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Shipping and Export Terminology

Exporting employs a unique body of words and phrases, all of which the beginner will soon become familiar with. For the time being we might briefly consider a few of the more common terms used in exporting circles:

Bills of Lading – This is the document provided by the shipping line as receipt and proof of ownership of the goods transported on your behalf. Usually the document tends to come with multiple copies, some of which are forwarded to the importer and others to the paying bank as evidence of trading.

Certificate of Origin – This is a statement by the exporter with the backing of a Chamber of Commerce and sometimes an embassy. The document states from which country the goods emanate.

Commercial Invoice – More detailed and complex than everyday invoices with which the reader will doubtless already be familiar, this document contains a full description of goods, along with packing marks, weights, insurance details and information regarding transportation routes. Some countries require Chamber of Commerce confirmation of the invoice’s contents; others require all information provided to be given in their own official language.

FOB (Free On Board) – The usual means of quoting export prices. The price includes carriage to specified ports or docks, and charges up to placing on board the ship or aircraft taking the items to their intended destination. If shipped from Southampton, the contract might then say ‘fob Southampton’.

CIF (Cost, Insurance, Freight) – A little further on from FOB this cost is that of FOB plus insurance on board.

Price Ex Factory – The price of your goods where the buyer has to arrange and pay for all other costs of carriage, insurance, etc.

Letter of Credit – A common form of payment for exports, provided and controlled by the paying bank.

Consolidated – Where your exported goods are consolidated or grouped with others, usually in a container, in order to obtain the benefits of cheaper shipping rates.