Trade and freight glossary
Plain-language definitions for the terms that show up on every export shipment, cross-linked to the free tools that go deeper on each one.
Incoterms
The standard trade terms published by the International Chamber of Commerce (ICC) that define who arranges and pays for transport, insurance and customs, and where risk passes from seller to buyer. The current set is Incoterms 2020, 11 rules from EXW to DDP.
Interactive Incoterms 2020 guide →FOB (Free On Board)
An Incoterm where the seller loads the goods on board the vessel at the named port; risk passes to the buyer once they are on board. A sea-only term, historically the most common for bulk and non-containerised cargo.
FOB explained →CIF (Cost, Insurance and Freight)
An Incoterm where the seller pays freight and buys minimum-cover insurance to the destination port, but risk still passes to the buyer once goods are on board at origin. Sea and inland waterway only.
CIF explained →HS code
The Harmonized System code, a standardised product classification used for customs worldwide. The first 6 digits are universal; countries add 2 to 4 more for their own tariff schedule and statistics.
Find your HS code →CBM (cubic metres)
The volume of a shipment: length x width x height in metres. Freight is charged on the greater of actual weight and volumetric weight, so CBM often decides the price for light, bulky cargo.
CBM calculator →Chargeable weight
The weight a carrier actually bills you on: the greater of the shipment's actual weight and its volumetric (dimensional) weight, calculated from CBM using a mode-specific divisor.
CBM calculator →Landed cost
The total cost to get goods to your door: the goods value (FOB) plus freight, insurance, import duty, VAT/GST and other charges. The number that should actually set your price, not the FOB value alone.
Landed cost calculator →Demurrage
A charge for a container sitting at the port or terminal beyond its free time, before it is taken away. Billed by the carrier or terminal, separately from detention.
Demurrage and detention calculator →Detention
A charge for a container held outside the port (e.g. at a warehouse) beyond its free time, before it is returned empty to the carrier. Billed separately from demurrage.
Demurrage and detention calculator →Reefer
A refrigerated shipping container, used for perishables and other temperature-sensitive cargo. Reefers have thicker insulated walls and a T-bar floor for airflow, so they hold less usable volume than an equivalent dry container.
Container load calculator →FCL and LCL
FCL (Full Container Load) is a shipment that fills, or is billed for, a whole container. LCL (Less than Container Load) is a smaller shipment consolidated with other shippers' cargo into one container, typically billed by CBM or weight.
Sea freight CBM calculator →Bill of lading (B/L)
The document a carrier issues for a sea shipment: a receipt for the goods, evidence of the contract of carriage, and (for an original, negotiable B/L) a document of title needed to claim the goods at destination.
Letter of credit (LC)
A bank's payment guarantee to a seller on behalf of a buyer, released once the seller presents documents (invoice, packing list, bill of lading, etc.) that exactly match the LC's terms. A single mismatched document is the most common reason a payment is delayed or refused.
UN/LOCODE
The United Nations' standard 5-letter code for ports and other trade locations: 2 letters for the country, 3 for the location. Used on bills of lading, customs declarations and booking systems worldwide.
Port finder →Certificate of origin
A document certifying the country where goods were produced or manufactured. Often required to claim a preferential duty rate under a free trade agreement, or as a standard customs requirement even without one.
FTA (Free Trade Agreement)
An agreement between countries that reduces or eliminates tariffs on qualifying trade between them. Qualifying usually requires meeting the agreement's rules of origin and presenting the correct certificate.
Tariff calculator →Cold chain
The unbroken sequence of refrigerated storage and transport that keeps a perishable shipment within its required temperature range from origin to destination. A single broken link can cut real shelf life well below the typical range for the commodity.
Shelf-life vs transit checker →Free time
The number of days a carrier or terminal allows a container to sit (at the port, for demurrage, or outside it, for detention) before daily charges start. Set by the carrier, the terminal and your specific contract, not a fixed industry number.
Demurrage and detention calculator →Turn definitions into a working shipment
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