In the shipping world, terminology can be confusing. Here are some helpful terms that will assist with your understanding:
Consignor: This is generally the name of the person or entity that has shipped the goods from the country/place of origin. This is generally the person or entity who has sold the goods (such as a supplier/seller), but in some cases it can be a third party that has shipped the goods on behalf of the seller.
Consignee: This is generally the name and details of the person or entity that is financially responsible for the goods being shipped, such as a buyer. Most of the time, but not always, the consignee is the person or entity who will be receiving the goods.
Notify party: These are details noted on the shipping bill of lading of who the carrier or agent is to notify when goods are about to arrive at their destination. This can often be a nominated person or company who can act on behalf of the consignee when goods arrive. However, in most instances this will be noted as the consignee details.
Bill of lading (also known as a BL): This is a legal document issued by a carrier and/or forwarding agent that will show the details of all the parties involved (consignor and consignee), origin and destination locations and the consignment that has been shipped. This is generally only issued once the shipment has departed its originating point and is a means of acceptance by the carrier. The carrier is obligated to complete the carriage of the goods as per the terms of the BL. The BL is used as proof of entitlement to goods being shipped and acts as a contract between the owner of the goods and the carrier and is generally non-negotiable. Often original bills of lading are used between buyers, sellers and financial institutions to form the ownership structure and security of goods being shipped.
Airway bill of lading (also known as an AWB): Much like the BL, an airway bill of lading is a shipping document issued for the carriage of goods via air. Carrying airlines will issue a master AWB (MAWB) and forwarding agents may also issue a house AWB (HAWB) to their customers. The same technical obligations can be applied much like a BL.
FCL: This is the term given to a ‘full container load’ when shipping containers, mainly 20ft or 40ft containers. FCL container shipments are used when a consignment requires a whole container to ship goods.
LCL: This term means ‘less than a container load’ and is often a method of shipping small quantities of goods that don’t require a full container.
Terms of sale: Often when purchasing goods overseas, there can be various purchase terms. The different terms determine what is included in the price paid for the goods and who is responsible for particular costs along the way. Here are some commonly used terms:
EXW: Meaning ‘ex-works’, this is used when goods are purchased from a seller/supplier and they are responsible for making the goods available from the store/warehouse/factory door. It will be the buyer’s responsibility to then uplift the goods from that point.
Example: If you purchase 10 cartons of shoes from a seller/supplier in Milan Italy, and their purchase terms are EXW Milan, this indicates that all costs for the goods are up to the point of having the goods available for collection (either from their store or warehouse or factory). It is then your responsibility to have the goods uplifted and collected from that point.
FOB: Meaning ‘free on board’, this is used when the price of goods includes getting the goods to a specific point at their origin (generally onto a vessel or aircraft for shipment to the buyer). It is the seller’s responsibility to ensure all charges are paid to this point. From there, responsibility passes to the buyer.
Example: The 10 cartons of shoes from a seller in Milan. The seller is giving you a total price with the terms ‘FOB Milan’. This means the price of the shoes includes everything to the point of loading (such as the price of the goods itself, sellers’ fee, delivery to the loading depot, loading onto a vessel/aircraft and any export clearance/handling charges). It is then the buyer’s responsibility to pay for freight, arrival and delivery charges at the destination.
CIF: Meaning ‘cost, insurance and freight’, this is used when the price of goods includes the freight and insurance charges to a particular destination. Once it arrives at the destination, responsibility then passes to the buyer for all arrival charges.
Example: The 10 cartons of shoes you bought from Milan are sold under CIF terms. If the destination is Auckland, then this will be CIF Auckland. The seller is responsible for everything including the freight and insurance costs of the shoes to Auckland. Once they arrive in Auckland, the responsibility passes to the buyer who will then pay for all other charges and taxes payable to get the goods delivered to them.
C&F: Meaning ‘cost and freight’, this is almost identical to the term CIF, but no insurance is included in the sale price of the goods.