A documentary credit (counter) taken out by a seller (importer) to allow purchase of goods required to meet a sale covered under original (head) credit. Under this type of arrangement the first credit (head) can be offered in support of security to the importer’s bank. As applicant for the second credit (counter) the importer is responsible for reimbursing the bank for payment made under it, regardless of whether or not they are paid under the original credit. Should be distinguished from a transferable credit.

A surcharge levied by the shipping company to cover any extra fuel costs incurred between the time a rate is quoted and when the goods are shipped. BAF could be a rebate if bunkering if bunkering costs have decreased in the meantime.

A bill of exchange accepted by a bank usually for the purpose of financing a sale of goods to or by the bank’s customer. The bill may be drawn, for example, by an exporter on the importer’s bank and be sold on the open market at a discount.

An insurance document indicating coverage of a particular shipment under an open cover policy. To be distinguished, particularly as regardspresentation under a documentary credit, from an insurance policy or aninsurance certificate. Also known as a ‘banker’s cover note’.

Contract between a bank as guarantor and a beneficiary in which the bank commits itself to pay a certain sum under certain, specified conditions. Thus, a demand guarantee is one in which the bank agrees to pay against the simple written demand of the beneficiary.

A transfer of funds (airmail or cable) between remitter and beneficiary via the banking system.

The direct exchange of goods and/or services for other goods and/or services without the use of money and without the involvement of a third party. Barter is an important means of trade with countries using currency that is not readily convertible.

One thousandths; 1/100 of 1%, i.e. 100 basis points is equal to 1%.

Non-containerised cargo which is grouped or consolidated for shipment, and then is later broken down, sub-divided or distributed at a further destination point. Breakbulk cargo is often unitised cargo on pallets or packed in boxes; specialised breakbulk vessels tend to carry their own loading/unloading machinery.

Documentary credit context: generally, the exporter-seller; the one on whose behalf the documentary credit is opened by the applicant (the importer-buyer).Guarantee/bond context; the one who will receive payment under the bond should the specified documents or contingencies be produced.

International Union of Credit and Investment Insurers.

Bonded Goods.

Freight rates which include loading/unloading charges according to the custom of the respective ports - which unfortunately varies widely. “Liner terms” is, thus, not yet a standard designation, and may or may not include cargo handling charges or the costs of moving cargo between the ship’s hold and the quay; traders are therefore well advised to require full details in advance from carriers. The ICC is currently working on establishing a standard liner term.
In New Zealand, a liner (or berth) term shipping rate indicates that the shipping company organises the stevedoring onto and out of the ship. This is the standard type of freight rate for most ships picking up general cargo. It particularly applies to any containerised cargo but not always to bulkbreak (loose) cargo and therefore the customer should check this with the shipping/forwarding agents.

Bid (buying) Rate

Provides an assurance of the intention of the party submitting a tender (i.e. the principal) to sign a contract if their tender is accepted. Usually takes the form of a bank guarantee.

SA negotiable instrument that represents an unconditional demand for payment. Together with the Bill of Lading it forms the basis for the documentary collection procedures and together with the exporter’s commercial invoice it can be used to charge the importer for the goods.

Defined by the Bill of Exchange Act as:

‘An unconditional order in writing, addressed by one person to another, signed by the person giving it requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to a bearer’.

A bill is signed by a drawer and addressed to a drawee, who becomes the acceptor by writing their name across the face of the bill. The person to whom the bill is payable is referred to as the payee.

A document issued when goods are entrusted to a shipping company for carriage. It can serve as a formal receipt for the goods by the ship owner, a memorandum of the contract of carriage, and documentary evidence of control over the goods. The holder or consignee of the bill has the right to claim delivery of the goods from the shipping company when they arrive at the port of destination. Bills of lading may be negotiable (order B/L) or non-negotiation (straight B/L). Bills of lading may also be distinguished by the mode of transport used for the shipment. See marine bill of lading, multimodal transport bill of lading, air waybill, railway consignment note and sea waybill.

