Question 1

What does EXW (Ex Works) mean in foreign trade?

Accepted Answer

The seller makes the goods available at their own premises, and the buyer bears all costs and risks of carriage from that point onward.

Question 2

What does FCA (Free Carrier) mean in foreign trade?

Accepted Answer

The seller delivers the goods, cleared for export, to a carrier nominated by the buyer at the agreed place.

Question 3

What does FAS (Free Alongside Ship) mean in foreign trade?

Accepted Answer

The seller delivers when the goods are placed alongside the vessel at the named port of shipment.

Question 4

What does FOB (Free On Board) mean in foreign trade?

Accepted Answer

The seller delivers the goods on board the vessel, and cost and risk pass to the buyer once the goods are loaded.

Question 5

What does CFR (Cost and Freight) mean in foreign trade?

Accepted Answer

The seller pays the cost and freight to the destination port, but risk passes to the buyer once the goods are on board.

Question 6

What does CIF (Cost, Insurance and Freight) mean in foreign trade?

Accepted Answer

The same as CFR, except the seller also buys minimum marine insurance covering the buyer's risk in transit.

Question 7

What does CPT (Carriage Paid To) mean in foreign trade?

Accepted Answer

The seller pays carriage to the named destination, but risk passes when the goods are handed to the first carrier.

Question 8

What does CIP (Carriage and Insurance Paid To) mean in foreign trade?

Accepted Answer

The same as CPT, except the seller also provides insurance covering the buyer's risk during carriage.

Question 9

What does DAP (Delivered At Place) mean in foreign trade?

Accepted Answer

The seller delivers when the goods are ready for unloading at the named destination, bearing all risk up to that point.

Question 10

What does DPU (Delivered At Place Unloaded) mean in foreign trade?

Accepted Answer

The seller delivers and unloads the goods at the named destination; it is the only Incoterm that requires the seller to unload.

Question 11

What does DDP (Delivered Duty Paid) mean in foreign trade?

Accepted Answer

The seller bears all costs and risks, including import clearance and duties, delivering the goods ready for unloading.

Question 12

What does T/T (Telegraphic Transfer) mean in foreign trade?

Accepted Answer

An electronic bank-to-bank wire transfer, and the most common way to pay in international trade.

Question 13

What does L/C (Letter of Credit) mean in foreign trade?

Accepted Answer

A bank's written promise to pay the seller once compliant shipping documents are presented.

Question 14

What does D/P (Documents against Payment) mean in foreign trade?

Accepted Answer

The buyer can collect the shipping documents only after paying the presenting bank for the goods.

Question 15

What does D/A (Documents against Acceptance) mean in foreign trade?

Accepted Answer

The buyer receives the documents after accepting a draft that promises payment on a future date.

Question 16

What does O/A (Open Account) mean in foreign trade?

Accepted Answer

The goods are shipped and delivered before payment is due, with the buyer paying within an agreed period.

Question 17

What does CAD (Cash Against Documents) mean in foreign trade?

Accepted Answer

The buyer pays for the goods in exchange for the shipping documents, usually through a bank.

Question 18

What does Deposit (Down Payment) mean in foreign trade?

Accepted Answer

An upfront partial payment, often around 30%, made to confirm an order before production starts.

Question 19

What does Balance Payment mean in foreign trade?

Accepted Answer

The remaining amount due after the deposit, typically paid before shipment or against documents.

Question 20

What does Advance Payment mean in foreign trade?

Accepted Answer

Full or partial payment made by the buyer before the goods are produced or shipped.

Question 21

What does SWIFT Code mean in foreign trade?

Accepted Answer

A standardized bank identifier code used to route international wire transfers securely.

Question 22

What does Remittance mean in foreign trade?

Accepted Answer

The transfer of funds from the buyer to the seller, the simplest method of settling payment.

Question 23

What does Escrow mean in foreign trade?

Accepted Answer

A neutral third party holds the buyer's payment and releases it to the seller once agreed conditions are met.

