified and generally accepted types of freight transaction that can be used between sender and recipient. It helps them to understand who owns the goods at each stage, who is responsible in each case for the actual task of shipping, who pays for the various cost elements, and who bears the associated risks (i.e. who pays in the event of damage or loss, at a given point).
The United Nations Commission on International Trade Law (UNICTRAL) recognises these terms as being the global standard for transportation, and they are available in 31 languages through ICC.
It should be noted that the parties to a shipping transaction may agree between themselves to use a previous version, most likely the immediate predecessor, Incoterms 2000. The vast majority of trade, however, is being done using Incoterms 2010.
Based in Paris, ICC was founded in 1919. In the chaos that followed WW1, a group of industrialists and financiers were determined to try to bring some order into world trade and to establish some rules and agreements that would make it easier to do business across borders and foster open trading. Its member companies now come from over 120 countries.
ICC’s biggest achievements include a code of documentary credits practice for banks, a standard of advertising practice, and of course, Incoterms.
This latest version was launched in September 2010 but actually came into being on 1st January 2011. This sometimes leads to confusion, with people referring to Incoterms 2011; and you may hear references to Incoterms 2012 or Incoterms 2013. They are not, however, updated annually and the correct reference is currently ‘Incoterms 2010’.
As we shall see, the Incoterms are described by 3-letter acronyms that aim to make them well-known and understood anywhere, regardless of language.
This latest edition contains 11 terms. The first 7 are applied to any form of transportation: the final 4 are applicable only to sea or waterway freight.
It is important to understand the concept of ‘delivery’ as it is understood in the freight industry. It does not always mean the physical arrival of the goods at their destination. It actually means the point at which the seller completes his contractual obligation (so in the case of Ex Works, that is when the buyer loads a lorry with the goods at the seller’s plant).
It may also help to note the significance of the first letter in the terms:
C terms require the seller to pay for shipping.
D terms mean that the seller or shipper’s responsibility ceases at a specified point, and they deal with who will pay pier, docking and clearance charges.
E terms mean that when the goods are ready to leave the seller’s premises, his responsibility ceases.
F terms mean that the primary cost of shipping is not met by the seller.
As a small business, how do you navigate all of these rules? In particular, small businesses need something that is convenient for the buyer, but at the same time mitigates costs and risks to the buyer.
The best Incoterm class for small businesses would be the C-term rules. In particular, CIF is the most common because there will be a stronger grasp on shipments. In this scenario, the seller takes responsibility for all costs until the cargo is loaded at the origin port, but the cost passes to the buyer at the specified discharge port.
Coupled with a sophisticated shipment tracking system and order fulfilment service, the competitive advantage of a small business with international clients will be given to those who use Incoterms wisely.
1. EXW Incoterms – Ex Works (named place of delivery)
‘Ex Works’ is also the typical basis of making initial quotations when the actual shipping costs at a given time are not known. It places the greatest responsibility with the buyer, while the seller has minimum obligations in the whole shipping process because the buyer covers all costs from seller’s door to the final destination.
The seller just makes the goods available at the agreed date and ready for collection, which is commonly the seller’s factory, mill, plant or warehouse. The buyer is held accountable for all subsequent costs and risk, and responsible for loading, transportation, clearance and unloading at the seller’s premises unless the specific wording is added to the contract to vary this term.
In practice, it is not uncommon that the seller loads the goods onto the vehicle at the risk and cost of the buyer or even free of charge. Such an agreement must be made within the contract of sales.
The EXW term should not be used if the buyer cannot handle the export formalities. In these instances, use FCA instead.
2. FCA Incoterms – Free Carrier (named place of delivery)
In Free Carrier, the seller is responsible for export clearance and delivery of the goods to the carrier at the named place of delivery.
The buyer is to clearly specify the precise point of delivery in the contract of sales or carriage.
If the named place of delivery is the seller’s place of business, the seller is responsible for loading the goods. If the named place is the carrier’s premises, the seller is not responsible for unloading.
A carrier is any person or company who undertakes the carriage, such as a shipping line, airline, trucking company, railway or freight forwarder.
The buyer normally pays for carriage to the port of import, and risk passes to him when the goods are handed over to the first carrier, even though ‘delivery’ may not take place until the destination. The buyer also pays for insurance.
3. CPT Incoterms – Carriage Paid To (named place of destination)
Carriage Paid To requires the seller to clear the goods, deliver them to the carrier and pay for the carrier to the named place of destination. Insurance is not required from the seller.
