Glossary of Terms Used in International Shipping

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Understanding the Language of Global Logistics

For professionals new to global logistics, the terminology of international shipping can appear needlessly complex. However, these terms represent carefully developed solutions to the practical challenges of moving goods overseas. At its core, the vocabulary of worldwide logistics serves three critical business functions:

Risk Allocation: Terms like Incoterms® create clear rules about when responsibility transfers between buyers and sellers during transit. This prevents costly disputes when goods are damaged or delayed during international shipping, which can impact commercial agreements.

Cost Management: Precise terminology around container types, freight classes, and surcharges allows businesses to accurately compare and control their international shipping costs. Understanding these distinctions can mean the difference between profit and loss on overseas transactions.

Operational Coordination: Standardized paperwork and procedures enable seamless handoffs between manufacturers, international shipping companies, customs authorities, and buyers across different legal systems and languages.

The most important concepts break down into several categories:

Documentation Terms

The Bill of Lading, for instance, isn't just paperwork - it's a legally binding contract, receipt, and title document all in one. Proper documentation ensures that internationally shipping goods clear customs and reach their destination without unnecessary delays or storage fees.

Commercial Terms

Incoterms® such as CIF (Cost, Insurance, and Freight) or FOB (Free On Board) precisely define which party bears costs and risks at each stage of the journey. These terms directly impact your bottom line by determining who pays for what portions of the international shipping costs.

Logistics Terms

Understanding container specifications (TEU/FEU) and global cargo transportation options (FCL/LCL) allows businesses to optimize their cargo space and reduce expenses. An international shipping company may quote different rates based on how efficiently you can utilize container space.

Financial Terms

Charges like demurrage (port storage fees) or bunker adjustments (fuel surcharges) can significantly impact total international shipping costs if not properly anticipated and managed.

For professionals entering global trade, mastering this terminology isn't about memorizing definitions—it's about understanding the business logic behind the terms. Each concept represents a solution developed through decades of global commerce to address specific operational challenges. When you understand both what the terms mean and why they matter, you gain the ability to:

Negotiate more effectively with global shipping companies
Accurately compare and predict international shipping costs
Structure contracts that properly protect your interests
Troubleshoot problems when they inevitably arise

The following terms represent the essential vocabulary needed to intelligently discuss options with logistics providers, accurately budget for shipments, and make informed decisions about global supply chains.

Global Logistics Terms

Ad Valorem
According to the value. For example, an import duty rate of 10% ad valorem means that 10% of the commodity's value is taxed.

Agent
An independent person or corporation acting as a representative, usually in a foreign market, who attempts to sell products for an overseas seller (principal) and earns a commission on successful sales. Agents are not typically involved in the delivery or servicing of products.

Air Waybill (AWB)
The document covers air transport. It is issued by the carrier, whether an airline or a freight forwarder, as a non-negotiable document serving as a receipt to the consignor for the commodity and containing the conditions of transport. It also displays the consignee's details, allowing them to be contacted upon the arrival of the goods.

HAWB
House AWB is issued by a freight forwarder acting as a carrier.
MAWB
The term used for the AWB issued on an airline's stationery to a freight forwarder for all of the items covered by one or more House AWBs on the one flight going from one loading airport to one destination airport.

Applicant
The buyer has requested that his bank arrange an L/C on his behalf. In some countries where the buyer may have trouble arranging an import license, the applicant may be a third party acting on behalf of the buyer.

BAF
Bunker Adjustment Factor - an adjustment to shipping companies' freight rates to consider fluctuations in fuel oil (bunkers) costs for their ships.

Bank Guarantee
A document issued by a bank acting as a guarantor for their customer. The bank's guarantee is accepted because of its status and creditworthiness compared to its customers. Often used in conjunction with major projects, in the form of Bid Bonds, Performance Bonds, and Warranty Bonds, commonly for 10% of the contract value, all of which provide the buyer with a measure of comfort should the seller not fulfill their obligations at various stages of the contract.

