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6 Common Import-Export Terms You Need to Know

6 Common Import-Export Terms You Need to Know - Team Watching City

Before you do business, gain the knowledge you need

Today’s post comes courtesy of Eric Greene of Go-To Tanks

Every professional field has its own pertinent glossary that describes and defines its functions and relative practices. The world of global trade is no exception. There is a specific term for each aspect of the international trade business. With the easy reach we have today to the nooks and crannies of the world at large, some of the basic terms have become commonplace to us. Whether we have a need to use them for personal activities or encounter them through allusive print or broadcast, they ring familiar.

However, unless we are actually employed in the area ourselves, familiarity doesn’t necessarily give us a clear understanding of what certain terminologies mean. Defining them may seem intimidating; it needn’t be. The comprehension of global trade terms is facilitated by the fact that many of them are interconnected: the explanation of one often carries a description or definition of another.

Try these on for size:

Bill of Lading

Lading is nothing more than loading, as in freight or cargo. A bill of lading is merely¬†a document that specifies the contractual terms between a shipper and the carrier that will transport the shipper’s goods between designated points. Issued by the carrier, it serves as a receipt for the handling of the shipper’s described freight and states the agreed-upon end destination. The term “carrier” is a blanket one for plane, rail, truck or ocean vessel.

Letter of Credit

This is literally a written letter that is internationally regarded as a risk management tool. On a buyer’s behalf, the letter is issued by a bank and requests that other banks turn over a certain amount of funds to the presenter of the letter. The presenter is usually the seller or the seller’s agent. The bank’s term for that person is the “account party” or “applicant.” The funds are charged against the buyer’s account.

FOB

Usually seen in lower case, it stands for “free on board.” It means the price of traded merchandise after it’s loaded onto a ship but before shipping. Transportation and other costs are not included. Essentially, this term releases a seller from further obligation once the merchandise has been loaded over the ship’s rail. From that point on, the buyer assumes responsibility for any damage to or loss of the cargo.

FAS

Relative to fob, fas denotes “free alongside ship.” Here, the seller’s obligation ends as soon as the cargo is placed on the quay or barge alongside the ship.

Embargo

This is a government order that prohibits export and import of specific products or trade with designated foreign countries. The United States has imposed and maintained an embargo on Cuba since 1960. However, the U.S. does allow the export of food supplies to Cuba under strict licensing by the Commerce Department’s Bureau of Industry and Security.

World Trade Organization

The WTO is the international body dedicated to the promotion of world trade. It is also tasked with resolving disputes among its member nations; 157 as of August, 2012. Its existence is the result of seven years of negotiations concluding in 1994. It officially gained recognition and replaced the obsolete General Agreement on Tariffs and Trade in January, 1995.

This sampling of terms barely scratches the surface of such a vast field. Further information on global trade terminology may be gleaned from www.wto.org.

 About the Author

This article was written by Eric Greene on behalf of Go-To Tanks. Need top-quality tanks to store your products? Check out gototanks.com and see what they have to offer.

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Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

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