GLOSSARY

Here you will find a list in an alphabetic order with the most used logistic terms. There are many shipping terms in logistics industry where it becomes difficult to recognise all of them, but don’t worry Sino shipping have carefully selected the most common terms which you will encounter in logistics.

 

A

 

Ad Valorem Tarif: A tariff calculated “according to value“, or as a percentage of the value of goods cleared through customs; for example, 15 percent ad valorem means 15 percent of the value of the entered merchandise

 

Air Waybill: A bill of lading that covers both domestic and international flights that transport 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 is obligated to carry the consignment to the airport of destination according to specified conditions.

 

ATA Carnet:  An ATA Carnet (a. k. a. “Merchandise Passport”) is a document that facilitates the temporary importation of products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a security deposit normally required at the time of importation.

 

Aggregate Shipment: Numerous shipments from different shippers to one consignee that are consolidated and treated as a single consignment

 

(AD) Anti-Dumping: Anti-dumping suits, along with ‘safeguards’ and ‘countervailing measures’, are tools for protecting domestic industries from surges of cheap foreign imports. Although the WTO strives to eliminate all trade barriers, it recognizes that nations require flexibility to adjust to economic shocks as multilateral agreements increasingly liberalize trade. Thus, these measures allow nations to temporarily protect their economies against fluctuations in trading patterns.

 

Alongside: 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

 

Advice of Shipment:  A notice sent to a local or foreign buyer advising that shipment has gone forward and containing details of packing, routing, etc. A copy of the invoice is often enclosed and, if desired, a copy of the bill of lading.

 

Anti-Diversion Clause: Prevents exported goods from going to destinations not approved by the government. In the United States, the Department of Commerce’s Bureau of Export Administration requires commercially exported goods to be accompanied by a destination control statement saying that the goods are only authorized for export to certain locations and that U.S. law prohibits their diversion. The latter part of this statement is the anti-diversion clause.

 

Arbitrage: The process of buying foreign exchange, stocks, bonds, and other commodities in one market and immediately selling them in another market at higher prices.

 

B

 

Balance of Trade: The difference between a country’s total imports and exports. If exports exceed imports, a favorable balance of trade exists; if not, a trade deficit exists.

 

Bill of Lading (B/L):  A document that establishes the terms of a contract between a shipper and a transportation company under which freight is to be moved between specified points for a specified charge. Usually prepared by the shipper on forms issued by the carrier

  1. A receipt for the goods delivered to the carrier for shipment.
  2. A definition of the contract of carriage of the goods.
  3. A Document of Title to the goods described therein.
  4. This document is generally not negotiable unless consigned “to order.”

 

Bonded Warehouse: A warehouse authorized by customs for storage of goods on which payment of duties is deferred until the goods are removed.

 

Booking: Arrangements with a carrier for the acceptance and carriage of cargo; i.e., a space reservation.

 

Broker of Trade: Someone that acts as an agent for others, as in negotiating contracts, purchases, or trade sales in return for a fee or commission

 

C

 

Consignee: The individual or company to whom a seller or shipper sends merchandise and who, upon presentation of necessary documents, is recognized as the merchandise owner for the purpose of declaring and paying customs duties

 

(CFR) Cost and Freight: A pricing term indicating that the cost of the goods and freight charges are included in the quoted price; the buyer arranges for and pays insurance. Also see C&F

 

CBM: Abbreviation for Cubic meter

 

Consolidator: An agent who brings together a number of shipments for one destination to qualify for preferential rates

 

Carrier:  Any person who, through a contract of carriage, undertakes to perform or procure the performance of carriage by rail, road, sea, air, inland waterway, or by a combination of modes

 

Clean Bill of Lading: A receipt for goods issued by a carrier which indicates that the goods were received in “apparent good order and condition,” without damages or other irregularities. Compare Foul bill of lading.

 

Certificate of Origin: A document, required by certain foreign countries for tariff purposes, certifying the country of origin of specified goods

 

(CIF) Cost, Insurance, Freight: A pricing term indicating the cost of the goods, insurance, freight, and the ports involved in the transportation.

 

Commercial Invoice: Receipt for a transaction and or goods purchased (invoice) indicating the sender or seller and the receiver or purchaser. A commercial invoice should contain an itemized list of the merchandise with the complete description of goods with their unit value and extended total value. Depending on the Customs requirements of the destination country, there may be additional requirements, statement or clauses that must appear as well.

