Shippers & Shipping Terminology

This page is an evolving “work in progress” designed to provide background and foundation knowledge of the delivery and transport of goods, domestically & internationally.  If you have suggestions for abbreviations, definitions, and terminology to add to the list, please let me know.

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• Airway Bill = A document that specifies the content of a consignment, it’s origins, buyer and seller, value, Customs product designation, transport costs, insurance terms, etc.  It is normal for it to also state flight numbers and air transport company operating the flight.  This is a valuable document and only originals are accepted for clearing goods through Customs, and removing them from the Customs Warehouse (Port of Entry Customs House).
• Bill of Lading = A similar document to an Airway Bill, but used with surface transport, most noteably ocean-going vessels.  The primary difference being that a Bill of Lading can be shared when several shippers consolidate small cargoes into a single shipping container.  Each final recipient of the container’s contents will receive an original copy of the Bill of Lading, describing their personal portion of the cargo in the same manner as an Airway Bill.
• Carrier  = A shipping or postal company that delivers consignments in an unescorted manner.  A simple example is the post office.  Packages sent via the post office are not escorted from start to finish of journey, with signatures being exchanged each time the package changes hands.
• Courier  = A shipping or postal company (3rd party handler) that escorts all consignments (single or amalgamated cargo) from start to end of journey.  Anytime the consignment is handed from one escort to another, the exchange is documented and signed for.  For this reason, using a courier is obviously more expensive than using a carrier.  Some international postal services, such as EMS, are classed as couriers due to the transfer signatures recording.
• Air Courier = where a person escorts a package via commercial sirline flights from one airport to another.  It is the most expensive, but arguably the most sure, form of delivery.  It should not be confused with regular couriers who transport by air, such as FedEx or UPS.
• CIF Shipping = Carriage, Insurance & Forwarding.  The concept of this mainly B2B shipping term is that the price quoted includes all costs from the seller’s premises to the “Port of Entry” in the buyer’s country.  The buyer then has to pay any Customs  handling charges and duties, plus delivery from the port of entry to the buyer’s location.  Sometimes it may be used in the context of CIF door-to-door, in which case, the only additional charge the buyer pays, is that relating to Customs duties and handling.
• FOB Shipping = Freight On Board.  This refers to a form of “Buyer Collect” contract where the only shipping charges paid to the seller are those for delivery to, and clearance through, the “Port of Exit”  in the seller’s country, up to the point where the shipment is loaded onto the aircraft, vehicle, or vessel, that will then transport it towards the port of entry in the buyer’s country.  From the moment it boards that transport, all shipping and insurance costs are on the buyer’s account, and all liabilities for safe delivery are the buyer’s.  This is normally a shipping term used only with B2B transactions, though some B2C transactions (e.g. made to order furnitures, classic cars, etc.) may also be conducted under FOB.
• GSP = General System of Preferences.  A complex system of international agreements relating to the quota and types of products moving between countries, whereby preferential import & export handling and treatment is given to those products accompanied by a GSP Certificate.  Some GSP agreements allow for an annual quota of product to enter a country without import duty surcharge.  Once the quota has been filled, all further shipments are subject to duty at the normal rates.
• Port of Entry  = The air. land, or sea, port where an import is assessed for Customs Duty and taxes.  It will normally include a warehousing and storage facility  that charges fees per day that the shipment is with them.  For this reason, most regular importers have a shipping agent  who clears consignments through Customs quickly, then relocates the goods to their own storage facility (which usually charges cheaper fees than the one at the port).
• Port of Exit.  As Port of Entry, but specifically for goods leaving a country.  The Port of Exit is usually named on the shipping documents, together with the aircraft or vessel, and voyage, details that are air-couriered, or faxed, to the buyer before the transport leaves the Port of Exit.
• P&P = Postage and Packaging.  This classification refers to the delivery charge displayed where the seller absorbs any handling charge into the price of the goods, it is the older form of cost-centre accounting , and has relevant to macro-accounting for Value Added Tax (VAT) and other country-specific taxation regulations.
• PP&H = Postage, Packaging & Handling.  This is commonly used where all P&P charged to a customer is assessable for sales tax, and where physical services rendered are assessed under the same rate of sales taxes as physical goods.  It may also be used where a seller is using cost-centre accounting that keeps labour costs and income assigned to individual departments.

The above list is neither definitive, nor final, and as time goes by, it will no doubt grow - your comments and suggestions are welcome.

Ed