OptimalShip's Helpful Shipping Tips

Most Commonly Used International Shipping Terms Everyone Should Know

Posted by K. Sterrett on Jun 27, 2018 12:56:10 PM

Are you confused by some of the lingo in international shipping? Abbreviations, acronyms, words that look different but mean the same thing…international shipping is tricky business, and the extensive vocabulary one must develop takes time and patience. Don’t worry, everyone must start somewhere, and we’re here to show you where.

international shipping lingo

Below you’ll find a glossary of the most commonly used international shipping terms in the industry. For a full glossary, you can download our guide to get all the terms in one place.

Air Waybill (AWB) – sometimes you will hear this term in such a way that it sounds like “Airway Bill” instead of “Air Waybill”. Both terms refer to the same thing: the contract between a shipper and a carrier. The air waybill is used as the shipping label and includes information about the shipment such as shipping and receiving address and contact information, tracking, contents, size and weight.

Bill of Lading is the same thing, in most cases, as an air waybill. Bills of lading are non-negotiable.

Certificate of Origin (CO) – a CO is a document that indicates where the product was MADE, not necessarily where it is shipping from. For example, if someone is shipping goods to India, but those goods were originally made in China, the Certificate of Origin would indicate that China was the origin country.

Sometimes a CO is required for a shipment and needs to be notarized by a local chamber of commerce when exporting from the US. In addition, if a shipment qualifies for preferential tariff treatment under Free Trade Agreements such as NAFTA, A Certificate of Origin is sometimes required.

Commercial Invoice (CI) – A commercial invoice is a document that is prepared by the exporter or sometimes, the third-party logistics company (3PL) that is assisting the exporter. A commercial invoice must accompany all dutiable shipments traveling internationally.  All commercial invoices require the same information:

  • Description of goods, including weight of the package
  • The address of both the shipper and the receiver
  • HS Codes
  • Quantity of items in the shipment
  • Value of items in the shipment
  • Country of Origin of items in the shipment
  • Airway bill number
  • Shipper signature, date

Payment terms and delivery terms are also sometimes included on a commercial invoice. It is also helpful to list the receiver’s tax ID (or country’s equivalent) on the commercial invoice. A commercial invoice is used to help assess taxes & duties at the border of the importing country.

Country of Origin of Goods – Where the goods have been produced, which is not necessarily where they are exported from. Refer to Certificate of Origin.

Customs – Also known as “customs department”, “customs service”, or “customs office”. This is the country government-run service that is responsible for receiving shipments from other countries, clearing and recording exports/imports, assessing duties and taxes, and formal inspections, when required.

Export – A shipment that is being transported out of a country.

Harmonized System Code (HS Code) – HS codes, are the universal number classification for trading goods internationally. The classification that the HS code indicates helps define tariffs and taxes, and always consists of 6 numbers. To learn more about HS, HTS, and Schedule B codes, check out our post.

Import – A shipment that is being transported into a country.

Importer of Record (IOR) – An importer, whether an entity or individual, who is responsible for ensuring that legal goods are imported in accordance with the law of the country. AN IOR is responsible for filing legally required documents.

North American Free Trade Agreement (NAFTA) – The trade agreement between Canada, US, and Mexico that encourages free trade between these countries.

Pro Forma Invoice – Sometimes a pro forma is used in place of a commercial invoice, and contains the same information about the goods being shipped as a commercial invoice. A Pro forma invoice must be used when the goods are being supplied free of charge to the consignee, for example: samples, gifts or inter-company material.

Tariff – Also referred to as “duties and taxes,” a tariff is an amount of money levied on goods that have been transported across a country’s borders. All shipments are subject to tariffs.

Value Added Tax (VAT) –A value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed (for example, if sales tax has already been paid). More than 160 countries around the world use value-added taxation, and it is most commonly found in the European Union.

Do international shipping terms confuse you? What’s difficult about them for you?

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Topics: International Shipping