 

Commodity: any article exchanged in trade but most commonly used to refer to raw materials, including such minerals as tin, copper, and manganese, and bulk-produced agricultural products such as coffee, tea.

 

Customs: The authorities designated to collect duties levied by a country on imports and exports. The term also applies to the procedures involved in such collection

 

CNTR NO: Container number

 

D

 

DDC: Destination Delivery Charge.

 

DDP (Delivered Duty Paid): A transaction in international trade where the seller is responsible for making a safe delivery of goods to a named destination, paying all transportation expenses but not the duty. The seller bears the risks and costs associated with supplying the good to the delivery location, whereas the buyer is responsible for paying the duty and other customers clearing expenses.

 

(DDP) Delivered Duty Paid: A transaction in which the seller is responsible for all of the costs related to transporting the goods, and for the goods themselves, until they have been received and transferred to the buyer. This includes paying for the shipping, duties, and any other expenses incurred while shipping the goods.

 

Demurrage: A penalty for exceeding free time allowed for loading or unloading at a pier or freight terminal. Also a charge for undue detention of transportation equipment or carriers in port while loading or unloading.

 

Door to Door: Through transportation of a container and its contents from consignor to consignee. Also known as House to House. Not necessarily a through rate.

 

Duty: A tax imposed on imports by the customs authority of a country. Duties are generally based on the value of the goods (ad valorem duties), some other factor such as weight or quantity (specific duties), or a combination of value and other factors (compound duties)

 

Draft: An unconditional order in writing from one person (the Drawer) to another (the Drawee), directing the drawee to pay a specified amount to a named drawer on presentation or on a fixed date

 

Drawee: The individual or firm on whom a draft is drawn and who owes the stated amount to the drawer

 

 

E

 

Export License: A document secured from a government, authorizing a shipper to export a specific quantity of a particular commodity to a certain country. An export license is often required when a government places restrictions upon exports

 

Exchange Permit: A permit sometimes required by the importer’s government to enable the import firm to convert its own country’s currency into foreign currency with which to pay a seller in another country

 

ETA: Estimated time of arrival
ETD: Estimated time of departure

 

Ex Works: terms the buyer is responsible for the whole shipment from door to door. All costs and liabilities are with the buyer. Ex Works (sometimes shown as EXW or ExWorks) is a widely used international shipping term or Incoterm

 

Export Declaration: The U.S. Treasury Department requires an export declaration for all export shipments, indicating the value, weight, destination, and other basic information about the shipment

 

F

 

(FOB) “Free on board”: A pricing term indicating that the quoted price covers all expenses up to and including delivery of goods upon an overseas vessel provided by or for the buyer

 

Freight Forwarder: An independent business that handles export shipments for compensation. A freight forwarder is among the best sources of information and assistance on U.S. export regulations and documentation, shipping methods, and foreign import regulations

 

FCL: Full container load, a common shipping term used in the international logistics industry for export and import ocean freight

 

Foreign Trade Zone Entry: A form declaring goods which are brought duty free into a Foreign Trade Zone for further processing or storage and subsequent exportation from the zone into the commerce of another country

 

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.

 

G

 

GATT (General Agreement on Tariffs and Trade): A multilateral treaty signed in 1947 to help reduce trade barriers between signatory countries and to promote trade through tariff concessions. The workings of the GATT agreement are the responsibility of the Council for Trade in Goods, which is made up of representatives from all WTO member countries. GATT membership now includes more than 110 countries

 

Gross Weight (GR Wt./GW ): The full weight of a shipment, including containers and packaging materials

 

General Export License: Any of various export licenses covering export commodities for which Individually Validated Export Licenses (IVEL) are not required. No formal application or written authorization is needed to ship exports under a general export license.

 

I

 

Import license: A document required and issued by some national governments authorizing the importation of goods into their individual countries.

 

Importer of Record: The importer is legally liable for payment of duties, taxes, and fees for compliance with customs and other government agency regulations pertaining to their imports. The importer of record may be the party who is buying or receiving the imported goods, or an interested party in the transaction who has the right to take entry under the customs regulations.

 

L

 

LCL:  Less than Container Load; Less than Car load

 

(L/C) Letter of credit: Issued by a bank per instructions by a buyer of goods, an LC authorizes the seller to draw a specified sum of money under specified terms, usually the receipt by the bank of certain document within a given time

 

Landed Cost: The total cost of a good to a buyer, including the cost of transportation.