Question 24

What does PI (Proforma Invoice) mean in foreign trade?

Accepted Answer

A preliminary invoice sent before shipment that states the goods, prices and terms for the buyer to confirm.

Question 25

What does CI (Commercial Invoice) mean in foreign trade?

Accepted Answer

The seller's official bill for the goods, used for customs valuation and for payment.

Question 26

What does PL (Packing List) mean in foreign trade?

Accepted Answer

A document detailing the contents, weight and dimensions of each package in a shipment.

Question 27

What does B/L (Bill of Lading) mean in foreign trade?

Accepted Answer

A carrier's receipt for the cargo and a document of title used to claim the goods at destination.

Question 28

What does AWB (Air Waybill) mean in foreign trade?

Accepted Answer

A non-negotiable transport document and receipt issued for goods shipped by air.

Question 29

What does CO (Certificate of Origin) mean in foreign trade?

Accepted Answer

A document certifying the country where the goods were produced, used for customs and tariffs.

Question 30

What does Form A mean in foreign trade?

Accepted Answer

A certificate of origin granting preferential tariff treatment under the Generalized System of Preferences.

Question 31

What does MSDS (Material Safety Data Sheet) mean in foreign trade?

Accepted Answer

A document listing a product's chemical make-up, hazards and safe handling, often required to ship goods.

Question 32

What does COA (Certificate of Analysis) mean in foreign trade?

Accepted Answer

A document confirming that a product's tested properties meet the agreed specifications.

Question 33

What does Telex Release mean in foreign trade?

Accepted Answer

An electronic message that authorizes release of the cargo without the original paper bill of lading.

Question 34

What does Insurance Policy mean in foreign trade?

Accepted Answer

A document evidencing cargo insurance coverage for the goods while in transit.

Question 35

What does Inspection Certificate mean in foreign trade?

Accepted Answer

A document issued by an inspector confirming the quantity, quality or condition of the goods before shipment.

Question 36

What does Draft (Bill of Exchange) mean in foreign trade?

Accepted Answer

A written order requiring the buyer to pay a stated sum on demand or at a fixed future date.

Question 37

What does FCL (Full Container Load) mean in foreign trade?

Accepted Answer

A shipment that fills an entire container and is booked under a single consignee.

Question 38

What does LCL (Less than Container Load) mean in foreign trade?

Accepted Answer

A shipment too small to fill a container, consolidated with other cargo to share the space.

Question 39

What does TEU (Twenty-foot Equivalent Unit) mean in foreign trade?

Accepted Answer

A standard measure of container capacity equal to one 20-foot container.

Question 40

What does FEU (Forty-foot Equivalent Unit) mean in foreign trade?

Accepted Answer

A unit of container capacity equal to one 40-foot container, or two TEUs.

Question 41

What does ETD (Estimated Time of Departure) mean in foreign trade?

Accepted Answer

The expected date and time the vessel or shipment leaves the port of loading.

Question 42

What does ETA (Estimated Time of Arrival) mean in foreign trade?

Accepted Answer

The expected date and time the shipment reaches its destination port.

Question 43

What does Demurrage mean in foreign trade?

Accepted Answer

A charge for keeping a container inside the port beyond the allowed free time.

Question 44

What does Detention mean in foreign trade?

Accepted Answer

A charge for holding the carrier's container outside the port beyond the allowed free time.

Question 45

What does Freight Forwarder mean in foreign trade?

Accepted Answer

An agent that arranges shipping, documentation and logistics on behalf of the shipper.

Question 46

What does Transshipment mean in foreign trade?

Accepted Answer

Transferring cargo from one vessel to another at an intermediate port on the way to the destination.

Question 47

What does POL (Port of Loading) mean in foreign trade?

Accepted Answer

The port where the goods are loaded onto the main vessel for export.

Question 48

What does POD (Port of Discharge) mean in foreign trade?

Accepted Answer

The port where the goods are unloaded from the vessel at the destination.