Beneficiary
The seller in whose favor an L/C is issued, ie, the person who will "benefit" from the L/C. (See also Letter of Credit).

Bill of Exchange
An unconditional order in writing, issued by the seller (drawer) instructing the buyer (drawee) to pay the seller's bank (payee) a specified amount (normally the full invoice value) on demand (at sight) or at a fixed or determinable future time. A suitable form can be obtained from the seller's bank or drawn upon a blank sheet of paper.

Bill of Lading (B/L)
The document covers transport by sea. Signed by the carrier, whether a shipping line or a freight forwarder, it serves as a receipt to the consignor for the commodity, as evidence of the contract of transport containing the conditions of transport, and as a document of title by which possession of the items can be transferred. Typically, a B/L is issued in a set of three signed originals or negotiables, one of which must be presented to claim the goods, upon which the others become void.

Combined Transport / Multimodal B/L
A B/L covers transport by shipping containers from an inland place before the loading port to an inland place beyond the destination port. Most freight forwarders and shipping companies title their B/Ls as "Bill of Lading for Combined Transport or Port-to-Port shipment" or similar.
Congen B/L
A standard form of a bill of lading used in shipments by chartered ships.
Clean B/L
A bill of lading indicates that the carrier received the cargo in good order and condition, without any clauses declaring a defective condition in the goods and/or their packing.
Dirty/Foul/ Claused B/L
A bill of lading with any clauses declaring a defective condition in the goods and/or their packing. Almost invariably not acceptable to banks for presentation under L/Cs and almost always unacceptable to the buyer. (See also Clean Bill of Lading).
House B/L
A freight forwarder acting as a carrier issues a bill of lading. The contract's terms and conditions may differ from those contained on the shipping company's B/L, which can, in extraordinary circumstances, lead to legal complications should a dispute arise.
Master B/L
The term used for the B/L issued by a shipping company to a freight forwarder for all of the commodities covered by one or more House B/Ls on the one ship going from one loading port to one destination port.
Ocean B/L
A B/L covering the port-to-port shipment. Typically, banks continue to use this term on Letters of Credit (L/Cs) even though the majority of international shipments are containerized (See also Multimodal Bill of Lading).
On Board/ Shipped On Board B/L
A B/L evidences that the carrier received the load and loaded it on board in good order and condition. "Shipped" indicates that not only were the goods on board, but the ship departed the port.
Order B/L
A negotiable B/L, in which the commodity is consigned "to order of" a particular party, often the shipper, in which case the consignee is mostly shown simply as "to order."
Straight B/L
A non-negotiable B/L in which the commodity is consigned directly to a named consignee.

Box
A colloquial term for a shipping container.

Breakbulk
Non-containerized cargo.

BSRA
Basic Service Rate Additional - the charge levied by shipping companies to importers for LCL cargo, including the port charges, transport to an unpacking depot (see CFS), subsequent sorting and storage of the cargo, and finally loading onto a vehicle, collecting the goods for delivery to the buyer.

C&F Cost and Freight (named port of shipment) - Incoterms
This abbreviation was changed to CFR in 1990, but it is still commonly used.

CAF
Currency Adjustment Factor - an adjustment to shipping companies' freight rates to consider the effect of fluctuations in currency exchange rates over time.

Carnet
A document, generally issued by a Chamber of Commerce that is a member of the International Chamber of Commerce (ICC), enables the holder to temporarily import merchandise into certain countries as samples or for display purposes without incurring import duty or posting a bond for the duty. The issuer will require the holder to give them security through a bank guarantee.

Cash Against Documents (CAD)
An arrangement whereby the buyer pays for goods as soon as they receive the seller's documents. An intermediary, such as a bank or an agent acting on behalf of the seller, is typically involved to ensure that the transaction proceeds smoothly.