 

M

 

Manifest: A list of the goods being transported by a carrier

 

Measurement Ton: The measurement ton (also known as the cargo ton or freight ton) is a space measurement, usually 40 cubic feet or one cubic meter. Cargo is assessed a certain rate for every 40 cubic feet or one cubic meter it occupies

 

M/T or Metric Ton: 1000 Kilos

 

Marking: Letters, numbers, and other symbols placed on shipment packages to facilitate identification. Also known as marks

 

Market Disruption: A situation where a surge in imports of a certain product causes a sharp decline in the domestic sales of that product, thereby creating a hardship for domestic producers

 

N

 

Net Weight (Actual Net Weight): The weight of the goods alone without any immediate wrappings; e.g., the weight of the contents of a tin can without the weight of the can.

NT: Net Tons.

NAFTA (North American Free Trade Agreement): A free trade agreement comprising the U.S.A., Canada, and Mexico.

 

O

 

Ocean Bill of Lading: A bill of lading (B/L) indicating that the exporter consigns a shipment to an international carrier for transportation to a specified foreign market. Unlike an inland B/L, the Ocean Bill of Lading also serves as a collection document. If it is a “straight” B/L, the foreign buyer can obtain the shipment from the carrier by simply showing proof of identity. If a “negotiable” B/L is used, the buyer must first pay for the goods, post a bond, or meet other conditions agreeable to the seller

 

On Board Bill of Lading: A bill of lading in which a carrier certifies that goods have been placed on board a certain vessel

 

Order Bill of Lading: A negotiable bill of lading made out to the order of the shipper

 

P

 

Port of Discharge: A port where a vessel is off-loaded and cargo discharged

 

Port of Entry: A port at which foreign goods are admitted into the receiving country

 

Port of Loading:  A port where cargo is loaded aboard the vessel, lashed, and stowed.

 

Packing list: A list showing the number and kinds of items being shipped, as well as other information needed for transportation purposes

 

Pro forma Invoice: An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (weight, size, etc.)

 

Proof of Delivery (POD): The delivery receipt copy of a freight bill indicating the name of the person who signed for a package with the date and time of delivery

 

Q

 

Quota: The quantity of goods of a specific kind that a country permits to be imported

 

Quotation: An offer to sell goods at a stated price and under specific conditions

 

S

 

Shipment: Freight tendered to a carrier by one consignor at one place at one time for delivery to one consignee at one place on one bill of lading

 

Ship’s Manifest: An instrument in writing, signed by the captain of a ship that lists the individual shipments constituting the ship’s cargo

 

Short-Shipped: Cargo manifested but not loaded

 

Shipper: The person or company who is usually the supplier or owner of commodities shipped. Also called Consignor

 

Schedule B: Refers to the statistical classification of domestic and foreign commodities exported from the United States. All commodities exported from the United States must be assigned a seven-digit Schedule B number

 

T

 

Tracking:  A system of recording movement intervals of shipments from origin to destination

 

Trade Barriers: Government laws, regulations, policies, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products

 

Tare Weight: The weight of a container and packing materials without the weight of the goods it contains

 

Terminal: An assigned area in which containers are prepared for loading into a vessel, train, truck, or airplane or are stacked immediately after discharge from the vessel, train, truck, or airplane

 

Tariff (the rate of duty): A schedule or system of duties imposed by a government on goods imported

 

Time Draft: A draft that matures either a certain number of days after acceptance or a certain number of days after the date of the draft. Compare Date draft and Sight draft

 

TEU: Twenty feet Equivalent Unit

 

Transaction statement: A document that delineates the terms and conditions agreed upon between the importer and exporter

 

UN numbers or UN IDs: four-digit numbers that identify dangerous goods, hazardous substances and articles (such as explosives, flammable liquids, toxic substances, etc.) in the framework of international transport

 

V

 

Value Added: The difference between the value of goods produced and the cost of producing them – the wages, interest, rent, and profits added to the output by a firm or industry

 

(VAT) Value Added Tax: A sales tax which is generally calculated by foreign countries on the basis of Cost Insurance Freight (CIF) value plus duty

 

W

 

Warehouse Receipt: A receipt of commodities deposited in a warehouse identifying the commodities deposited. It is non-negotiable if permitting delivery only to a specified person or firm, but it is negotiable if made out to the order of a person or firm or to a bearer. Endorsement (without endorsement if made out to bearer) and delivery of a negotiable warehouse receipt serves to transfer the property covered by the receipt. Warehouse receipts are common documents in international banking

 