Question 49

What does NVOCC (Non-Vessel Operating Common Carrier) mean in foreign trade?

Accepted Answer

A carrier that issues its own bills of lading but does not own the ships it uses.

Question 50

What does HS Code (Harmonized System Code) mean in foreign trade?

Accepted Answer

A standardized international number that classifies a product for customs duties and trade statistics.

Question 51

What does Customs Clearance mean in foreign trade?

Accepted Answer

The process of getting goods approved by customs to enter or leave a country.

Question 52

What does Customs Declaration mean in foreign trade?

Accepted Answer

A formal statement to customs listing the goods, value and origin of a shipment.

Question 53

What does Duty (Customs Duty) mean in foreign trade?

Accepted Answer

A tax a government charges on imported goods, usually based on their value or quantity.

Question 54

What does Tariff mean in foreign trade?

Accepted Answer

A schedule of taxes that a government applies to imported or exported goods.

Question 55

What does VAT (Value Added Tax) mean in foreign trade?

Accepted Answer

A consumption tax applied at each stage of the supply chain, often charged on imports.

Question 56

What does Anti-dumping Duty mean in foreign trade?

Accepted Answer

An extra import tax imposed to protect local industry from goods sold below fair market value.

Question 57

What does Bonded Warehouse mean in foreign trade?

Accepted Answer

A secured facility where imported goods are stored without paying duty until they are released.

Question 58

What does Drawback (Duty Drawback) mean in foreign trade?

Accepted Answer

A refund of import duties paid when the imported goods are later re-exported.

Question 59

What does Import License mean in foreign trade?

Accepted Answer

An official permit that allows restricted or regulated goods to be imported.

Question 60

What does ISF (Importer Security Filing) mean in foreign trade?

Accepted Answer

A US customs filing, known as 10+2, required before ocean cargo is loaded for the United States.

Question 61

What does AMS (Automated Manifest System) mean in foreign trade?

Accepted Answer

A US customs system that requires carriers to submit cargo data before the goods arrive.

Question 62

What does MOQ (Minimum Order Quantity) mean in foreign trade?

Accepted Answer

The smallest quantity a manufacturer will accept for a single product or order.

Question 63

What does OEM (Original Equipment Manufacturer) mean in foreign trade?

Accepted Answer

A factory that produces goods to a buyer's design and specifications, sold under the buyer's brand.

Question 64

What does ODM (Original Design Manufacturer) mean in foreign trade?

Accepted Answer

A factory that designs and produces a product the buyer can rebrand as their own.