Certificate
A general term for any document issued by the seller or another party certifying that some action or fact about the items has occurred.

Certificate of Origin
A certificate stating the country of origin of the commodity. Depending on the importing country's requirements, this can be as simple as being issued by the seller or the manufacturer. In most cases, however, it must be issued by a Chamber of Commerce in the country of origin.

CFR

Cost and Freight (named port of destination) - Incoterms
The seller must pay the costs and freight necessary to bring the load to the named destination; however, the risk of loss or damage to the load is transferred from the seller to the buyer when the load passes the ship's rail at the port of shipment. The seller is responsible for clearing the community for export. This term requires the load to be carried in a "seagoing vessel."

CIF

Cost, Insurance, and Freight (named port of destination) - Incoterms
This term is similar to CFR, but with the additional requirement that the seller must procure marine insurance against the buyer's risk of loss or damage to the load. This term requires explicit cargo carriage in a "seagoing vessel".

CIP

Cost and Insurance Paid to (named place of destination) - Incoterms
This term is similar to CPT, but with the additional requirement that the seller must procure marine insurance against the buyer's risk of loss or damage to the commodity, covering the period from the carrier's delivery of the load to the buyer. According to the FCA, this term can be applied to any mode of transport.

CFS
Container Freight Station - a place or depot where individual LCL cargo is loaded into, and unloaded from, containers

Charterparty
A voyage charter party is a written contract between a shipowner and a charterer who rents the use of the ship or part of its freight capacity. It covers transporting cargo from one or more ports to another, detailing the costs and responsibilities involved.

Commercial Invoice
A document issued by the seller and addressed to the buyer provides details of the individual transaction, including a complete description of the goods, prices, currency, delivery terms, and payment terms, among other relevant information. The customs authorities in the importing country generally use this to assess customs duties payable.

Conference
A group of shipping companies that offer regular services on specific routes at published rates. Sometimes referred to as liner shipping. Non-conference shipping lines are sometimes referred to as independent or outsiders.

Consignee
The party shown on the bill of lading or air waybill to whom the shipment is consigned need not always be the buyer; in some countries, it will be the buyer's bank. See also Bill of Lading—Order B/L and Notify Party.

Consolidation
Where a freight forwarder groups, or consolidates, one or more shipments for one or more shippers to the same destination as one overall shipment. (See also House B/L and Master B/L).

Consular Invoice
The seller's commercial invoice is certified, for a fee, in the exporting country by the consular representative of the importing country, a requirement now observed by only a handful of countries.

Container ship
The ship is designed to take ISO (International Standards Organisation) containers in vertical cells within the ship's holds and on the deck. These ships generally rely on the wharf's infrastructure to load and unload the containers.

Conventional ship
The ship was designed with holds that can load almost any type of loose cargo, such as drums, sacks, crates, pallets, etc. These ships are designed with their derricks for loading and unloading.

CPT Carriage Paid To (named place of destination) - Incoterms
The seller must pay the costs and freight necessary to bring the goods to the named destination. Still, the risk of loss or damage to the commodity is transferred from the seller to the buyer when the load is delivered to the carrier's custody. According to the FCA, this term may be used for any mode of transport.

Customs Broker
A person or corporation licensed by the Australian Customs Service to handle the clearing of goods through customs on behalf of importers.

Customs Duty
A tax, duty, or tariff levied upon goods entering a country at the time of import. Usually based on the value of the commodity (ad valorem), the physical nature of the goods, such as quantity or weight, or a combination of the value and other factors.

CY
Container Yard - a place or depot where individual containers are held before loading on board a ship and after unloading from the ship. Can be inland or at the dockside.

DAF

Delivered at Frontier (named place) - Incoterms
The seller must pay the costs and freight to bring the goods to a land frontier, but before the customs border of the adjoining country. This term applies only to land transport.

