Terms

Marine Only Terms
 
FAS (Free Alongside Ship):
●      The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards.
FOB (Free on Board):
●      The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
CFR (Cost & Freight) to a named place
●      The risk of loss of or damage to the goods passes when the goods are on board the vessel.
●      The buyer bears all costs once the seller has delivered the goods to the named place.
CIF (Cost, Insurance and Freight) to a named place
●      The risk of loss of or damage to the goods passes when the goods are on board the vessel, but the seller covers insurance costs for the buyer until freight is delivered to the name place.
●      The buyer bears all costs once the seller has delivered the goods to the named place.
 
All Modes of Transportation
 
EXW (Ex Works)
●      The risk of loss or damage to the goods passes when the goods are recovered from the seller’s facility, and the buyer bears all costs from that moment onwards.
FCA (Free Carrier) to a named place
●      The risk of loss of or damage to the goods passes when the goods are delivered by the seller to the named place, and the buyer bears all costs from that moment onwards, however, the seller must take care of the export clearance if applicable.
CIP (Carriage & Insurance Paid) to a named carrier/place
●      The risk of loss of or damage to the goods passes when the goods turned over to the named carrier, but the seller covers insurance costs for the buyer until freight is delivered to the name place.
●      The buyer bears all costs once the seller has delivered the goods to the named place.
CPT (Carriage Paid To) to a named carrier/place
●      The risk of loss of or damage to the goods passes when the goods are turned over to the named carrier, but the buyer bears all costs after carrier has delivered goods to a named place.
DAP (Delivered at Place) to a named place
●      The risk of loss of or damage to the goods passes once the goods are delivered at the named place, and the buyer bears all costs from the named place onwards.
DAT (Delivered at Terminal) to a named terminal
●      The risk of loss of or damage to the goods passes once the goods have been made available at said terminal.
DDP (Delivered Duty Paid)
●      The risk of loss or damage to the goods passes once the buyer has control of the product, and the seller bears all costs until goods delivered to the buyer.
 

ACCEPTANCE

Broadly speaking, it is any agreement to purchase goods under specified terms. An agreement to purchase goods at a stated price and under stated terms.

ACT OF GOD

A natural event, not preventable by any human agency, such as flood, storms, or lightning. Forces of nature that a carrier has no control over, and therefore cannot be held accountable. See “Force Majeure.”

ADVANCE FREIGHT

Partial payment of the bill of lading freight in advance; in other respects is the same as guaranteed freight.

AIR WAYBILL

A bill of lading that covers both domestic and international flights transporting goods to a specified destination. This is a non-negotiable instrument of air transport that serves as a receipt for the shipper, indicating that the carrier has accepted the goods listed and obligates itself to carry the consignment to the airport of destination according to specified conditions.

ALL RISK

The broadest form of coverage available, providing protection against all risks of physical loss or damage from any external cause. Does not cover loss or damage due to delay, inherent vice, pre-shipment condition, inadequate packaging, or loss of market.

ALONGSIDE

A phrase referring to the side of a ship. Goods to be delivered "alongside" are to be placed on the dock or barge within reach of the transport ship’s tackle so that they can be loaded aboard the ship.

LCL(Less-than-carload; also, Less-than-containerload)

A shipment that occupies less space than is available in a railcar or cargo-carrying container.

JUST-IN-TIME INVENTORY SYSTEM

An inventory system that keeps production inventory to an absolute minimum.

IRREVOCABLE LETTER OF CREDIT

A letter of credit in which the specified payment is guaranteed by the bank if all terms and conditions are met by the drawee.

INTERMODAL TRANSPORTATION

A shipment utilizing more than one mode of transport, i.e., a shipment moving in container by water and then by rail.

INLAND BILL OF LADING

A bill of lading used in transporting goods overland to the exporter’s international carrier.

INHERENT VICE

A loss caused by the inherent nature of the thing insured and not the result of a casualty or external cause.

IN BOND

A term applied to the status of merchandise admitted provisionally to a country without payment of duties, either for storage in a bonded warehouse or for trans-shipment to another point, where duties will eventually be imposed.

HAZARDOUS CARGO

Poses hazards to handlers or to other cargoes and, because of this, requires special handling. Often subject to regulatory control.

GUARANTEED FREIGHT

Freight payable whether the goods are delivered or not, provided the failure to deliver the goods resulted from causes beyond the carrier’s control.

GOODS IN TRANSIT

Goods moving between two points.

GOODS

Cargo shipped by sea or air.

FREIGHT FORWARDERS

Companies that buy space in large quantities and sell it to shippers requiring less vessel space. Also perform many other services for shippers including preparation of export documentation and arranging for cargo insurance.

FREIGHT

The money charged by the carrier for transporting goods.

FREE TRADE ZONE

A port designated by the government of a country for duty-free entry of any non-prohibited goods. Merchandise may be stored, displayed, used for manufacturing, etc., within the zone and re-exported without duties being paid. Duties are imposed on the merchandise (or items manufactured from the merchandise) only when the goods pass from the zone into an area of the country subject to the Customs Authority. Also called FOREIGN TRADE ZONE.

FORCE MAJEURE

The title of a standard clause in marine contracts exempting the parties for non-fulfillment of their obligations as a result of conditions beyond their control, such as earthquakes, floods, or war. See “Act of God.”

FLAGS OF CONVENIENCE

Nations that have lax maritime registration rules. Many ships are registered in these countries because of their lenient safety and crew requirements.

F.O.B./F.A.S. ENDORSEMENT

If a merchant sells on F.O.B., F.A.S., C &F or similar terms, it is the buyer’s responsibility to place the insurance.

F.O.B. WAREHOUSE (Free on board warehouse)

Seller owns goods until they are delivered to buyer’s warehouse at final destination; selling price includes all costs so far plus transportation to final warehouse.

F.O.B. VESSEL (Free on board vessel)

Seller owns goods until they are loaded on vessel; selling price includes all costs so far plus cost of loading on vessel.

F.O.B. TRUCK (Free on board truck)

Seller owns goods until they are loaded on truck at his factory; selling price includes all costs so far plus cost of loading on truck.

F.C.&S. (Free of Capture & Seizure)

Clause excluding war risks from the Marine Policy; war risks can be covered by issuing a separate War Policy with an additional premium being charged.

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