Shipping goods on an international scale is a far more sophisticated process than just transporting an object from one point to another.
There are several procedures and regulations in place to ensure the safe delivery of products to their destination and it is essential for people importing/exporting goods to keep track of all the relevant terminology – especially your obligations and responsibilities as an importer.
Only by understanding these freight forwarding terms and definitions, can you minimise errors and avoid misunderstandings in the supply chain.
If you are about to begin importing or exporting with your business or want to target customers worldwide, then you might be interested in knowing the following freight shipping terms:
Incoterms
Incoterms are international rules for the interpretation of trade terms. Incoterms make international trade easier and help traders in different countries to understand one another.
These standard trade definitions that are most commonly used in international contracts are protected by ICC copyright. It is important that you know the following terms of trade: EXW, FOB, CFR, CIF, CIP, DAT, DAP, DDP & FCA.
A thorough understanding of these terms will ensure you understand your costs and risks along the supply chain. You will understand where risk begins and where it ends and what you will need to organise with regards to importing/exporting.
The term depicts a legal responsibility for both parties and it is often mentioned on the other legal documents such as the bill of lading and commercial invoices. These terms will also help to work out what you need to ask your freight forwarder for with regards to a quote.
NOTE: Never pay upfront for any international sale! Always check that the factory you are dealing with is “real” and never ever pay money if the bank details change during the transaction. The internet has made fraud and internet IP theft relatively easy, so please protect yourselves.
You can talk to a global logistics company like Stockwell International who will assist in all of these details including educating you on your obligations regarding the commodity (product) you want to import and export.
FCL & LCL
FCL freight forwarding stands for Full Container Load and LCL for Less than Container Load.
The difference between these shipping terms may sound self-explanatory.
FCL is applied to a situation when a shipper moves a sufficient amount of goods to fill a whole shipping container. Therefore, LCL is applied to a situation when the shipper is moving a number of goods that does not require a whole shipping container.
In some situations, individual LCL consignments are combined and shipped with other LCL consignments inside a single shipping container. In this case, shippers should be assured that their individual consignments will be separated from the others when they reach their destination.
Bill of Lading
This is one of the most standard shipping terms there are. The Bill of Lading is a legal document issued by the carrier to the shipper. This includes the basic details like the type of goods being shipped, their quantity, the destination address, and the freight rates.
The Bill of Lading can be regarded as an agreement between the two parties to follow given rules and regulations, guaranteeing the timely delivery of goods.
Detention
This is a fee that you might have to pay if your shipping containers have been picked up from the port of destination but have not been returned empty to the shipping line on time.
Shippers must pay an extra fee, depending on the number of days they have taken to return empty containers. Therefore, it is crucial for you to be on time when unloading and returning shipping containers when importing goods.
Rollover
Rollover is one of those import/export terms that are used in a situation when the container does not load onto the ship on time. Rollover means cargo is switched from its original sailing to a later one.
There are various reasons why a container may not get loaded onto its original scheduled ship, such as late delivery of cargo to the terminal, overbooking, vessel omissions and customs problems. In rollover situations, the carrier reschedules cargo containers to the next sailing with available space or even rollover other cargo to place the shipment on the next sailing that is already booked to capacity.
Port Storage
Port Storage is another fee a shipper can be hit with after their cargo is delivered to a port. Ports charge port storage fees when shipping containers remain at the port beyond their allotted free days.
Generally, when shipping containers are unloaded from a cargo ship, they then get moved to the container yard and the port provides a free storage period that, depending on the port, may vary depending on the quantity or weight of the containers or may be a standard number of days for all containers.
Shippers are responsible for taking care of the custom clearance procedures and getting their cargo trucked out of the port within their allotted free days or face port storage fees.
Stuffing and Stripping
Stuffing and Stripping are two shipment terms that are often used together. Stuffing is the process of loading containers with loose products before their shipment. Stripping is the unloading of a shipping container once the international freight forwarding is complete.
Bonus Terms
We couldn’t limit ourselves to just seven terms, so here are a few more you should know:
Free On Board (FOB): used to indicate whether the seller or the buyer has assumed liability for goods that are damaged or destroyed during shipment. FOB origin means the buyer takes the risk and FOB destination means the seller holds the risk of loss until the goods are delivered to the buyer.
Cost and Freight (CFR): a contract term which requires the seller to arrange for the carriage of goods to the buyer’s port of destination.
Certificate of Origin: a document that provides proof of where goods were manufactured. Most countries require a Certificate of Origin for customs clearance and to calculate duties.
There are many other important aspects to importing so please call one of our staff to discuss in detail, before you start the import/export process.