DDP

Delivered Duty Paid (named place of destination) - Incoterms
The seller fulfills his obligation to deliver when the goods have been made available at an agreed point at the named place in the country of importation, often the buyer's premises. The seller must bear the risks and all costs, including duties, taxes, and other charges, for delivering the goods thereto cleared for importation. This term should not be used if the seller cannot directly or indirectly obtain any necessary import license or approval. This term can be applied to all modes of transportation.

DDU

Delivered Duty Unpaid (named place of destination) - Incoterms
The seller fulfills his obligation to deliver when the load has been made available at an agreed point at the named place in the country of importation. The seller must bear the risks, costs, and other charges associated with delivering it to the buyer, excluding duties and taxes. The buyer is responsible for customs clearance, and if they fail to do so, they are responsible for the consequences. This term can be applied to all modes of transportation.

Documentary Collection
A method whereby the seller uses the services of his bank to ensure that the buyer only receives the shipping documents under conditions specified by the seller, ie, upon payment or acceptance of the seller's bill of exchange. (see Bill of Exchange, Cash Against Documents, and URC522).

Documentary Credit
The officially correct term for a Letter of credit is "documentary Credit." The UCP500 only mentions "Documentary Credit," not "Letter of Credit." (See also Letter of Credit and UCP500.)

Demurrage
A carrier is charged extra when loading and/or unloading is not completed within the specified time.

DEQ

Delivered Ex Quay (named port of destination) - Incoterms
Like DES, the seller must also arrange for discharge onto the quay or wharf.

DES Delivered Ex Ship (named port of destination) - Incoterms
The seller makes the shipment available to the buyer on board the ship at the destination port and is responsible for all costs and risks until that point, as well as arrival within the given period. Typically, this term refers to bulk cargo carried on chartered ships.

Documents against Acceptance (D/A)
See Documentary Collection

Documents against Payment (D/P)
See Documentary Collection

Draft
See Bill of Exchange

Drawee
See Bill of Exchange

Drawer
See Bill of Exchange

Dumping
To gain a competitive advantage over other suppliers, the practice of selling goods in a foreign market at a price lower than what they would be sold at in the home market. If this is shown to be injurious to locally-based suppliers in the foreign market, that country's government may impose remedies through anti-dumping duties.

Duty Drawback
Suppose items that have been imported, and upon which customs duty has been paid, are exported or used to manufacture goods that have been exported. In that case, the exporter may be entitled to a refund of the original import duty paid.

Exchange Rate
The price of one currency in terms of another.

Export
To send goods from a country to an overseas destination.

EXW

Ex Works (named place) - Incoterms
The seller's only responsibility is to make the load available at his premises (ie, works or factory). The buyer bears the entire cost and risk associated with transporting the load from the origin to the desired destination and must be able to fulfill any required export formalities. The term represents the seller's minimum obligation.

FCA

Free Carrier (named place)- Incoterms
The Seller fulfills their obligation to deliver when they hand over the goods, cleared for export, into the charge of a carrier or another person named by the buyer at the named place or point. This term may be used to refer to any mode of transport, including multimodal transport.

FAK
Freight All Kinds, as a general description of the commodity on a master B/L, is covered under the one freight rate regardless of the nature of the individual goods.

FAS

Free Alongside Ship (named port of shipment) - Incoterms
The seller fulfills his obligation to deliver when the cargo is placed alongside the vessel at the named port of shipment. This means that the buyer must bear all costs and risks of loss or damage to the goods from that point. The seller is responsible for clearing the goods for export. This term can only be used for sea or inland waterway transport, and its correct use is limited to situations where a chartered ship is involved or when the cargo is not containerized.

FCL
Full Container Load, generally but not always, indicates that the items in the container are from a single seller who packed the container and are destined for a single buyer who will unpack the container.

FI (Free In)

In the international ocean freight terminology, the word “Free” means “Not included.” I.e., if it is FI, then the shipper is responsible for the cost of loading everything onto a vessel for international shipping overseas.