Weight

  • Gross – The weight of the goods including packing, wrappers, or containers, both internal and external. The total weight as shipped.
  • Net – The weight of the goods themselves without the inclusion of any wrapper.
  • Tare – The weight of the packaging or container.
  • Weight/Measurement Ton – In many cases, a rate is shown per weight/measurement ton, carrier’s option. This means that the rate will be assessed on either a weight ton or measurement ton basis, whichever will yield the carrier the greater revenue.
  • Weight Ton – Metric measure equals 1000 Kilograms; in English measure a short ton is 2000 pounds, a long ton is 2240 pounds

 

(WTO) World Trade Organization: The international organization which resulted from the Uruguay Round of GATT negotiations. The WTO seeks to establish global rules of trade between nations; its goal is to help trade flow smoothly, freely, fairly and predictably

GLOSSARY FOR SOURCING IN CHINA

 

1. AQL = AQL stands for 'Acceptance Quality Limit’ and is defined as the “quality level that is the worst tolerable” in ISO 2859-1. It represents the maximum number of defective units, beyond which a batch is rejected. 3 major AQL defects levels are: Critical, Major, and Minor defects. Different product has different criteria for Critical, Major and Minor. In general, Critical defects are hazardous and unsafe for end-users; Major Defects cause product function and performance failure; Minor Defects are the ones deviate from the spec, but not likely to affect the usability of the product.

2. AWB = Airway Bill, the Receipt of your Air shipment. Issued by the air freight Carrier, the airlines.

3. AIR FREIGHT = Sometimes referred as the “air cargo”, are normally larger shipments via air from port to port. You need a freight forwarder to book the air cargo space with the commercial airlines.

4. AIR EXPRESS: Refers to courier companies (such as DHL, UPS, FedEx) shipping products from a pickup point (such as the supplier factory) to a designated address (such as your home or Amazon FBA warehouse).

5. BOL or B/L= Bill of Lading, the Receipt of your ocean shipment. Issued by the ocean freight Carrier to the shipper (supplier) and to the freight forwarder. The container# or the B/L# on the BOL can be used to track shipment status either on fright Carrier’s website or freight forwarder’s website. 7. CONTAINER: LCL = Less than Container Load;

8. CONTAINER: FCL = Full Container Load.

20FT = 20 Feet Container (~30 cubic meters);

40FT = 40 Feet Container (~60 cubic meters);

40HQ = 40 Feet High Cubic Container (~68 cubic meters)

9. CBM = Cubic Meter, this term is often referenced when the supplier give you the total shipment size.

10. CI and PL = Commercial Invoice and Packing List. Prepared by your supplier declare value of the goods and packaging detail of the goods. CI and PL are required set of documents for making the shipment booking (either AIR or Ocean) and custom clearance.

11. CUSTOM BROKER = Customs broker is a licensed professional who prepares and submits documentation to obtain custom clearance from government agencies. Custom broker is different from freight forwarder. Freight forwarder uses custom broker’s service to clear custom. Sometimes a freight forwarding company has in house custom broker, sometimes they use a third party broker’s service to clear custom.

12. CUSTOM BOND = a financial guarantee to the custom that tax and duties will be paid sufficiently.

Bond Option 1: single entry bond = good for 1 importation

Bond Option 2: continuous bond = good for 1 year, no importation limits

13. COO = Country of Origin. For example, if product is made in China, COO is China. The “Made In China” mark needs to be printed on the outer carton.

14. CONSIGNEE = The party that is legally allowed to receive the goods. For example, if you are the Buyer, on Supplier’s commercial invoice you will be listed as consignee.

15. ULTIMATE CONSIGNEE = The actual intended recipient of the shipment. For example, if you are sending the goods to Amazon warehouse, Amazon and its warehouse address will be listed as Ultimate consignee.

16. DIM AND WEIGHT = Dimensions and Weight

17. DDP = Delivery Duty Paid to a name place (it could your house, a warehouse). Supplier bears all the cost.

18. EA = Each

19. EXW = Ex Work Factory, international commerce term (Inco Term): Seller is only responsible for putting the shipment on their dock for Buyer to pick up. Buyer is responsible for all costs including pick up cost, export clearance cost, export tax & duty.

20. FREIGHT FORWARDER = A company or an agent who helps to ship product from point A to point B. Forwarders are NOT actual freight carriers. They can help prepare export documents at the origin country, book cargo space (either via air or ocean), consolidate freights, clear import customs at the destination country, deconsolidate shipments if it is LCL and deliver goods to your named destination.