The transfer of risk from seller to buyer occurs at a different point than the transfer of cost.
The seller’s risk ends with delivery to the carrier while the buyer’s risk begins when the carrier receives the goods from the seller. However, the buyer is only responsible for additional costs after the goods arrive at the final destination.
The term CPT is often used in air freight, containerized ocean freight, small parcel shipments and “ro-ro” shipments of motor vehicles.
A carrier is any person or company who undertakes the carriage, such as a shipping line, airline, trucking company, railway or freight forwarder.
4. CIP Incoterms – Carriage and Insurance Paid to (named place of destination)
This is commonly used in road/rail or road/sea container shipments and is the multimodal equivalent of CIF.
In Carriage and Insurance Paid To, the seller assumes all risk until the goods are delivered to the carrier at the place of shipment – not the place of destination.
Same as CPT, but the seller is obligated to secure minimum insurance coverage. The risk passes when the goods are handed over to the freight forwarder, who in practice supplies the insurance element and the buyer is responsible for all risks until the freight reaches the named place of destination.
A carrier is any person or company who undertakes the carriage, such as a shipping line, airline, trucking company, railway or freight forwarder.
In multimodal shipments, the place of shipment is the first carrier used.
5. DAT Incoterms – Delivered at Terminal (named terminal at port or place of destination)
In this system (new in Incoterms 2010)Delivered At Terminal refers to the seller pays for delivering the goods to the arrival terminal, (excluding import clearance). Up to the point that goods are unloaded at the terminal, the risk remains with the seller.
Goods are placed at the disposal of the buyer at the named terminal, at the named port or place of destination. It is important to clearly specify the precise point at or within the terminal where the goods will be unloaded.
DAT is used irrespective of the mode of transport selected and may also be used where more than one mode of transport is utilized. The specific point within the terminal at the place of destination should clearly be specified as agreed upon.
DAT requires the seller to clear goods for export, where applicable, without any obligation to clear the goods for import, pay import duty or carry out import customs formalities.
6. DAP Incoterms – Delivered at Place (named place of destination)
Also new in Incoterms 2010, this is identical to DAT, except in Delivered At Place the seller delivers when the goods are placed at the disposal of the buyer, on the arriving means of transport, ready for unloading at the named place of destination. Seller’s assumes responsibility for the cost and risk (excluding import clearance) is right up to the point that the goods are ready for unloading by the buyer at his chosen destination. Therefore, clearly specify the precise point of delivery at or within the named place of destination.
DAP is used irrespective of the mode of transport selected and may also be used where more than one mode of transport is utilized. The point within the agreed place of destination should be specified as clearly agreed upon. The risk to this point belongs to the seller.
If the seller incurs costs under the obtained contract of carriage related to unloading at the place of destination, the seller is not entitled to recover such costs from the buyer, unless otherwise agreed between both parties.
DAP requires the seller to clear goods for export, where applicable, without any obligation to clear the goods for import, pay import duty or carry out import customs formalities.
7. DDP Incoterms – Delivered Duty Paid (named place of destination)
This is the polar opposite to EXW: With Delivered Duty Paid, the seller assumes all responsibilities, costs, risks and obligations, including import duties, taxes, clearance fees etc., right up to the destination point, where the buyer is then responsible for unloading the shipment.
(You may also come across the unofficial phrase “Free In Store” – FIS – for this term).
The seller is responsible for all costs and risk until the goods are unloaded and must pay both export and import formalities, fees, duties and taxes.
The buyer is free of any risk or cost until the goods are unloaded from the vehicle at the named place of destination which is usually the buyer’s place of business.
8. FAS Incoterms – Free Alongside Ship (named port of shipment)
This is revised in Incoterms 2010, in Free Alongside Ship, the goods are cleared for export by the seller or, more typically, his shipper/freight forwarder, and placed alongside the vessel at the named port of departure. The location can be a loading dock or a barge.
Note that this is not a multimodal term, but is used for heavy and bulk cargoes.
The seller pays all expenses until the freight is loaded by their forwarder onto the vessel. In that point, delivery is made: and thereafter, the buyer’s forwarder is responsible for loading the freight onto the vessel, local carriage, discharge, import formalities, insurance and duties and onward carriage to the final destination.
FAS applies to ocean or inland waterway transport only and is popular with bulk cargo, such as oil or grain.
For containerized shipments which are delivered only to the terminal, the term FCA should be used.