B/L terminology:

• Ocean/Marine The classic B/L, a negotiable instrument used for goods shipped on board ocean-going vessels.

• On Board/Shipped A B/L evidencing the loading on board of cargo in good condition.

• Received for Shipment A B/L which only evidences that goods have been received, not that they have been loaded on board; common with container shipments delivered to port terminal; must be converted by subsequent “on board” notation if shipper needs an ‘on board’ or ‘shipped’ document for payment under a documentary credit.

• Clean A B/L which contains no notation indicating that the goods have been wholly or partially lost/damaged.

• Dirty/Foul/Claused A B/L with a notation to the effect that the goods have been partially/wholly lost or damaged.

• Straight A non-negotiable B/L; consignee only needs to identify himself to pick up the goods.

• Order A negotiable B/L, issued ‘to the order’ of a particular party, commonly the shipper.

• Through A B/L used when shipment involves successive transport stages with different carriers.

• Direct A B/L for direct transport between loading and discharging ports.

• Multimodal/Combined Transport A B/L issued to cover transport involving successive stages via different transport modes, e.g. road transport followed by sea followed again by road transport.

• FIATA FBL (FBL) A standard form B/L issued by a freight forwarder; considered under the UCP500 - along with other forwarder bills in which the agents accept full responsibility as a carrier - as acceptable as a clean on board B/L issued by a carrier.

• House A B/L issued by a forwarder in its own name (house) covering grouped consignments.

• Freight Pre-Paid A B/L indicating on it that the freight has been paid.

• Liner A B/L issued subject to the terms and conditions of a shipping line.

• Short-Form A B/L which does not contain the full terms and conditions of the contract of carriage; instead, it contains an abbreviated version of the carrier’s condition, with a reference to the full set of conditions.

• Stale A B/L which is presented late (for documentary credit purposes, a B/L must be presented within a certain number of days after shipment).

• Full Set of Originals For documentary credit or collection purposes, the buyer may require the seller to produce a full set (commonly up to three) of signed originals - that is, B/L’s which bear the original signature of the ship’s master or agent.

• Waybill A non-negotiable transport document.

A letter from an importer to the shipping company in which the importer undertakes to indemnify the shipping company against the consequences of delivering goods without production of an original bill of lading. The importer’s letter of undertaking requires the prior endorsement or guarantee by their bankers before it is acceptable to the shipping company.

An endorsement in blank specifies no endorsee and a bill so endorsed becomes payable to bearer and may be negotiated by delivery. When a bill has been endorsed in blank any holder may convert the blank endorsement into a special endorsement by writing above the endorser’s signature a direction to pay the bill to the order of himself, or some other person.

Originally a system for transmission of electronic bills of lading. In the process of being expanded by SWIFT into an electronic platform for transmission of all trade documents.

A warehouse authorised by customs authorities for storage of goods on which payment of duties is deferred until the goods are removed for domestic consumption. If the goods are re-exported, no duty has to be paid at all .See Foreign trade zone.

The document of title to goods being held in bond storage.

A specific freight rate (usually defined by individual commodity) for shipment of a full container, irrespective of the volume it contains.

Non-containerised cargo which is grouped or consolidated for shipment, and then is later broken down, sub-divided or distributed at a further destination point. Breakbulk cargo is often unitised cargo on pallets or packed in boxes; specialised breakbulk vessels tend to carry their own loading/unloading machinery.

A surcharge levied by the shipping company to cover any extra fuel costs incurred between the time a rate is quoted and when the goods are shipped. BAF could be a rebate if bunkering if bunkering costs have decreased in the meantime.

Business day means any date that is not a non-business day.
Non-business day means any Saturday or Sunday or any bank holiday (not being a part holiday) within the meaning of ‘The Banking Act 1908’ and includes in respect of any bank premises every day on which those premises are not opened for business.

A form of countertrade under which exporters of, e.g. heavy equipment, technology, or plant facilities agree to purchase a certain percentage of the output of the new facility once it is in production.