21. FOB = Free On Board + (name a port), inco term: Seller is responsible for delivering shipment to the designated port AND pay all export fees, tax and duty. Shipment is FREE and ready to be exported.

22. HTS Code = Harmonized Tariff Schedule Code. HTS Code determines product’s duty. HTS code can be found at https://hts.usitc.gov/ *: It is Importer’s responsibility to determine HST code. Freight forwarder can ASSIST in finding the code, the Importer Of Record (IOR) is ultimately responsible for using correct HTS code.

23. LEADT TIME: the waiting time between two transactions, e.g.:

 Production lead time = from time of the PO to order completion

 Shipping lead time = from time of the Pickup to Delivery

24. MOQ = Minimum Order QTY

25. MASTER CARTON = The outer carton that holds smaller cartons inside

26. PO = Purchase Order

27. P.I. = Pro Forma Invoice (suppliers normally use P.I. to acknowledge and confirm your PO)

28. POA = Power of Attorney. An authorization form authorizing a freight forwarder or a custom broker to perform import and export duties on your behalf.

29. PCS = Pieces

30. PANTONE COLOR = Pantone LLC is a U.S. corporation best known for its Pantone Matching System (PMS), a proprietary color used in a variety of industries, primarily printing, though sometimes in the manufacture of colored paint, fabric, and plastics.

31. RAL NUMBER = RAL is a color matching system used in Europe that is created and administrated by the German RAL. RAL classic system, mainly used for varnish and powder coating but nowadays there are reference panels for plastics as well.

32. PRICE/QTY BREAK = A tiered pricing based on order QTY change, e.g.:

 Price for 500pcs | Price for 1000pcs | Price for 5000pcs

33. QTY = Quantity

34. RFQ = Request For Quote

35. ROP = Re- Order Point. It is an inventory point. When you set a ROP point, when the inventory level falls below the set ROP point re-order is flagged.

36. SS = Safety Stock. It is an additional quantity of an item held in inventory in order to reduce the risk that the item will be out of stock. Safety stock acts as a buffer in case the sales of an item are greater than planned and/or the supplier is unable to deliver additional units at the expected time.

37. SOP = Standard Operating Procedure.

38. SLI = Shipper’s Letter of Instruction. Normally supplier fills in freight forwarder’s SLI to ship your goods.

39. TOOLING = The common categories of tooling include fixtures, jigs, gauges, molds, dies, cutting equipment and patterns.

40. DIELINE = A dieline serves as a package template that ensures proper layout for a printed product. It is a diagram that shows all the cut lines and folds of a package in flattened form. If you customize the packaging, a dieline is needed either made from scratch or from your supplier’s existing packaging.

Thanks for your attention !

 

Interested in our logistics services? Need further assistance & dedicated information?
Our SINO experts answer within 48h !

ALL YOU NEED TO KNOW ABOUT HS CODE

International trade is a tool to expand our markets for both goods and services that otherwise may not have been available for us. It is the reason why you can pick up between a Japanese, German or American car for example.

International trade plays a very important role in our daily life, for example if you walk into a supermarket and can buy south American bananas, Brazilian coffee and a bottle of south African wine, then you are experiencing the effect of international trade.

HS code definition:

 

HS Codes (or HTS Codes), also known as the Harmonized Commodity Description and Coding System, or simply the Harmonized System, are a standardized international system to classify globally traded products. The system was first implemented in 1988 and is currently maintained by the World Customs Organization. The HS Convention, signed in 1983, has over 200 member countries. As signatories, each country agrees to classify its tariff and duty structure according to the HS Code categories.

HS code is developed and managed by the World Customs Organization, the HS code

  • Consists of 5,000 commodity groups covered in 99 Chapters containing 21 sections
  • Is identified by a six- digit code that can be broken down into three parts
  • Is supported by well-defined rules with legal and logical structure to achieve uniform classification all over the world

hs code

 

To understand the meaning of HS codes, we will take 1704.90.10.00 as an example.

 

  • 17 relates to Chapter 17 of Section IV – Prepared foodstuffs; beverages, spirits, and vinegar; tobacco and manufactured tobacco substitutes
  • 04 relates to sugar confectionery (including white chocolate), not containing cocoa
  • 90 relates to confections or sweetmeats ready for consumption:
  • 10.00 relates to candied nuts

The first two digits (HS-2) identify the chapter the goods are classified in, e.g. 09 = Coffee, Tea, Maté and Spices. The next two digits (HS-4) identify groupings within that chapter, e.g. 09.02 = Tea, whether or not flavoured. The next two digits (HS-6) are even more specific, e.g. 09.02.10 Green tea (not fermented). Up to the HS-6 digit level, all countries classify products in the same way (a few exceptions exist where some countries apply old versions of the HS).

