Glossary of International Trade Terms

A

ADR (Average Daily Rate): The average rate paid per unit over a specific period.

AI (Artificial Intelligence): Technology used for automation in sourcing, logistics, and demand forecasting.

AMS (Advanced Manifest System): A U.S. Customs requirement for import cargo.

APEC (Asia-Pacific Economic Cooperation): A forum that facilitates economic growth and trade in the Asia-Pacific region.

Arbitration: A method of resolving disputes outside of court where an impartial third party makes a binding decision.

ASNs (Advanced Shipping Notices): Electronic notifications sent to buyers about pending deliveries.

B

B2B (Business-to-Business): Transactions between businesses.

B2C (Business-to-Consumer): Transactions between businesses and consumers.

Bill of Lading (B/L): A document issued by a carrier to acknowledge receipt of cargo.

BoQ (Bill of Quantities): A document listing the quantity and type of goods in an order.

BOM (Bill of Materials): A comprehensive list of materials and components needed to manufacture a product.

Brokerage Fees: Charges incurred for services provided by a broker or intermediary.

C

CIF (Cost, Insurance, and Freight): A shipping term indicating that the price includes cost, insurance, and freight.

COO (Certificate of Origin): A document stating the country where the product was manufactured.

CQI (Continuous Quality Improvement): A strategy for enhancing product and process quality.

CPSC (Consumer Product Safety Commission): A U.S. agency regulating product safety.

C-TPAT (Customs-Trade Partnership Against Terrorism): A U.S. Customs initiative aimed at strengthening international supply chains.

Customs Clearance: The process of moving goods through customs so they can enter or leave a country.

Cargo Insurance: A policy that protects against potential loss or damage to goods during transport.

D

DAP (Delivered at Place): The seller delivers goods to the buyer’s location, covering most transport costs.

DDP (Delivered Duty Paid): The seller pays for all costs, including duties, until the goods reach the buyer.

Demurrage: Charges incurred when cargo is not removed from a port or terminal within a designated time frame.

Due Diligence: The comprehensive appraisal of a business or supplier before entering into an agreement.

Drop Shipping: A method where a seller does not keep goods in stock but transfers customer orders to a manufacturer or wholesaler.

E

ETA (Estimated Time of Arrival): The estimated date and time when a shipment will arrive at its destination.

ETD (Estimated Time of Departure): The estimated date and time when a shipment will depart from its origin.

EXW (Ex Works): A shipping arrangement where the buyer is responsible for all transport costs once goods leave the seller’s premises.

EORI (Economic Operators Registration and Identification): A unique identification number used in trade with EU countries.

End-to-End Supply Chain: Refers to the complete process from product creation to delivery to the end customer.

F

FOB (Free On Board): Indicates the seller’s responsibility ends when goods are loaded onto a transport vessel.

FCL (Full Container Load): Refers to a shipment that takes up an entire container.

FDA (Food and Drug Administration): A regulatory body ensuring the safety of food and medical imports.

Factory Audit: An evaluation of a supplier’s manufacturing facilities and capabilities.

Force Majeure: A clause in contracts that removes liability for unforeseeable and uncontrollable events that prevent contract fulfillment.

Freight Forwarder: An intermediary that arranges the shipment of goods on behalf of the seller or buyer.

Free Trade Zone (FTZ): Areas where goods may be imported, stored, and processed with reduced tariffs.

G

GATT (General Agreement on Tariffs and Trade): An agreement to promote international trade by reducing tariffs.

GMP (Good Manufacturing Practice): Regulations that ensure products are produced consistently and meet quality standards.

Gross Weight: The total weight of goods, including packaging.

GSP (Generalized System of Preferences): A trade program allowing preferential duty-free entry of goods from developing countries.

Goods in Transit Insurance: Coverage for goods against damage or loss during shipment.

H

HS Code (Harmonized System Code): An internationally standardized system of names and numbers for classifying traded products.

HACCP (Hazard Analysis Critical Control Point): A management system focused on food safety.

Harmonized Tariff Schedule (HTS): A classification system used to define product tariffs.

Handling Charges: Costs associated with processing and handling goods during shipment.

High-Risk Cargo: Shipments that are susceptible to theft or damage due to their value or nature.

I

INCOTERMS (International Commercial Terms): Standardized trade terms defining buyer and seller responsibilities in international transactions.

IPI (Inland Point Intermodal): Transportation from a port to an inland point.

Inspection Certificate: A document certifying goods have been checked for compliance before shipment.

IPR (Intellectual Property Rights): Legal rights protecting creations such as inventions and trademarks.

In-Bond: A term for goods that are transported under customs control but not cleared for entry.

J

JIT (Just-In-Time): A strategy to improve efficiency by receiving goods only when needed.

Joint Venture: A business arrangement where parties agree to pool resources for a specific task or project.

Jumbo Cargo: Large-scale or oversized shipments requiring special transport arrangements.

K

KPI (Key Performance Indicator): A measurable value used to assess the success of an organization in achieving key business objectives.

Knockdown Kit: A collection of parts that are ready to be assembled at the destination.

Kaizen: A practice of continuous improvement, often applied to manufacturing and business processes.

Known Shipper Program: A security initiative for air cargo to ensure the reliability of shippers.