Term	Category	Meaning
EXWEx Works	Incoterms	The seller makes the goods available at their own premises, and the buyer bears all costs and risks of carriage from that point onward.
FCAFree Carrier	Incoterms	The seller delivers the goods, cleared for export, to a carrier nominated by the buyer at the agreed place.
FASFree Alongside Ship	Incoterms	The seller delivers when the goods are placed alongside the vessel at the named port of shipment.
FOBFree On Board	Incoterms	The seller delivers the goods on board the vessel, and cost and risk pass to the buyer once the goods are loaded.
CFRCost and Freight	Incoterms	The seller pays the cost and freight to the destination port, but risk passes to the buyer once the goods are on board.
CIFCost, Insurance and Freight	Incoterms	The same as CFR, except the seller also buys minimum marine insurance covering the buyer's risk in transit.
CPTCarriage Paid To	Incoterms	The seller pays carriage to the named destination, but risk passes when the goods are handed to the first carrier.
CIPCarriage and Insurance Paid To	Incoterms	The same as CPT, except the seller also provides insurance covering the buyer's risk during carriage.
DAPDelivered At Place	Incoterms	The seller delivers when the goods are ready for unloading at the named destination, bearing all risk up to that point.
DPUDelivered At Place Unloaded	Incoterms	The seller delivers and unloads the goods at the named destination; it is the only Incoterm that requires the seller to unload.
DDPDelivered Duty Paid	Incoterms	The seller bears all costs and risks, including import clearance and duties, delivering the goods ready for unloading.
T/TTelegraphic Transfer	Payment	An electronic bank-to-bank wire transfer, and the most common way to pay in international trade.
L/CLetter of Credit	Payment	A bank's written promise to pay the seller once compliant shipping documents are presented.
D/PDocuments against Payment	Payment	The buyer can collect the shipping documents only after paying the presenting bank for the goods.
D/ADocuments against Acceptance	Payment	The buyer receives the documents after accepting a draft that promises payment on a future date.
O/AOpen Account	Payment	The goods are shipped and delivered before payment is due, with the buyer paying within an agreed period.
CADCash Against Documents	Payment	The buyer pays for the goods in exchange for the shipping documents, usually through a bank.
DepositDeposit (Down Payment)	Payment	An upfront partial payment, often around 30%, made to confirm an order before production starts.
BalanceBalance Payment	Payment	The remaining amount due after the deposit, typically paid before shipment or against documents.
Advance PaymentAdvance Payment	Payment	Full or partial payment made by the buyer before the goods are produced or shipped.
SWIFTSWIFT Code	Payment	A standardized bank identifier code used to route international wire transfers securely.
RemittanceRemittance	Payment	The transfer of funds from the buyer to the seller, the simplest method of settling payment.
EscrowEscrow	Payment	A neutral third party holds the buyer's payment and releases it to the seller once agreed conditions are met.
PIProforma Invoice	Documents	A preliminary invoice sent before shipment that states the goods, prices and terms for the buyer to confirm.
CICommercial Invoice	Documents	The seller's official bill for the goods, used for customs valuation and for payment.
PLPacking List	Documents	A document detailing the contents, weight and dimensions of each package in a shipment.
B/LBill of Lading	Documents	A carrier's receipt for the cargo and a document of title used to claim the goods at destination.
AWBAir Waybill	Documents	A non-negotiable transport document and receipt issued for goods shipped by air.
COCertificate of Origin	Documents	A document certifying the country where the goods were produced, used for customs and tariffs.
Form AForm A	Documents	A certificate of origin granting preferential tariff treatment under the Generalized System of Preferences.
MSDSMaterial Safety Data Sheet	Documents	A document listing a product's chemical make-up, hazards and safe handling, often required to ship goods.
COACertificate of Analysis	Documents	A document confirming that a product's tested properties meet the agreed specifications.
Telex ReleaseTelex Release	Documents	An electronic message that authorizes release of the cargo without the original paper bill of lading.
Insurance PolicyInsurance Policy	Documents	A document evidencing cargo insurance coverage for the goods while in transit.
Inspection CertificateInspection Certificate	Documents	A document issued by an inspector confirming the quantity, quality or condition of the goods before shipment.
DraftDraft (Bill of Exchange)	Documents	A written order requiring the buyer to pay a stated sum on demand or at a fixed future date.
FCLFull Container Load	Logistics	A shipment that fills an entire container and is booked under a single consignee.
LCLLess than Container Load	Logistics	A shipment too small to fill a container, consolidated with other cargo to share the space.
TEUTwenty-foot Equivalent Unit	Logistics	A standard measure of container capacity equal to one 20-foot container.
FEUForty-foot Equivalent Unit	Logistics	A unit of container capacity equal to one 40-foot container, or two TEUs.
ETDEstimated Time of Departure	Logistics	The expected date and time the vessel or shipment leaves the port of loading.
ETAEstimated Time of Arrival	Logistics	The expected date and time the shipment reaches its destination port.
DemurrageDemurrage	Logistics	A charge for keeping a container inside the port beyond the allowed free time.
DetentionDetention	Logistics	A charge for holding the carrier's container outside the port beyond the allowed free time.
Freight ForwarderFreight Forwarder	Logistics	An agent that arranges shipping, documentation and logistics on behalf of the shipper.
TransshipmentTransshipment	Logistics	Transferring cargo from one vessel to another at an intermediate port on the way to the destination.
POLPort of Loading	Logistics	The port where the goods are loaded onto the main vessel for export.
PODPort of Discharge	Logistics	The port where the goods are unloaded from the vessel at the destination.
NVOCCNon-Vessel Operating Common Carrier	Logistics	A carrier that issues its own bills of lading but does not own the ships it uses.
