Import and Export Terms You Need to Know

If you’re interested in the import-export business and hope to reach customers overseas, it’s important to understand the key terms involved. Learning import-export terminology isn’t just useful for understanding trade; it can also help prevent confusion when you’re faced with crucial questions or need to handle important documents.

Import and Export Terms

Which terms should you know?

• Customs Clearance

  The customs clearance process involves a series of activities related to managing, inspecting, and authorizing a product before it enters or leaves a particular territory. The term can also refer to various official documents issued by customs officers that authorize products or commodities to cross borders.

• CIF, CNF, OFR, AFR Costs

  Several of these acronyms relate to the costs associated with shipping commodities or products. That’s why it’s important to discuss them in detail.

• CIF (Cost, Insurance, Freight)

  The term CIF refers to the total cost of shipping a commodity. These costs include shipping, insurance, and sea freight charges.

• CNF (Cost and Freight)

  Although similar to CIF, the term CNF does not include insurance costs in the calculation of shipping costs for a commodity.

• OFR (Ocean Freight Rate)

  The term OFR is used to indicate the basic cost of shipping products by sea. OFR is usually calculated per cubic meter.

• AFR (Air Freight Rate)

  AFR is similar to OFR, but uses air freight instead. AFR costs are calculated based on weight, in kilograms or pounds.

• Container Freight StationA Container Freight Station is a location where containers are grouped and organized. This helps ensure containers can be selected and transported more accurately and on time. A Container Freight Station isn’t always located at a port; it can also be found near a railway station or major road.

• Container Yard

  The terms Container Freight Station (CFS) and Container Yard are sometimes confused. In fact, they’re different: a Container Yard is generally located within a port, while a CFS isn’t limited to that location. CFS operations also tend to be more complex and sophisticated.

• Export of Finished Goods (Ex Works)

  The term Ex Work is often used in business transactions that follow the FOB (Free on Board) method at the destination point. In this context, Ex Work means the goods have been officially handed over at a location specified by the buyer. Ex Work can also refer to the “bare” price of goods for export or import. This means the price covers only the goods themselves and excludes items such as official documents or packaging costs.

• Container Seal

  The term Seal refers to a locking device used to secure a container’s contents before it is transported and shipped. Also known as a security seal, it usually has a code that identifies the container and its contents.

• Ports of Loading and Discharge (POL and POD)

  The terms POL (Port of Loading) and POD (Port of Discharge) refer to locations at a port that serve different purposes, even though both are important in container management. POL is the Port of Loading, the area specifically used to load containers and prepare them for departure. POD is the Port of Discharge, the area used to unload containers before distribution after they are offloaded from the ship.

• Demurrage Time
  

  It’s important to remember that containers at a port are not stored free of charge. Demurrage refers to the rental fee charged for containers left at a container port. The calculation and payment period begins when a container enters the port and ends when it is loaded onto a ship and ready to depart.

• Detention Time

  Detention is similar to demurrage, but applies specifically to containers that are empty or loaded with goods and have not yet been returned.

• Consolidation

  Consolidation refers to combining two or more export products in a single container before shipping them by sea. This is generally done to save on shipping costs.

• DDP and DDU Shipments

  DDP (Delivered Duty Paid) shipping is a trade term under which the seller is responsible for risks during transit. This also includes the responsibility for paying taxes, permits, container fees, and other costs. In other words, the buyer only needs to receive the goods. On the other hand, DDU (Delivered Duty Unpaid) shipping is a term under which the buyer is responsible for all shipping costs, including taxes and container fees.

• Port Processing Time (Dwelling Time)

  Loading and unloading containers takes a significant amount of time. The term Dwelling Time describes the period during which a container is at the port and being loaded or unloaded. This time is usually calculated from when the container enters the port or is unloaded from the ship and is ready to be unloaded.

• Certificate of Origin

  If you are involved in importing or exporting products with a distinctive advantage tied to a particular location, the term Certificate of Origin is very important. This certificate is an official document that indicates the origin of specific commodities, such as coffee or chocolate.

• SRP (Customs Registration Letter)

  In Indonesia, SRP refers to the Customs Registration Letter. This document is proof that a company or business has met the requirements set by the customs office to import goods.

That’s a brief overview of some terms used in the world of exports and imports. We hope this information is valuable to you.