It’s very important to understand HS code because this code is used by various organizations, governments for different purposes:

 

  • Taxes
  • Trade policies
  • Quotas controls
  • Price Monitoring
  • Monitoring of controlled goods
  • Setting of freight and transport tariffs
  • Gathering of transport and trade statistics and economic research and analysis among other users

Attention: Every country has its specific HS code, there is no Global HS code. Each country can modify it by adding two or four digits. The first 6-digit numbers are supposed to remain the same across the entire world.

 

How to choose the right HS code

 

Sometimes let’s say that you customers may ask you to specify a 10-digit HS number on the commercial invoice. the 10-digit number you use for U.S. export purposes may be different than the 10-digit number they need to use in their country for their import purposes. Why are they different?

As we mentioned before the first 6 digits are uniform for all countries who agreed to the Harmonized System. However individual countries have the authority to add to the HS system to create 10-digit codes based on their individual taxes and needs. (Some countries use eight-digit codes; others use 12-digit codes.

Practical example:

 

Exporting umbrellas form the United states to Germany.

In the United states umbrellas are identified by the HS number 6603.20.3000. If you are exporting to Germany and you complete the commercial invoice using all digits of that code, the German importer’s paperwork will be refused. Because in Germany the right code for umbrella’s is 6603.20.0000.

 

What Happens in case of Using an Incorrect HS Code:

 

  • The product will be classified Incorrectly
  • The goods will be entered into another country under an incorrect classification number
  • The exporter’s certificate of origin will be prepared incorrectly
  • import clearance delays may occur.
  • The buyer may incur additional costs.
  • The importing country may begin an investigation.
  • Goods may be denied preferential duty treatment.
  • Penalty action may be taken.

 

Tips on How to determine the correct HS code.

 

  • The first step is to break down your products into specific groups, this step is critical to ensure efficiency and control of data. Note that in some cases there may be slight discrepancies between the HS code your supplier will use and the correct HS code in the country of import.
  • Product ruling is a type of public ruling under the Taxation Administration Act. It gives certainty to participants or potential participants on the tax consequences of an arrangement. It’s highly suggested to check the Ruling whether you are familiar with the product or not, because it constantly changes, and tariffs doesn’t necessarily keep up with technology.
  • Product specification is a document that provides critical defining information about a product and can include:
  1. identification of the manufacturer
  2. list of rules,
  3. bans and standards that apply to the item
  4. design specifications
  5. product images that visually illustrate the product

Conclusion:

 

As you can see HS code is a very important tool, that’s required at each import/export process. Mastering HS code is a key for easier shipments. By providing the right code from the first time you will be saving  time and money.

You can always ask for help from your Customs Broker or your Freight forwarder. Don’t hesitate to contact us for any further information or queries.

We are so glad to Share our Knowledge and expertise with you. By reading this article you already know much about HS code and we hope we answered to all your questions regarding HS code.

Interested in our logistics services? Need further assistance & dedicated information?
Our SINO experts answer within 48h !

Incoterms

Incoterms 2010- premium guide- 11 terms description

Incoterms – Importing from China

 

Incoterms are rules that allows buyers and sellers to identify the responsibility of each one. It allows the parties to identify a point where the costs and risks of transportation are precisely divided between both of them.

Incoterms e.g (International commercial terms) Has a set of 11 international standard trade terms which last version is Incoterms 2010.

Incoterms also coordinate responsibilities for Customs clearance/ duties between the parties.

In other words, incoterms Are essential in every import/ export process, it’s a tool used by freight forwarders to facilitate the shipping process.  It defines who will arrange for carriage, who will pay for the carriage, who will break risk of loss or damage to goods.

Incoterms are associated with freight charges, they are used as a convenient way of confirming the role of each party ( who will pay the various charges during international transport). They are frequently used by freight forwarders and carrier when issuing freight quotations or clarifying who should pay the fees. However, incoterms cover a much wider range of responsibilities and obligations for sellers and buyers. Each incoterm has its proper rules and responsibilities that defines the role of each party.

