Ocean Shipping Terminology

ACCEPTANCE : A draft, payable at a determinable future, date upon the face of which the drawee acknowledges his obligation to pay it at maturity. (Broadly speaking, any agreement to purchase goods under specified terms. An agreement to purchase goods at a stated price 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.

ADVANCE FREIGHT : Partial payment of the bill of lading freight in advance; in other words, it is the same as guaranteed freight.

AIR WAY BILL : A bill of lading (see bill of) 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.

ARBITRAGE : The buying of foreign exchange, securities, or commodities in one market and the simultaneous selling in another market, in terms of a third market. By this manipulation, a profit is made because of the difference in the rates of exchange or in the prices of securities or commodities involved.

AVERAGE : Any loss or damage due to insured perils that is less than a total loss. Two types of average occur: Particular Average and General Average.

BACKHAUL : A return trip or a movement in a direction of or for a purpose of secondary importance.

BELLY FREIGHT : Cargo that is transported in the lower freight compartments of passenger aircraft.

BENEFICIARY : The person in whose favor a draft is issued or a letter of credit opened.

BILL OF LADING : The document issued on behalf of the carrier describing the kind and quantity of goods being shipped, the shipper, the consignee, the ports of loading and discharge and the carrying vessel. It serves as a document of title, a contract of carriage, and a receipt for goods.

BONDED WAREHOUSE : A building authorized by Customs authorities for storage of goods on which payment of duties is deferred until the goods are removed.

BREAK BULK : Loose cargo, such as cartons, stowed directly in the ship's hold as opposed to containerized or bulk cargo. See "Containerization."

BROKERS : Companies that help both shipper and carrier achieve low freight rates and efficient utilization of carrier equipment.

BULK SHIPMENTS : Shipments that are not packaged, but are loaded directly into the vessel's holds. Examples of commodities that can be shipped in bulk are ores, coal, scrap, iron, grain, rice, vegetable oil, tallow, fuel oil, fertilizers, and similar commodities.

C&F (Cost and Freight) : Seller owns goods until they are loaded on vessel; selling price includes all costs so far plus cost of freight. The buyer is responsible for insurance.

C.I.F (Cost, Insurance and Freight) : Seller owns goods until they are loaded on vessel; selling price includes cost of goods, insurance, and freight.

CL (Carload also Container Load) : A shipment that fully occupies the space available in a rail-car or cargo-carrying container.

CARGO : Goods, merchandise or commodities of every description that may be carried aboard a vessel, in consideration of the freight charged; does not include provisions and stores for use on board.

CARNET : A custom's document permitting the holder to carry or send merchandise temporarily into certain foreign countries (for display, demonstration, or similar purposes) without paying duties or posting bonds.

CARRIAGE OF GOODS BY SEA ACT (COGSA) : 1936 US Statute that governs the acts that a carrier is responsible for and defines the terms used in shipping. The act provides that the shipowner's liability will be limited to $500 per shipping package, and it stipulates a one-year time limit for filing suit against the carrier. This act automatically applies to international ocean movements but not to domestic ocean transits unless the carrier agrees to be bound by it.

CARRIER : Usually means Steamship Company, but can also refer to trucking company, airline, or railroad as transporter of cargo.

CERTIFICATE OF INSPECTION : A document often required with shipments of perishable or other goods, when certification notes the good condition of the merchandise immediately prior to shipment.

CERTIFICATE OF MANUFACTURE : A statement sometimes notarized by a producer, usually also the seller, or merchandiser that indicates the goods have been manufactured and are at the disposal of the buyer.

CERTIFICATE OF ORIGIN : A specified document, required by certain foreign countries for tariff purposes, certifying the country of origin of the merchandise. Sometimes the signature of the consul of the country to which it is destined is needed.

CHARTER PARTY : A written contract between the owner of a vessel and the one (the charterer) desiring to empty the vessel, setting forth the terms of the arrangement, i.e., freight rate and ports involved in the contemplated trip.