9. FOB Incoterms – Free on Board (named port of shipment)
Be wary of the misleading nature of this common phrase and how it is often misused. It is to be used only for exclusively water transportation. Do not use it for road/rail/sea multimodal container transportation – use FCA instead.
In FOB, the seller clears the goods for export and loads the goods on the vessel and at the named port of departure nominated by the buyer.
New for Incoterms 2010 is that cost and risk are divided when the goods are actually on board: but delivery occurs when the goods are on board ship.
The seller takes over risk and costs starting from the time the goods have been loaded. In addition, the seller is responsible for import clearance and duties.
10. CFR Incoterms – Cost and Freight (named port of destination)
Cost and Freight (previously known as C&F) require the seller to clear the goods for export, deliver them onboard the ship at the port of departure and pay for the transport of the goods to the named port of destination. The risk passes from seller to buyer when the goods are delivered onboard the ship.
The transfer of risk from seller to buyer occurs at a different point than the transfer of cost. Actual risk passes to the buyer once the goods are loaded on the vessel.
Note that it is not the seller’s job to clear the goods through customs. The buyer is responsible for paying all additional transport costs from the port of destination as well as import clearance, insurance and duties.
CFR is used for ocean or inland waterway transport only.
If the freight is containerized and delivered only to the terminal, the use of CPT is recommended.
11.CIF Incoterms – Cost, Insurance and Freight (named port of destination)
CIF is a very common format and it is identical to CFR: the only difference is that the seller also pays to ensure the merchandise.
In Cost, Insurance and Freight, the seller is responsible for delivering the goods onboard the vessel at the port of shipment – not port of destination. In addition, the seller is paying for the transport and obligated to secure insurance, but only for minimum coverage to the named port of destination.
The buyer assumes all risk once the goods are onboard the vessel for the main carriage, but does not assume costs until the freight arrives at the named port of destination.
CIF applies to ocean or inland waterway transport only. It is commonly used for bulk cargo, oversized or overweight shipments.
If the freight is containerized and delivered only to the terminal, the use of CIP is recommended.
As mentioned earlier, the parties may choose to use older terms, and the following that is no longer specified by the ICC may still be encountered.
DAF – Delivered at Frontier (named place of delivery)
For rail and road shipments. Seller pays for transport to the country frontier. Buyer arranges for customs clearance and pays for transport from frontier to his site. Risk passes at the frontier.
DES – Delivered Ex Ship (named port of delivery)
You may come across this with bulk commodities where seller owns or charters their own vessel. Unlike CFR and CIF, the seller bears not just cost, but risk and title until the arrival of the vessel at the delivery port. Buyer pays to unload plus customs duties, taxes, etc.
DEQ – Delivered Ex Quay (named port of delivery)
The same as DES, except risk passes only when goods are unloaded at the destination.
DDU – Delivered Duty Unpaid (named place of destination)
Seller delivers the goods to the ultimate destination in the contract. The goods are not cleared for import or unloaded. The buyer is responsible for all costs and risks beyond this point. Any variation must be explicit in the contract.
What is the legal status of Incoterms?
It is important to note the limitations of Incoterms. They do not replace the many and varied legal systems that apply in the world’s countries and trading blocs: and it is these often infuriating legal minefields that freight forwarders encounter daily and in so doing, fully justify their fees.
Incoterms are designed to codify basic concepts of risk, the allocation of costs, the point at which delivery takes place, and the responsibility for insurance. This has been hugely beneficial to world trade: it allows insurers to operate effectively at a global level and for all the countries which adhere to the Incoterms rules (that is, most of them) it oils the wheels (and keels) of trade.
What International Commercial Terms do not cover are the issues like who covers the goods before and after the delivery process; who pays VAT or other sales taxes; the precise nature of the contract between buyer and seller (although ICC does have model contracts and clauses, these are not legally binding); or when things go wrong, how alleged breaches of contract are settled. The sales contract will state which country’s legal system will apply in that event.
International legal harmonisation on trade law issues is something that UNICTRAL has been working on for many years, with some success, but much remains to be done.
Other moves that will help international trade have come from the Rotterdam Rules, endorsed by 22 countries accounting for 25% of world trade – they allow for multi-modal door-to-door shipments to have built-in liabilities and insurance issues contained within individual contracts. Another potential step forward towards contractual uniformity comes from the 59 countries (including France, China and the United States but not yet the UK) that are signatories to the U.N. Convention on Contract for the International Sale of Goods (“CISG”).