The Global Sourcing &
Import / Export
Glossary

The fee paid to a sourcing agent for their services, typically calculated as a percentage of the total purchase order value (usually 3–10%) or as a fixed service fee per project.

The transportation of goods by aircraft. Air freight is the fastest mode of international shipping, typically taking 1–5 days door-to-door, but commands a significantly higher cost per kilogram than sea or rail freight.

A non-negotiable shipping document issued by an airline or freight forwarder for the transport of goods by air. It serves as a receipt, a contract of carriage, and a customs declaration document.

A legally binding document issued by a carrier (shipping line) to a shipper, acknowledging receipt of cargo and specifying the terms and destination of transport. The B/L also serves as a document of title to the goods.

A government-licensed storage facility where imported goods can be stored without payment of customs duties until the goods are formally entered into commerce, re-exported, or otherwise disposed of.

A professional who purchases goods on behalf of an importer, acting as the buyer’s representative in the country of manufacture. Also called a purchasing agent or procurement agent. Synonymous with sourcing agent in most B2B contexts.

Under CIF, the seller is responsible for the cost of goods, freight charges to the destination port, and a minimum level of marine insurance. Risk transfers to the buyer when the goods are loaded on board at the port of origin — despite the seller paying freight and insurance to the destination.

A tax levied by a government on goods crossing its borders. Import customs duties are typically calculated as a percentage of the goods’ customs value (ad valorem), though specific duties (per unit) and compound duties also exist.

The country where a product was manufactured, produced, or substantially transformed. Country of origin determines which tariff rates, trade agreements, import quotas, and trade remedy measures apply to a shipment.

Under CFR, the seller pays the cost of goods and freight to the named destination port. Unlike CIF, the seller does not provide marine insurance. Risk transfers to the buyer when goods are loaded at origin.

Under DAP, the seller delivers goods to a named place of destination, ready for unloading. The seller bears all risk and costs of transport to the destination. The buyer is responsible for import customs clearance and duty payment.

The maximum obligation term for the seller. Under DDP, the seller bears all costs and risks associated with delivering goods to the named destination, including import duties, taxes, and clearance. The buyer simply takes delivery.

A systematic pre-qualification process for verifying a supplier’s legal standing, ownership, financial health, certifications, trade history, and compliance record before entering a commercial relationship.

The minimum obligation term for the seller. Under EXW, the seller makes goods available at their premises (factory, warehouse). The buyer bears all costs and risks from that point — including export clearance, freight, insurance, and import duties.

A government document submitted by an exporter providing details of goods being exported — including quantity, value, HS code, and destination. In the U.S., this is known as the Electronic Export Information (EEI) filed via the Automated Export System (AES).

An on-site inspection of a supplier’s manufacturing facility to assess its production capabilities, quality management systems, equipment, workforce, health and safety standards, and compliance with buyer specifications.

Under FCA, the seller delivers goods, cleared for export, to the carrier nominated by the buyer at the seller’s premises or another named place. Risk transfers when the goods are handed to the carrier at the agreed location.

A logistics specialist who arranges the transportation of goods on behalf of importers or exporters. Freight forwarders negotiate rates with carriers, prepare shipping documentation, arrange customs clearance, and coordinate the entire door-to-door logistics chain.

A designated area within the United States (or other country) where foreign and domestic goods can be brought, stored, manipulated, or manufactured free from customs duties until the goods enter domestic commerce.

A 6-digit (internationally standardized) or 8–10 digit (country-specific) numerical code used by customs authorities worldwide to classify traded goods. The HS code determines applicable tariff rates, import quotas, licensing requirements, and trade statistics.

A shipping arrangement where a buyer’s goods do not fill an entire ocean container and are consolidated with cargo from other shippers in a shared container. The buyer pays only for the space their goods occupy (typically priced per cubic meter or per weight-measurement ton).

A shipping arrangement where the importer books an entire ocean container — typically a 20-foot (TEU) or 40-foot (FEU) standard container, or a 40-foot high-cube. The importer pays for the full container regardless of whether it is completely filled.

A financial instrument issued by the buyer’s bank guaranteeing payment to the seller, provided the seller presents specific documents (shipping documents, inspection certificates, etc.) that comply exactly with the LC’s terms within the stipulated timeframe.

The total cost of a product from the point of manufacture to the importer’s warehouse or final destination, including the purchase price, freight, insurance, customs duties, customs brokerage fees, port handling charges, and inland delivery costs.

The smallest quantity of a product a manufacturer or supplier is willing to produce or sell in a single order. MOQ is set by the supplier to ensure that the production run is economically viable given setup costs, material minimums, and labor commitments.

A manufacturer that produces goods to another company’s specifications. In global sourcing, “OEM” typically refers to a factory that will produce products branded and specified by the buyer, rather than selling its own branded goods.

A quality control inspection conducted when production is 80–100% complete and before goods are packed for shipment. The inspector verifies product conformity, quantity, packaging, labeling, and functionality against the buyer’s approved specifications.

A business model in which a retailer or brand owner contracts a manufacturer to produce goods that are then sold under the retailer’s own brand name, rather than the manufacturer’s brand.

A legally binding commercial document issued by a buyer to a seller, specifying the type, quantity, agreed price, payment terms, delivery requirements, and product specifications for the ordered goods.

A statistical quality sampling standard (ISO 2859-1) defining the maximum defect rate considered acceptable in a production batch. AQL levels specify how many units to sample and how many defects are permissible before the lot should be rejected.

A formal document sent by a buyer to potential suppliers, requesting a price quote for specific goods or services based on defined specifications. The RFQ is the standard starting point for supplier price comparison.

A professional intermediary hired by an importing company to identify, vet, negotiate with, and manage overseas suppliers on the buyer’s behalf. A sourcing agent acts in the buyer’s interest (unlike a trading company, which acts in its own commercial interest) and is typically compensated through a commission or a fixed service fee.

The transportation of goods by ocean vessel. Sea freight is the most economical mode for large-volume international shipments and handles approximately 90% of global trade by volume.

The process of independently confirming a supplier’s legal identity, business registration, financial standing, regulatory compliance, and operational capabilities before entering a commercial relationship. Also referred to as supplier due diligence or supplier qualification.

An electronic bank-to-bank transfer used to make international payments between buyers and sellers. Also known as a wire transfer. T/T is the most common payment method in B2B global trade due to its speed, relatively low cost, and simplicity.

A company that buys goods from manufacturers and resells them to buyers, typically at a markup. Unlike a sourcing agent, a trading company acts as a principal in the transaction — it buys and sells in its own name, rather than representing the buyer’s interests.

The range of financial instruments and products used by importers and exporters to fund international trade transactions and manage the risks associated with cross-border commerce, including payment risk, currency risk, and delivery risk.

A tax or duty imposed by a government on imported (or occasionally exported) goods. Tariffs are a primary instrument of trade policy, used to generate revenue, protect domestic industries, and influence trade relationships.

A document issued by a warehouse operator confirming that specific goods of defined quantity and quality are stored at the warehouse and are available for the holder of the receipt. Can be used as collateral for financing or as a transfer of goods ownership.