L

LCL (Less than Container Load): A shipment that does not fill a container and is consolidated with other shipments.

LC (Letter of Credit): A bank-issued document guaranteeing that a buyer’s payment will be received on time and for the correct amount.

Lead Time: The time it takes from order placement to delivery of goods.

Logistics Management: Coordination of the flow of goods from origin to delivery.

Last Mile Delivery: The final step of the delivery process where goods reach the end customer.

M

MOQ (Minimum Order Quantity): The smallest quantity a supplier is willing to sell.

MRP (Material Requirements Planning): A system used to calculate the materials needed for production.

MRO (Maintenance, Repair, and Operations): Supplies needed for upkeep of facilities and equipment.

Manifest: A document listing the cargo being transported.

Multimodal Transport: The use of multiple modes of transport (e.g., ship, truck, rail) for a single shipment.

N

NAFTA (North American Free Trade Agreement): An agreement facilitating trade between the U.S., Canada, and Mexico.

NDA (Non-Disclosure Agreement): A legal contract that ensures confidentiality.

Non-Conformance Report (NCR): A report documenting products or processes that do not meet standards.

NPS (Net Promoter Score): A measure of customer loyalty and satisfaction.

Notices of Rejection: Formal notifications given when goods do not meet import requirements.

O

OEM (Original Equipment Manufacturer): A company that produces components for use in another company’s end product.

ODM (Original Design Manufacturer): A company that designs and manufactures a product to be rebranded by another company.

OTIF (On Time In Full): A metric measuring how often deliveries are on time and complete.

Order Acknowledgement: A document confirming that a supplier has received and accepted a buyer’s order.

Outsource Manufacturing: Contracting out production to a third-party manufacturer.

P

PO (Purchase Order): A formal document from a buyer to a supplier outlining the details of a purchase.

PPE (Personal Protective Equipment): Safety equipment used during production.

Packing List: A detailed list of items included in a shipment.

Port of Discharge: The port where cargo is unloaded from a vessel.

Pro Forma Invoice: A preliminary bill of sale sent before the delivery of goods.

Q

QC (Quality Control): Measures taken to ensure products meet specified standards.

QMS (Quality Management System): A system ensuring consistent product quality and compliance with regulations.

Quarantine: The isolation of goods to check for compliance and prevent contamination.

Quotation: A supplier’s formal response with pricing and terms for an inquiry.

R

RFQ (Request for Quotation): A document requesting price and terms from suppliers for specific goods or services.

ROHS (Restriction of Hazardous Substances): A directive limiting certain hazardous materials in products.

RMA (Return Merchandise Authorization): A formal approval required before returning products.

Reorder Point: The inventory level that triggers a new order to prevent stockouts.

Reverse Logistics: The process of moving goods from their destination back to the manufacturer for return, recycling, or disposal.

S

SKU (Stock Keeping Unit): A unique identifier for each product.

SLA (Service Level Agreement): A formal document outlining service expectations between a provider and client.

Supplier Verification: The process of confirming a supplier’s qualifications and reliability.

Supply Chain: The network of resources involved in the production and distribution of a product.

Six Sigma: A set of techniques for process improvement focused on reducing defects.

T

T/T (Telegraphic Transfer): An electronic payment method for transactions.

Tariff: A tax or duty imposed on imported goods.

Third-Party Inspection (TPI): An independent inspection performed by an external organization.

Trade Agreement: An accord between nations to reduce tariffs and import barriers.

Trade Terms: Conditions defining the responsibilities and risks of buyers and sellers.

U

UPC (Universal Product Code): A barcode identifying products for sale.

UCC (Uniform Commercial Code): A comprehensive set of laws governing commercial transactions in the U.S.

UCR (Unique Consignment Reference): A number identifying shipments for customs.

Underwriters Laboratories (UL): A global safety certification company.

Unit Load Device (ULD): Containers used to load cargo on wide-body aircraft and specific container ships.

V

VAT (Value-Added Tax): A tax added at each stage of the production and distribution process.

Vendor Managed Inventory (VMI): A system where the supplier monitors and replenishes inventory as needed.

Verified Gross Mass (VGM): The declared weight of a packed container, required under international maritime regulations.

Volumetric Weight: The space a shipment occupies, used to calculate shipping costs.

W

Waybill: A document with shipping details that accompanies a shipment.

WTO (World Trade Organization): An international organization that regulates trade between member countries.

Warehouse Receipt: A document issued by a warehouse listing goods stored.

Wholesaler: A business that sells goods in bulk to retailers or other merchants.

X

X-Ray Inspection: A method of non-invasive inspection for quality and safety checks.

X-Works (EXW): A shipping term where the buyer is responsible for all shipping and logistics costs once the goods leave the seller’s facility.

XML (eXtensible Markup Language): A data format used in electronic data interchange (EDI).

Y

Yield Rate: The proportion of products produced without defects.

Yard Management System (YMS): A system for managing the movement and storage of vehicles in a yard.

Z

Zone Picking: A method in warehouses where pickers are assigned to specific areas.

Zero Defects: A quality management approach aiming for no defects in production.

Zoning Regulations: Rules affecting storage, shipping, and warehouse locations.