FO (Free Out)

FO is the international shipping term in ocean freight that indicates that the consignee (recipient) is responsible for the cost of unloading cargo from the vessel at the destination.

FIO (Free In and Out)

FIO is an international shipping term used in the ocean freight industry. It means that the carrier is not responsible for the cost of loading and unloading shipments onto or from the vessel.

FIS Free into Store - Incoterms
An unofficial trade term indicating that the seller's price includes all costs up to delivery to the buyer. This has a similar effect to DDP.

Flat Rack
A device designed for cargo that will not fit into containers to be shipped on container ships. Consists of a base and two ends of the exact dimensions of an ISO container.

FOB Free On Board (named port of shipment) - Incoterms
The seller fulfills his obligation to deliver when the load has passed over the ship's rail at the named port of shipment. This means that the buyer must bear all costs and risks of loss or damage to the goods from that point. The seller is responsible for clearing the goods for export. This term can only be used for sea or inland waterway transport. This is probably the most commonly misused term in international trade. Its correct use now is only where the ship's rail is relevant to the transaction, such as when using a chartered ship or when things are not containerized. It cannot apply to air freight.

Force Majeure
A clause in a contract protects both parties if part of the contract cannot be complied with due to causes outside the parties' control and could not have been avoided by exercising due care, such as floods, earthquakes, civil unrest, and similar events.

Freight Forwarder
A person or corporation that arranges the transport of goods on behalf of either the seller or buyer. In many cases, the freight forwarder will also consolidate several small shipments into one larger one to take advantage of better freight rates. In most cases, the freight forwarder will assume the legal liabilities of acting as a carrier.

Gross Weight
The total weight of a shipment, including its packaging materials, such as crates and pallets.

Groupage
see Consolidation

Hazardous Goods
Certain cargoes, such as explosive, radioactive, poisonous, and flammable items, as prescribed by the UN, must be declared to the carrier before being loaded onto ships or aircraft. The penalties for misdeclaring or failing to declare hazardous cargo are extremely high.

Import
To bring goods from overseas into one's country.

Incoterms 2000
The International Chamber of Commerce issued a set of rules for interpreting the most commonly used trade terms in foreign trade, which are recognized worldwide.
iccwbo.org/incoterms

Insurance
A process whereby someone who is at risk of something happening to their financial detriment (the assured) pays someone else (an underwriter) a fee (premium) to bear that risk on their behalf.

Insurance Certificate
A certificate issued by the insurance underwriter gives details of a particular transaction held insured under an insurance policy.

Policy
Contract of insurance.

Landed Cost
The total cost that an importer pays to have goods delivered to their premises typically includes the cost of the commodity, international transportation, insurance premiums, port charges, customs duties, delivery charges, and bank charges, among others.

LCL
A Less-than-Container Load (LCL) is a small cargo that cannot be economically shipped as a Full Container Load (FCL). It will be combined with other LCL cargo from other shippers going to the same destination port into an FAK FCL. See also Consolidation.

Letter of Credit
A conditional order in writing, issued by a buyer's bank, guarantees payment to the seller upon presentation of the stipulated documents, strictly in accordance with the credit terms. It is strongly recommended that every exporter and importer have a copy of the "Uniform Customs and Practice for Documentary Credits," an International Chamber of Commerce publication (No. 500). These are available from most major Chambers of Commerce or from us at AUD 20.00, including postage, handling, and GST, to Australian addresses only.

Letter of Credit - Confirmed
A letter of credit, which a local bank has further guaranteed, is generally issued in the exporter's country.

Letter of Credit - Irrevocable
A credit that cannot be revoked, canceled, or amended unless the beneficiary agrees. Virtually all L/Cs are issued under UCP500.

Letter of Credit - Discrepancy
Where a document does not comply strictly with the terms and conditions of an L/C.