HS CodeHarmonized System Code	Customs & Duties	A standardized international number that classifies a product for customs duties and trade statistics.
Customs ClearanceCustoms Clearance	Customs & Duties	The process of getting goods approved by customs to enter or leave a country.
Customs DeclarationCustoms Declaration	Customs & Duties	A formal statement to customs listing the goods, value and origin of a shipment.
DutyCustoms Duty	Customs & Duties	A tax a government charges on imported goods, usually based on their value or quantity.
TariffTariff	Customs & Duties	A schedule of taxes that a government applies to imported or exported goods.
VATValue Added Tax	Customs & Duties	A consumption tax applied at each stage of the supply chain, often charged on imports.
Anti-dumping DutyAnti-dumping Duty	Customs & Duties	An extra import tax imposed to protect local industry from goods sold below fair market value.
Bonded WarehouseBonded Warehouse	Customs & Duties	A secured facility where imported goods are stored without paying duty until they are released.
DrawbackDuty Drawback	Customs & Duties	A refund of import duties paid when the imported goods are later re-exported.
Import LicenseImport License	Customs & Duties	An official permit that allows restricted or regulated goods to be imported.
ISFImporter Security Filing	Customs & Duties	A US customs filing, known as 10+2, required before ocean cargo is loaded for the United States.
AMSAutomated Manifest System	Customs & Duties	A US customs system that requires carriers to submit cargo data before the goods arrive.
MOQMinimum Order Quantity	OEM & ODM	The smallest quantity a manufacturer will accept for a single product or order.
OEMOriginal Equipment Manufacturer	OEM & ODM	A factory that produces goods to a buyer's design and specifications, sold under the buyer's brand.
ODMOriginal Design Manufacturer	OEM & ODM	A factory that designs and produces a product the buyer can rebrand as their own.
Lead TimeLead Time	OEM & ODM	The total time from placing an order to receiving the finished goods.
SampleSample	OEM & ODM	A trial unit made for the buyer to check quality and specifications before bulk production.
PPSPre-Production Sample	OEM & ODM	A final approved sample produced before mass production, used as the quality benchmark.
Mass ProductionMass Production	OEM & ODM	The large-scale manufacturing of goods that begins after the sample is approved.
ToolingTooling (Mold)	OEM & ODM	The custom molds and equipment built to manufacture a specific product, often a one-time cost for the buyer.
SKUStock Keeping Unit	OEM & ODM	A unique code that identifies each distinct product variant for inventory tracking.
BOMBill of Materials	OEM & ODM	A complete list of the materials and components needed to manufacture a product.
Private LabelPrivate Label	OEM & ODM	Products made by one company and sold under another company's brand name.
CustomizationCustomization	OEM & ODM	Adapting a product's design, formula, packaging or branding to a buyer's requirements.
Unit PriceUnit Price	OEM & ODM	The price charged for a single unit of a product, before shipping and other costs.
InquiryInquiry	Trade Roles & Process	A buyer's request to a supplier for product, price and terms information.
QuotationQuotation	Trade Roles & Process	A supplier's formal offer stating prices, terms and validity for the requested goods.
RFQRequest for Quotation	Trade Roles & Process	A buyer's document inviting suppliers to submit prices for specified goods or services.
POPurchase Order	Trade Roles & Process	A buyer's official document committing to buy goods at agreed quantities, prices and terms.
ShipperShipper	Trade Roles & Process	The party sending the goods, usually the seller or exporter named on the bill of lading.
ConsigneeConsignee	Trade Roles & Process	The party named to receive the goods, usually the buyer or importer.
Notify PartyNotify Party	Trade Roles & Process	The party the carrier notifies when the shipment arrives, often the buyer or their agent.
BeneficiaryBeneficiary	Trade Roles & Process	The party entitled to receive payment, usually the seller under a letter of credit.
ApplicantApplicant	Trade Roles & Process	The party that asks its bank to open a letter of credit, usually the buyer.
Sourcing AgentSourcing Agent	Trade Roles & Process	An intermediary who finds suppliers and manages purchasing on behalf of a buyer.
Trading CompanyTrading Company	Trade Roles & Process	A business that buys and resells goods rather than manufacturing them itself.
End UserEnd User	Trade Roles & Process	The final customer who actually uses the product, as opposed to a reseller.
Counter OfferCounter Offer	Trade Roles & Process	A reply to an offer that proposes different terms and reopens the negotiation.
QCQuality Control	Quality & Compliance	Inspecting and testing products to make sure they meet the required quality standards.
QAQuality Assurance	Quality & Compliance	The processes and systems that prevent quality problems before they happen.
AQLAcceptable Quality Limit	Quality & Compliance	The maximum number of defects allowed in a sample for a production batch to pass inspection.
PSIPre-Shipment Inspection	Quality & Compliance	A quality and quantity check of the finished goods carried out before they are shipped.
Third-party InspectionThird-party Inspection	Quality & Compliance	Quality inspection carried out by an independent agency rather than the buyer or seller.
REACHREACH	Quality & Compliance	An EU regulation governing the registration and safe use of chemical substances in products.
RoHSRoHS	Quality & Compliance	An EU directive restricting hazardous substances such as lead in electrical and electronic products.
CPSCCPSC	Quality & Compliance	The US Consumer Product Safety Commission, which sets safety rules for consumer goods.
FDAFDA	Quality & Compliance	The US Food and Drug Administration, which regulates food, cosmetics, drugs and related products.
ISOISO	Quality & Compliance	The International Organization for Standardization, whose standards such as ISO 9001 certify quality systems.
GMPGood Manufacturing Practice	Quality & Compliance	A system that ensures products are consistently produced and controlled to quality standards.
CECE Marking	Quality & Compliance	A mark showing a product meets EU health, safety and environmental requirements.
Batch NumberBatch Number	Quality & Compliance	A code identifying a specific production run, used for traceability and recalls.