COLLECT FREIGHT : Freight payable at destination provided the vessel delivers the goods as specified.

COMMERCIAL INVOICE : A statement of transaction between a seller and buyer prepared by the seller, and a description of the merchandise, price, terms etc.

COMMERCIAL SET : Set of four "negotiable" documents that represents and takes the place of the goods themselves in the financing of the cargo sales transaction.

COMMON CARRIER : Transporter who holds himself out to the general public for the transportation of goods over a definite route and according to a regular schedule.

CONSIGNEE : Party who is to receive the good; usually the buyer.

CONSIGNMENT : Merchandise shipped to a foreign agent or customer when an actual purchase has not been made, but under an agreement obliging the consignee to pay the consignor for the goods when sold.

CONSOLIDATION : The Consolidation Endorsement may be added to an Open Cargo Policy at an agreed premium, to provide coverage on merchandise while in transit to, and while at, a common consolidation point for the purpose of preparing or consolidating the merchandise for export.

CONSULAR DOCUMENTS : Bills of lading, certificates of origin or special invoice forms that are officially signed by the consul of the country of destination.

CONSULAR INVOICE : A detailed statement of goods shipped certified by the consul at the point of shipment.

CONTAINERIZATION : Shipping systems based on large cargo-carrying containers ranging up to 48 feet long that can be easily interchanged between trucks, trains and ships without re-handling the contents.

CONTRABAND : During the time of war, materials carried aboard in a vessel that could aid a belligerent in the process of the war, such as arms, weapons or munitions.

CUSTOMS BROKER : Licensed by US Customs to clear shipments for clients, can also forward goods "In Bond" to your port.

D/A-DOCUMENTS AGAINST ACCEPTANCE : Instructions from a shipper to his bank that the documents attached to a time draft for collection are deliverable to the drawee against his acceptance of the draft.

D/P-DOCUMENTS AGAINST PAYMENT : Instructions a shipper gives to his bank that the documents attached to a draft for collection are deliverable to the drawee only against his payment of the draft.

DECK CARGO : Cargo carried outside rather than within the enclosed cargo spaces of a vessel.

DELAY : Even under All Risk coverage, damage due to delay is not recoverable. Most underwriters have inserted a "Delay Cause" in the Open Cargo Policy, which states specifically that the damage caused by delay is not recoverable even if the delay was due to a peril insured against.

DEMUR RAGE : A charge assessed by carriers to users who fail to unload and return equipment promptly.

DOCK RECEIPT : Receipt issued by an ocean carrier or its agent for merchandise delivered at its dock or warehouse awaiting shipment.

DOCUMENTARY : A commercial letter of credit providing for payment by a bank to the name beneficiary, usually the seller of merchandise, against delivery of documents specified in the credit.

DOCUMENTS : Papers customarily attached to foreign drafts, consisting of ocean bills of lading, marine insurance certificates, and commercial invoices, and where required, including certificates of origin and consular invoices.

DRAFT : Buyer's payment for goods.

DRAYAGE : Local trucking.

DUNNAGE : Wood and other packing materials used to wedge and otherwise keep cargo in place.

DUTY : (a) Ad valorem duty means an assessed amount at a certain percentage rate on the monetary value of an import. (b) Specific duty: an assessment on the weight or quantity of an article without preference to its monetary value or market price. (c) Drawback: a recovery in whole or in part of duty paid on imported merchandise at the time of exportation, in the same or different form.

EX (POINT OF ORIGIN) : From the point where the shipment begins movement, e.g., "Ex Factory" "Ex Mine" or "Ex Warehouse." See "Terms of Sale."

EX-DOCK (From Dock) : Seller owns goods until they are unloaded on dock at port of discharge; selling price includes all costs so far plus cost of unloading from vessel.

EX-FACTORY : Seller owns goods until they are picked up at his factory; selling price is the cost of the goods.

EXPORT DECLARATION : A form filled out by a US exporter for government statistical and export-control purposes.