Glossary

Plain-language definitions of the industry terms you will encounter when sourcing and importing. Use this glossary as a quick reference while evaluating products and suppliers.

A

Air Freight: Shipping cargo by airplane, either airport-to-airport or door-to-door. Fast but costly, and billed on chargeable weight rather than size alone.
AQL (Acceptable Quality Limit): A sampling standard that sets how many units to inspect and how many defects are acceptable before a batch is rejected.
AWB (Air Waybill): The non-negotiable transport document for air cargo, acting as a receipt and contract of carriage, with an 11-digit number used for tracking the shipment.

B

B/L (Bill of Lading): The key sea freight document issued by the carrier, serving as a receipt for cargo, evidence of the transport contract and a document of title to the goods.
BAF (Bunker Adjustment Factor): A fuel surcharge added to ocean freight rates so carriers can pass changes in ship fuel costs on to shippers.

C

Cargo Insurance: Insurance that covers goods against loss or damage in transit, often written on Institute Cargo Clauses A, B or C for about 110% of value.
CBM (Cubic Meter): The standard unit of cargo volume in freight, calculated from package dimensions and used to price LCL and plan container loading.
CFR (Cost and Freight): A sea-only Incoterm where the seller pays ocean freight to the destination port, but risk passes to the buyer once goods are on board.
CFS (Container Freight Station): A warehouse near a port where LCL cargo from several shippers is received, consolidated into containers, or unpacked on arrival.
Chargeable Weight: The weight a carrier bills for, taken as the greater of a shipment's actual gross weight and its volumetric weight.
China–Europe Rail Freight: Container transport by train between China and Europe, typically faster than sea freight and cheaper than air freight.
CI (Commercial Invoice): The seller's final bill for a shipment, listing goods, quantities, prices and terms, used by customs to assess duties and by the buyer to pay.
CIF (Cost, Insurance and Freight): An Incoterm where the seller pays the cost, insurance, and freight to bring goods to the buyer's destination port.
CIP (Carriage and Insurance Paid To): An Incoterm where the seller pays carriage and all-risks insurance to a named destination, while risk passes to the buyer at the first carrier.
CO (Certificate of Origin): A document certifying the country where goods were made, used by import customs for trade statistics, trade rules and preferential duty under trade agreements.
Consignee: The party named on the transport document to receive the goods at destination, usually the buyer or importer, or a bank when shipped to order.
Container Types (20GP, 40GP, 40HQ): The three standard dry shipping containers used for sea freight, with approximate internal volumes and how to choose between them.
CPT (Carriage Paid To): An Incoterm where the seller pays carriage to a named destination, but risk passes to the buyer when goods are handed to the first carrier.
Customs Broker: A licensed professional or company that prepares and files customs declarations for importers, classifies goods and arranges payment of duties and taxes.
Customs Clearance: The process of getting goods approved by customs to leave the export country or enter the import country, including declarations, checks and payment of duties.
Cut-off Time: The deadline set by a carrier or terminal for cargo, documents, VGM or customs clearance before a vessel departs.
CY (Container Yard): The terminal area where full and empty containers are stored before loading onto a ship or after discharge, used mainly for FCL cargo.

D

D/A (Documents against Acceptance): A collection payment method where the buyer receives shipping documents by accepting a bill of exchange and pays on a later due date.
D/P (Documents against Payment): A collection payment method where banks release the shipping documents to the buyer only after the buyer pays the invoice amount.
DAP (Delivered at Place): An Incoterm where the seller delivers goods to a named destination ready for unloading, and the buyer handles unloading and import clearance.
DDP (Delivered Duty Paid): An Incoterm where the seller delivers goods to the buyer's named place, cleared for import with duties and taxes paid, ready for unloading.
Demurrage and Detention: Daily charges for keeping a container at the terminal or outside it beyond the free time allowed by the carrier.
Deposit and Balance Payment: A common payment structure where the buyer pays part of the order upfront to start production and the rest before or after shipment.
Door-to-Door Shipping: A shipping service that covers the full journey from the seller's premises to the buyer's address, including main freight and local delivery.
DPU (Delivered at Place Unloaded): An Incoterm where the seller delivers goods to a named place and unloads them there, while the buyer handles import clearance and duties.

E

ETD and ETA (Estimated Time of Departure and Arrival): The planned dates when a vessel, flight or train is expected to leave origin and reach destination, which often change in transit.
Express Courier Shipping: Door-to-door delivery of small parcels by integrated carriers such as DHL, FedEx, or UPS, handling pickup, flight, customs, and delivery.
EXW (Ex Works): An Incoterm where the seller makes goods available at its own premises and the buyer handles loading, export, freight and import.

F

FAS (Free Alongside Ship): A sea-only Incoterm where the seller clears goods for export and places them beside the buyer's vessel at the named port of shipment.
FCA (Free Carrier): An Incoterm where the seller clears goods for export and hands them to the buyer's carrier at a named place, where risk passes to the buyer.
FCL (Full Container Load): A sea freight option where one shipper books an entire container for their own goods, paying a flat rate per container.
FOB (Free On Board): An Incoterm where the seller delivers goods onboard the vessel and the buyer assumes cost and risk from that point.
Freight Forwarder: A logistics company that arranges shipping for importers and exporters, booking carriers and coordinating documents, customs, and delivery.
Freight Prepaid and Freight Collect: Two ways to pay ocean or air freight: paid by the shipper at origin, or paid by the consignee at destination.