The chart below demonstrates the exact responsibilities and charges of the buyer and seller according to incoterm 2010. The chart defines the following information:

  • Obligations of the buyer and the seller
  • Which party handles insurance, permits, and permissions
  • At which point costs and risks are transferred from the seller to the buyer

Incoterms 2010 by the international chamber of commerce

 

 These rules Are identified by the ICC ( international chamber of commerce, which is the source for any freight forwarder and in case of any issue the ICC should be your first resource for information

 

The eleven terms – Premium Guide

 

Everyone who works in import/export should know all the incoterms; (International commercial terms). It’s subject that helps not only traders but more importantly lawyers, Transporters, and insurers.

Before going into details, you have to know that the eleven terms can be divided into 4 parts:

  1. Departure
  2. Main carriage not paid by seller
  3. Main carriage paid by seller
  4. Arrival

 

Now let’s categories the 11 terms into these four groups:

  1. Departure:

 

EXW – EX works

Means that the seller fulfills his obligation to deliver when he has made the goods available at his premises to the buyer. In particular, he is not responsible for loading the goods on the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer must carry out all tasks of export & import clearance. Carriage & insurance is to be arranged by the buyer. This term thus represents the minimum obligation for the seller.

 

  1. Main carriage not paid by seller:

FCA – Free Carrier

Means that the seller fulfills his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point.

If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated the parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

 

FAS- (Free Alongside ship)

Means that the seller fulfill his obligation to deliver when the goods have been placed alongside the vessel, the quay, or in the lighters at the named port of shipment.

The seller is required to clear the goods for export.

The buyer has to bear all costs and risks of loss or damage to the goods from that moment.  This term is only used for ocean transport only. FAS is applied for bulk cargo.

 

FOB – Free on board

Means that the seller fulfills his obligation when the goods pass the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point.

The seller must clear the goods for export. This term can only be used for ocean transport. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

Incoterms 2010 rules advised to use FCA instead of FOB, because the containers are delivered regularly in the port’s container terminal and not loaded onto the ship. But in practical work, almost all the Chinese supplier will use FOB instead of FCA.

 

  1. Main carriage paid by seller:

 

CFR- cost and freight

Means that the seller must pay the costs and freight necessary to bring the goods to the named port of destination. The risk of loss of or damage to the goods passes when the goods are on board the vessel.

The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The CFR term requires the seller to clear the goods for export.

This term can only be used for sea and inland waterway transport.

 

CIF_ cost, insurance and freight

Means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel.

The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover.

However, if the buyer wishes to have more insurance protection, he will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

 

CPT- carried payed to

Means that the seller pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier.

“Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage, by rail, road, sea, air, inland waterway or by a combination of such modes.

If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier.

The CPT term requires the seller to clear the goods for export.

This term may be used for any mode of transport including multimodal transport.

 

CIP- carriage and insurance paid to

This term is the same as CPT with the exception that the seller also has to procure insurance against the buyer’s risk of loss or damage to the goods during the carriage.

However, if the buyer wishes to have more insurance protection, he will need either to agree as much expressly with the seller or to make its own extra insurance arrangement This term may be used for any mode of transportation.

 

  1. Arrival:

 

DAT- Delivered at terminal

Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

 

DAP- Delivered at place

Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.

 

DDP – Delivered duty paid

Means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation.

The seller has to bear the risks and costs, including duties, taxes and other charges of delivering the goods thereto, cleared for importation.

Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation.

The 11 terms can be also divided into 2 groups:

  • Waterway transport: FAS, FOB, CFR, CIF
  • Any mode of transport: EXW, FCA, CPT, CIP, DAT, DAP, DDP

 

The five Most commonly used incoterms

 

FOB – Free On Board (named port of shipment)

  • Loading at the sellers’ facility whether onto truck, train or barge = Sellers’ responsibility
  • Pre-carriage – those freight charges that arise from moving goods from the sellers’ origin to the port or airport = Sellers’ cost and responsibility
  • Loading to vessel = Sellers’ responsibility
  • Principle carriage (ocean carrier) = Buyer is responsible for cost and any loss or damage while in transit on the ocean carrier.

 

 EXW – Ex Works(named place)

the key thing to know about EXW? All charges incurred for transportation of the goods are the responsibility of the buyer and transfer of ownership happens as soon as the goods leave the floor of the seller’s facility.

Incidentally, this is the most common term encountered when importing goods from the EU and applies exclusively to containerized or multimodal transport as well as air, rail or road.

