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Frequently used business terms and abbreviations

I.  The Modes of Making a Bargain

Cost and Freight(CFR):The seller should pay the fees of customs clearance and the fee of carriage to the appointed place. This method is only suitable for air-express and inland shipment service. After the products have been given to the carrier,the buyer should bear the risk of loss of or damage to the goods.

Cost, Insurance and Freight(CIF):Besides the cost of insurance and freight carriage, the seller should also pay for the marine insurance against the buyer's risk of loss of or damage to the goods during the carriage.

Carriage and Insurance paid TO(CIP):The seller should pay for the carriage and insurance fee of the freight for the buyer. This method can be used in any way of transportations.

Carriage Paid TO(CPT):The seller has to contract for the carriage of the freight. The seller must clear the goods for export and pay the carriage fee necessary to bring the goods to the named port of destination. This method can be used with nay modes of transportations. The risk of loss or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is to be borne by the buyer from the time when the goods pass the ship's rail in the port of shipment.

Documents against Acceptance(D/A):D/A is a mode of payment often used in the international trade. Under this mode, the exporter releases the documents under the condition that the importer has made acceptance on the draft. The exporter may face the risk of non-payment or late payment by the importer.

Documentary Credit(D/C):D/C is a mode of payment widely used in international trade. The documentary of credit should be granted and issued by the issuing bank of the buyer side. It can promise that the seller can make an appointed payment under the terms of the documentary credit.

Documents against payment (D/P):The exporter will inform the collecting bank in the importing country to release the documents to the importer under the condition that the importer has made the payment through the remitting bank.

Delivered at Frontier(DAF):The task of the seller is not completed until they have delivered the products to the appointed place in front of the border neighbor country as well as handled the customs clearance procedure.

Delivered Duty Paid(DDP):The task of the seller is not completed until they have provided the products at the appointed place in the import country. The seller should bear the risks and fees, including customs and other duties as well as the fees of carriage and customs clearance. This mode can be used with any method of transport.

Delivered Duty Unpaid(DDU):The task of the seller is not completed until they have provided products at the appointed place in the import country. The seller should bear all the risks and fees during the carriage. However this doesn't include customs and all the related duties and other fees required by the governments. The buyer should pay all the custom fees and bear the risk.

Free on Board(FOB):The seller is responsible for delivering the goods until the goods pass the rail of the seller's ship. The expenses and risks afterwards should be borne by the buyer.

EX Works(EXW):The seller provides the buyer with the goods at the seller's factory. All the expenses and risks afterwards (from the buyer's factory to the destination) should be paid and borne by the buyer.

Free alongside Ship(FAS):The task of the seller is not completed until they have provided the goods along the side the buyer's appointed ship. The buyer must assume all of the expenses and risks.

Free Carrier(FCA):The seller must be responsible for customs clearance and providing the goods to the transporter entrusted by the seller at the appointed place. This mode can be used with all forms of transport.

Delivered Ex Quay(DEQ):The task of the seller is not completed until they have handled customs clearance and providing goods at the appointed destination port. The seller should pay for customs duties and other taxes and costs of the carriage.

Delivered Ex Ship(DES):The task of the seller is not completed until they have provided the buyer with goods at the appointed destination port before customs clearance.

II .Trade Commonly used Abbreviation

Estimated Time of Arrival(ETA):ETA is the estimated date and time of goods' arrival according to the carriage schedule.

Estimated Time of Departure(ETD):ETD is the estimated date and time of the goods'departure according to the carriage schedule.

European Union(EU):EU is an economic and trade organization in Europe. It includes 15 member countries. They are Australia, Belgium, Demark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden and Britain.

Full Container Load(FCL):FCL means the full container will be carried by only one carrier or accepted by only one person or agent.

Generalized System of Preference(GSP):GSP is a favorable customs duty system provided by developed countries. It is beneficial to some developing countries. This system includes reducing the duties or making the import duty free.

Harmony System(HS):The codes of HS are set up by the World Custom Organization, and it is used as a method of classification by customs, statistical institutes, export and import merchants, the transportation industry and other people doing international trade. Hong Kong government has applied HS tothe customs since Jan. 1st, 1999.

International Air Transit Association(IATA):This international airfreight association aims at improving business airline services.

International Chamber of Commerce(ICC):The international Chamber of Commerce is a non-governmental organization. It has already surpassed 130 countries and an innumerable amount of business organizations and companies. It represents the international business society and aims to promote world business and investment, as well as provides for business a series of suitable services for the real world.

International Chambers of Commercial Terms(INCOTERMS):This set of terms explains the uniform regulations of the international trade terms, and it also defines the rights and incumbencies, such as CIF, FOB, FAS, CFR and so on.

International Maritime Dangerous Goods Codes(IMDG Code):IMDG Code is the code for dangerous goods management suggested by the International Maritime Organization. It includes urgent procedures, encasements for packing dangerous goods, production of packages, testing instructions, and so on.

Letter of credit(L/C ):L/C is the prevalent name of the documentary L/C.

Less than Container Load (LCL):LCL means the goods in the container are carried by several carriers or accepted by several persons or agents.

Demand Draft(D/D):D/D means the remitting bank, at the request of the remitter, will draw a demand draft on its branch or correspondent bank, instructing it to make a certain amount of payment to the payee on behalf of the remitter.

Mail Transfer(MT):The money transfer is through the mail, especially through the airmail. It is different from the telegraphic transfer.

Standard International Trade Classification(SITC):SITC is the standard suggested by the U.N. It is applied to trade statistics and classifications for economic analysis. It is also used in the Hong Kong government's trade statistic report.

Twenty-foot Equivalent Unit(TEU):TEU is the unit applied for counting the carrying ability of the container ship. One unit is equal to a twenty-foot container.

Telegraphic Transfer(T/T):T/T is a process that the remitting bank, at the request of the remittance, sends a cable to its correspondent bank aboard. In the international trade,the remittance usually inform the remitting bank transfer the certain amount of money from his account to make a payment to the payee ororganization aboard by the telegraph.

United Conventions and Practice(UCP):UCP can be used by international chambers to set up or operate the regulations of L/C.

United Nations Commission on International Trade Law(UNCITRAL):This commission is helpful for unifying the International Trade Law. The commission concentrates onhandling four main categories of international trade affairs: the sale of goods, payment,business arbitration and related regulations of goods carriage.

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