G

Gross Weight and Net Weight: Gross weight (G.W.) is the goods plus all packaging; net weight (N.W.) is the goods alone. Both figures appear on shipping documents.

H

HS Code (Harmonized System Code): An international product classification number used by customs worldwide to identify goods and set duty rates, import rules and trade statistics.

I

Import Duty and Taxes: The charges an importing country collects on goods entering it, mainly customs duty plus VAT, GST or sales taxes, calculated on a declared customs value.
Incoterms (International Commercial Terms): A set of standard trade rules from the ICC that define who pays for transport, who bears risk, and who clears customs in a sale.
ISF (Importer Security Filing): A US customs requirement that ocean importers file shipment details, known as 10+2, at least 24 hours before cargo is loaded on the vessel at origin.
ISPM 15 (Wood Packaging Standard): An international standard requiring solid wood crates, pallets and dunnage used in trade to be treated against pests and marked with an official stamp.

L

L/C (Letter of Credit): A bank's written promise to pay the seller once it presents shipping documents that match the terms of the credit exactly.
LCL (Less than Container Load): A sea freight option where small shipments from several shippers share one container, with charges based on volume or weight.
Lead Time: The time from order confirmation until goods are ready or delivered, usually split into production lead time and shipping transit time.

M

MBL and HBL (Master and House Bill of Lading): Two layers of bills of lading: the MBL issued by the ocean carrier to a forwarder, and the HBL issued by the forwarder or NVOCC to the actual shipper.
MOQ (Minimum Order Quantity): The smallest quantity of a product a supplier is willing to produce or sell in a single order.

N

Notify Party: The company or person named on a bill of lading to be told by the carrier when the cargo arrives, often the buyer, customs broker or destination agent.
NVOCC (Non-Vessel Operating Common Carrier): An ocean carrier that does not own ships but buys container space from shipping lines, issues its own bills of lading, and resells transport.

O

ODM (Original Design Manufacturer): A manufacturing model where the factory supplies its own existing product designs, which the buyer can customize lightly and sell under its brand.
OEM (Original Equipment Manufacturer): A manufacturing model where the factory produces goods to the buyer's own design and specifications, often sold under the buyer's brand.

P

Palletizing and Crating: Securing cartons on a pallet or enclosing them in a wooden crate so heavy or fragile cargo can be handled by forklift and shipped safely.
Partial Shipment: Sending one order in two or more separate shipments, a practice that must be allowed by the sales contract and, if used, the letter of credit.
PI (Proforma Invoice): A preliminary invoice the seller issues before shipment, listing goods, prices and terms, often used to confirm an order and request payment.
PL (Packing List): A shipping document that details how goods are packed, including package count, contents, weights and dimensions for each carton, crate or pallet.
POL and POD (Port of Loading and Port of Discharge): The ports where cargo is loaded onto the main vessel and unloaded from it, as shown on bookings, quotes and the bill of lading.
PPS (Pre-Production Sample): A sample made with the actual materials and process before mass production, approved by the buyer as the reference for the full order.
PSI (Pre-Shipment Inspection): An inspection of finished, packed goods before they leave the factory, used to confirm quality and quantity before the buyer pays the balance.

Q

QC (Quality Control): The checks a factory or buyer performs on materials, production, and finished goods to make sure products meet the agreed specifications.

R

RFQ (Request for Quotation): A buyer's formal request asking suppliers to quote price and terms for specific goods, quantities and delivery conditions.

S

Sea Freight (Ocean Freight): Shipping goods by cargo vessel in containers, the lowest-cost way to move heavy or bulky orders from China to overseas ports.
Shipper: The party that sends goods and contracts with the carrier, named as shipper on the bill of lading or air waybill, usually the seller or exporter.
Shipping Marks: The labels and symbols printed on the outside of cartons, crates and pallets to identify a shipment, match it to documents and guide safe handling.
SO (Shipping Order): The carrier's booking confirmation that reserves space on a vessel and allows the shipper to collect an empty container for loading.
SWB (Sea Waybill): A non-negotiable ocean transport document that lets the named consignee collect cargo without presenting any original paper document at destination.

T

T/T (Telegraphic Transfer): An electronic bank-to-bank wire transfer, the most common way overseas buyers pay suppliers in China for deposits and balances.
Telex Release: A carrier instruction that lets the consignee collect cargo without presenting an original bill of lading, after the originals are surrendered at origin.
TEU (Twenty-foot Equivalent Unit): A standard unit for counting container capacity, where one 20-foot container equals one TEU and a 40-foot container equals two.
THC (Terminal Handling Charge): A fee charged by carriers for handling containers at the port terminal, applied separately at the origin and destination ports.
Third-Party Inspection: A quality check carried out by an independent inspection company hired by the buyer, rather than by the factory or the buyer's own staff.
Transshipment: Moving cargo from one vessel to another at an intermediate hub port before it continues to the final port of discharge.

V

VGM (Verified Gross Mass): The confirmed total weight of a packed container, which must be submitted to the carrier before loading under SOLAS rules.
Volumetric Weight (Dimensional Weight): A calculated weight based on a package's size, used by air and express carriers to price bulky shipments fairly against their space.