 

CFR – Cost and Freight (named port of destination)- ocean shipment

 

  • Loading at the sellers’ facility whether onto truck, train or barge = Sellers’ responsibility
  • Pre-carriage – those freight charges that arise from moving goods from the sellers’ origin to the port or airport = Sellers’ cost and responsibility
  • Loading to vessel = Sellers’ responsibility
  • Principle carriage (ocean carrier) = Seller is responsible for cost but the Buyer is responsible for any loss or damage while in transit on the ocean carrier.

 

CIF – Cost, Insurance and Freight (named port of destination)- maritime or ocean shipments

 

  • Loading at the sellers’ facility whether onto truck, train or barge = Sellers’ responsibility
  • Pre-carriage – those freight charges that arise from moving goods from the sellers’ origin to the port or airport = Sellers’ cost and responsibility
  • Loading to vessel = Sellers’ responsibility
  • Principle carriage (ocean carrier) = Seller is responsible for cost but the Buyer is responsible for any loss or damage while in transit on the ocean carrier.
  • Ideal for containerized shipments

 

DDP – Delivered Duty Paid (named place)

 

This term means the seller is responsible for all charges involved in bringing the goods from the sellers’ facility or point of loading to the final place of destination. This includes all charges associated with freight, customs clearance, duties and taxes.

 

Understanding and using Incoterms effectively is important, and every importer has unique requirements. Before concluding a sales contract, we recommend that you consult our complete list of incoterms and consult your lawyer. Remember that your freight forwarder must do more than just offer a good price.

Interested in our logistics services? Need further assistance & dedicated information?
Our SINO experts answer within 48h !

HOW TO GET AN EORI NUMBER ?

EORI (Economic operators Registration and identification), is a numbering scheme specific to the European Union. If you are not based in Europe you don’t need an EORI number. But if you are based in an EU country you should read the following.

EORI is mandatory for companies and individuals who are carrying out custom activities in the European Union.

An EORI number consists of an ISO country code (EU member state)  followed by 12 digits number and maximum of 15 digits. It is based on the trader’s VAT number. For Germany it can look like this DE5512345678.

EORI number is required to provide information for goods both at pre-arrival or pre-departure or is engaged in import and export of goods under a transit process.

How to apply for an EORI number:

 

The application process consists of filling an application form online. However, the application form varies from an individual to another depending if the individual is:

  • Registered for value added tax (VAT).
  • Not VAT- registered and the individual is exporting.
  • Not VAT – registered and the individual is importing.

The application form you will fill in depends on the country you are in.

Format of the EORI number:

 

There are two forms of EORI number:

  • For companies or individuals registered to VAT, the EORI number will begin with two letters GB for UK. The number is then followed by 12 digits.
  • Dummy numbers can be issued for non- VAT – registered operators. The number will be smaller than the usual EORI

There can be one EORI number per trader, regardless the number of offices that may have. Each office will have its own EORI number.

Office 1: GB 123456789015

Office 2: GB 123456789016, it can continue depending on the number of offices.

 

Consequences of not having an EORI number:

 

In case you didn’t apply for an EORI number, the customs authorities will hold your cargo until you apply for an EORI number.

They will not impose any penalty or destroy your cargo that you have imported from china or any other county. However, it’s always advisable to have an EORI number before any import process.

In case you didn’t apply in advance, the best solution will be to apply before the shipment has departed from the country of origin.

Does the EORI number applies to any mode of transportation?

 

YES, an EORI number is mandatory in every import/ export process, regardless of whether you are getting your imported products delivered by sea Freight or Air Freight you should get an EORI number.

 

DOES EORI number concerns non- registered companies?

 

EORI number is mandatory for any import process regardless whether you are registered or not. In many European states you are not required to register a company n order to perform commercial activities. Therefore, you must have an EORI number even if you are importing as an individual.

 

How to apply for an EORI number?

 

The EORI number is provided by the customs authorities in which you or your company reside. You can either apply online all fill a form an send it by mail or fax to the customs. Below you will find a list of links to different websites of EU customs authorities for more information on the application:

Austria Belgium Bulgaria
Croatia Czech Republic Denmark
Estonia Finland France
Germany Greece Hungary
Ireland Italy Latvia
Lithuania Luxembourg Malta
Netherlands Poland Portugal
Romania Slovakia Slovenia
Spain Sweden United kingdom

Check that you are registred and your EORI number is valid,

Interested in our logistics services? Need further assistance & dedicated information?
Our SINO experts answer within 48h !