Trade Terminology Basics

A coffee importer contacts a Brazilian exporter: “We need to buy actuals for immediate shipment. Can you provide 100 tons of Grade A Arabica beans FOB Santos port within 30 days?”

An export manager writes to customers: “Due to the recent appreciation of our local currency, we must adjust our FOB prices by 8% starting next quarter to maintain our cost structure.”

After a six-month quality dispute, the ICC arbitration panel issued an award: “The buyer must accept the goods with a 20% price reduction, and the seller must improve quality control procedures for future shipments.”

A logistics coordinator emails the carrier: “Your container is located in Bay C-47 at the terminal. You have a 2-hour window from 2 PM to pick up. Please present your booking number and equipment receipt at the gate.”

An exporter contacts their insurance broker: “We have an urgent shipment valued at $500,000 leaving port on Friday. Can you issue a binder today covering all risks from warehouse to destination? The full policy can follow next week.”

A buyer emails their agent: “The vessel arrived yesterday, but we cannot release the container without the original B/L. The seller sent it by regular mail 15 days ago, and it still hasn’t arrived. Can we request a bank guarantee or switch B/L to avoid demurrage charges?”

A CFO reports to management: “Our subsidiary in Country X has accumulated $5M in local currency from exports. Due to new foreign exchange blockage regulations, we can only transfer $50K per month. We recommend using these funds to source local raw materials for other markets.”

A customer service manager writes: “The machinery exported to Germany failed inspection. We’re processing it as a boomerang shipment for repairs. To avoid import duties, we’ll file ATA Carnet documentation showing it’s the same equipment with serial numbers matching the export declaration.”

A purchasing director proposes: “Copper prices appear to be at the bottom after falling 40% this year. I recommend we lock in 6 months of inventory now. If the market rebounds as expected, we’ll have significant cost advantages over competitors.”

An export manager proposes to a buyer: “Instead of ordering just the machines, consider our bundle package: 10 machines + spare parts kit + operator training + 2-year warranty = $250,000 total, saving you $35,000 versus separate purchases.”

A credit manager informs sales: “Customer ABC has outstanding invoices of $180,000 against a credit ceiling of $200,000. They can only place additional orders worth $20,000 unless they pay down their balance or provide additional security.”

An importer writes to supplier: “Upon inspection, we found 15% of the goods are defective (Grade B instead of Grade A as ordered). We’re submitting a formal claim requesting either: (1) 20% price reduction on the entire shipment, or (2) replacement of defective units at your cost. Please respond within 7 days per our contract terms.”

A logistics manager reports: “Our shipment arrived at Shanghai port on Monday. The customs broker needs the original commercial invoice and certificate of origin to proceed with clearing. Without these documents, we’ll incur demurrage charges starting Thursday. Please courier them via DHL immediately.”

During contract review, legal counsel advises: “The amendment lacks consideration – you’re asking the supplier to extend the delivery date without offering anything in return. To make it binding, consider offering advance payment, higher quantity commitment, or premium pricing as consideration for the accommodation.”

A buyer explains to suppliers: “Instead of each of you shipping separately, our freight forwarder will consolidate all three orders into one 40-foot container. Factory A delivers 5 CBM to the warehouse on June 1st, Factory B delivers 10 CBM on June 3rd, and Factory C delivers 15 CBM on June 5th. The full container ships June 8th to Los Angeles.”

An insurance broker advises a client: “Your current policy provides coverage only to the port of discharge. Since you’re responsible for inland transportation to your warehouse 200 km away, I recommend extending coverage to include this leg. The additional premium is just $150 but protects against $100,000 in potential loss.”

A legal team calculates: “Due to the supplier’s 60-day delivery delay, we: (1) lost sales worth $200,000, (2) paid $25,000 air freight to emergency-source from alternative supplier, (3) incurred $15,000 in storage fees for delayed inventory. We’re claiming total damages of $240,000 under the breach of contract.”

A customs broker notifies a client: “Your declaration shows ‘electronic components’ but the HS code you provided is for ‘plastic parts.’ This discrepancy will trigger customs inspection and delay clearance by 3-5 days. I need the correct product classification and supporting technical specifications to file an accurate declaration.”

A finance manager explains: “To secure our $2 million credit line, we executed a deed of charge over our inventory and receivables. This deed gives the lender priority claim to these assets if we default. It’s been notarized and registered with the commercial registry as required by law.”

A sales manager negotiates: “For this $200,000 order, we can offer deferred payment of 60 days after B/L date, but we require a bank guarantee as security. Alternatively, if you prefer 90 days deferred, we’ll add a 2% finance charge to cover our cost of capital during the waiting period.”

A logistics coordinator confirms: “Your order has been delivered to the DDP named place (your Chicago warehouse) on December 3rd at 10:30 AM. Our driver obtained a signed POD from your receiving department. All import duties, customs clearance, and inland freight were handled by us as per the DDP terms agreed in the contract.”

An export manager receives notification: “Your L/C documents have been dishonoured by the issuing bank for the following discrepancies: (1) B/L shows ‘Clean on Board’ but packing list mentions ‘water-stained cartons,’ (2) Insurance certificate dated after B/L date, (3) Invoice description reads ‘widgets’ but L/C specifies ‘plastic widgets.’ Please correct and re-present within 5 days.”

A documentation specialist instructs: “For your first L/C shipment, you’ll need to prepare: (1) Commercial Invoice – 3 originals signed and stamped, (2) Full set of clean on-board B/L (3/3), (3) Packing List detailing each carton, (4) Certificate of Origin from Chamber of Commerce, (5) Insurance Policy for 110% CIF value, (6) Inspection Certificate from SGS. All documents must be presented to bank within 21 days of B/L date.”

A finance manager explains to the team: “Under this L/C, we’ll issue a sight draft for the full invoice amount of $500,000, drawn on XYZ Bank (the issuing bank). Once they accept the draft and find our documents in order, we’ll receive payment within 5 banking days. For our next shipment, the customer wants 90-day terms, so we’ll use a time draft instead – we can discount it with our bank for immediate cash at about 3% discount.”