A Glossary of Common Global Trade Terms

Global trade, like many industries, has its own unique set of terminology. Here are some of the most commonly used terms:

1. 3PL (Third-Party Logistics): Refers to logistics companies that allow businesses to outsource operations such as warehousing, picking, packing, and shipping.
2. Assaying Company
3. institutions set up to assay (test the purity of) precious metals. This is often done to protect consumers from buying fake items.

3. Backorder: A term used when an item is not currently available, but it can be ordered for delivery at a later date.
4. Batch Fulfilment: The process of fulfilling multiple orders at once.
5. Bill of Lading (or B/L): A legal document between the shipper and carrier detailing the type, quantity, and destination of the goods being carried.
6. This document is used by the shipper of the goods (consignor), the receiver of the goods (consignee), and the shipping carrier that actually transports the goods.

6. Blind Shipping: When the receiver of goods is unaware of the shipper or vice versa.
7. Bonded Warehouse facility
8. A site where shippers can store imported goods before customs have processed them,
9. Goods stored in bonded warehouses aren’t liable for customs duties, and
10. When the goods have been delivered to their next destination, all applicable duties become payable
11. CIF (Cost, Insurance, and Freight): An Incoterm where the seller is responsible for the costs, insurance, and freight to bring the goods to the port of destination.
12. only applies to goods shipped via a waterway or ocean

9. CIQ: China Entry-Exit Inspection and Quarantine Bureaus
10. COA Certificate: Certificate of Analysis
11. This document verifies that the product manufactured conforms to the customer’s requirements.
12. DAP:Delivery at Place
13. When goods are bought or sold DAP it means that the Seller delivers the goods to a place previously agreed to by the seller and the buyer.
14. This can be any location. The agreed place of delivery (e.g. the terminal) needs to be specifically named.

12. DDP (Delivered Duty Paid): An Incoterm indicating that the seller is responsible for all costs and risks associated with delivering goods to a named place of destination.
13. DLC: Documentary Letter of Credit
14. A financial instrument, issued by banks or trade finance institutions through a SWIFT MT700 message, where seller/exporters receive payment from the buyer/importer, once the terms specified in the DLC are completely fulfilled.

14. EXW (Ex Works): A term indicating that the seller is only responsible for making the goods available at their premises, and the buyer is responsible for all other costs.
15. FCO: Full Corporate Offer
16. A full corporate offer is a document which outlines the conditions of the sale.

16. FOB (Free On Board): An Incoterm where the seller is responsible for the goods until they are loaded on a vessel at a port of shipment.
17. IEC: International Electro Technical Commission
18. An organisation that prepares and publishes international standards for all electrical, electronic and related technologies.
19. IMFPA: Irrevocable Master Fee Protection Agreement
20. A contract used in international trade to protect the fee (commission) of the intermediary (broker) who mediates in transactions, mainly for the purchase of commodities or merchandise negotiated in bulk such as food, raw materials, minerals.

19. Incoterms: Short for international commercial terms, these are universal trade terms used to determine who (the buyer or seller) is responsible for what during the shipping process.
20. IPCO: Irrevocable Corporate Purchase Order
21. A document drawn up by commercial buyers,
22. containing the quantities of products required, the type of products required, and other conditions that the buyer wants the sale to proceed under.
23. LME: London Metal Exchange
24. The London Metal Exchange (LME) is a commodities exchange that deals in metals futures and options. It is the largest exchange for options and futures contracts for base metals, which include aluminium, zinc, lead, copper, and nickel.
25. LOI: Letter of intent
26. A document written in business letter format that declares a party’s intent to do a specific thing. It’s usually, but not always, non-binding, and it states a preliminary commitment by one party to do business with another party.

23. Q&Q Inspection: Inspection to help protect your brand and your company’s reputation by minimizing defective merchandise, customer complaints, non-compliant products, and late and short shipments
24. SBLC: Standby Letter of Credit 
25. Refers to a legal instrument issued by a bank on behalf of its client, providing a guarantee of its commitment to pay the seller if its client (the buyer) defaults on the agreement.
26. SGS (formerly Société Générale de Surveillance – French for General Society of Surveillance)
27. Swiss multinational company headquartered in Geneva,
28. provides inspection, verification, testing and certification services.

26. SPA: Sale and Purchase Agreement
27. Represents the outcome of key commercial and pricing negotiations, and
28. is a binding legal contract between two parties that obligates a transaction to occur between a buyer and seller.

Understanding these terms can help you navigate the complexities of the global trade industry more effectively. Happy trading!The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this article are for general informational purposes only. Readers of this article should contact us or any other attorney to obtain advice with respect to any particular legal matter.  No reader, user, or browser of this article should act or refrain from acting on the basis of information on this article without first seeking legal advice.  Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed.  The content on this posting is provided “as is;” no representations are made that the content is error-free.