Letter of Credit - Under Reserve
When documents with discrepancies are negotiated against a Letter of Credit (L/C), the negotiating bank reserves the right to reclaim the funds from the exporter if the discrepancy is not acceptable to either the buyer or the L/C-issuing bank.

Liner terms
Freight rates typically include loading and unloading charges, as offered by regular shipping lines.

Manifest
A list of the various shipments being carried on a ship or aircraft.

Net Weight
The weight, or mass, of the goods themselves without any packaging.

Notify Party
Upon arrival of the goods at the destination port, the carrier will advise the person or company.

On Board / Shipped On Board
A notation on a bill of lading indicated that not only did the carrier receive the goods in good order and condition, but they were also placed on board the ship.

Open Account
The seller allows the buyer to send payment at some future time (ie, 60 days).

Packing List
A document that details the contents, and often dimensions and weight, of each package or container.

Payee
See Bill of Exchange.

Phytosanitary Certificate
A document issued by the Department of Agriculture, Fisheries, and Forestry for the export of plants or plant products from Australia.

Port charges
See APCA, BSRA, and PSC

Pre-payment
The buyer pays the seller for the goods before they are shipped.

Pro Forma Invoice
The exporter issues a sample invoice before shipment, which the importer may require to arrange import approvals or apply for a letter of credit. The invoice can also be used as an offer to sell goods.

PSC
Port Service Charge is similar to APCA.

Reefer
Colloquial for a refrigerated container

RO-RO
A "roll-on/roll-off" ship is where loaded transport vehicles are driven onto it, such as a car ferry, or where containerized and other cargo is loaded into it by forklifts or similar. Shipping Marks

Specific markings on packages to identify them apart from other packages and to identify them on the relevant documents.

Sight Draft
A bill of exchange is drawn "at sight," meaning that when the drawee accepts the bill, it falls due for payment. See also Bill of Exchange.

STC
Said to contain, often placed before the description of the commodity on a bill of lading, because the carrier does not know the nature or quantity of goods placed in the packages or the containers.

SWIFT
Society for Worldwide Interbank Financial Telecommunications, whereby banks can electronically transfer funds, issue L/Cs, etc.

T/T
Telegraphic transfer is an electronic method of transferring funds between banks, typically utilizing the SWIFT network.

Tare
The weight of the packaging or container, excluding the goods.

Tenor
The time before a bill of exchange falls due for payment

Term Draft
A bill of exchange is drawn for a period other than at sight or on demand.

TEU
A twenty-foot equivalent unit (TEU) describes the carrying capacity of a train or ship. For example, a 40-foot container takes up the space of two TEUs.

THC
CY and CFS operators levied the terminal handling charge for goods passing through their operations.

To Order
See Bill of Lading, Order B/L.

Transshipment
Goods are transferred from one ship to another at an intermediate port. It can also refer to goods being transferred from one method of transport to another.

UCP500
Uniform Customs and Practice for Documentary Credits, an International Chamber of Commerce publication (No. 500), outlines guidelines for banks to follow when dealing with Letters of Credit (L/Cs). (See also Letter of Credit).

URC522
Uniform Rules for Collections, International Chamber of Commerce publication 522, lays out guidelines for banks to follow when handling Collections. (See also Collections).

Value for Duty
The value of an import declared to the customs upon which customs duty will be calculated. In Australia, the value of the goods at the time of export from the exporting country is generally the FOB value, using the exchange rate at the date of export. Many other countries use the CIF value at the time of declaration in the importing country.

Volumetric
A notional or calculated weight for bulky goods sent by air. Generally stated as 6000 cm³ = 1 kg, the total volume in cubic centimeters is divided by 6000 to obtain an equivalent weight in kilograms. The airline or forwarder will charge whichever is greater than the actual and volumetric weights. Also shown sometimes as 167 kg = 1 cbm

Wharfage
See APCA, BSRA, and PSC.