Incoterms

Ex Works

Free Carrier

Free Alongside Ship

Free On Board

Cost and Freight

Cost, Insurance and Freight

Carriage Paid To

Carriage and Insurance Paid To

Delivered At Place

Delivered At Place Unloaded

Delivered Duty Paid

Payment

Telegraphic Transfer

Letter of Credit

Documents against Payment

Documents against Acceptance

Open Account

Cash Against Documents

Deposit (Down Payment)

Balance Payment

Advance Payment

SWIFT Code

Remittance

Escrow

Documents

Proforma Invoice

Commercial Invoice

Packing List

Bill of Lading

Air Waybill

Certificate of Origin

Form A

Material Safety Data Sheet

Certificate of Analysis

Telex Release

Insurance Policy

Inspection Certificate

Draft (Bill of Exchange)

Logistics

Full Container Load

Less than Container Load

Twenty-foot Equivalent Unit

Forty-foot Equivalent Unit

Estimated Time of Departure

Estimated Time of Arrival

Demurrage

Detention

Freight Forwarder

Transshipment

Port of Loading

Port of Discharge

Non-Vessel Operating Common Carrier

Customs & Duties

Harmonized System Code

Customs Clearance

Customs Declaration

Customs Duty

Tariff

Value Added Tax

Anti-dumping Duty

Bonded Warehouse

Duty Drawback

Import License

Importer Security Filing

Automated Manifest System

OEM & ODM

Minimum Order Quantity

Original Equipment Manufacturer

Original Design Manufacturer

Lead Time

Sample

Pre-Production Sample

Mass Production

Tooling (Mold)

Stock Keeping Unit

Bill of Materials

Private Label

Customization

Unit Price