Abbreviation

Shipping Terms: Main Abbreviations

Any Safe Water Port - "ASWP" - Is usually associated with a CIF transaction where the seller and the buyer mutually agreed to deliver the cargo at a safe place (port).

Approval to Export - "ATE" - The term is used when the goods are approved to be exported.

Bank Comfort Letter - "BCL" - Also known as a Letter Capability Bank or Bank Confirmation Letter, this is a letter from the buyer's bank confirming its ability to meet certain payment requirements. This letter says that the buyer has sufficient funds to cover the cost of the order. It should, however, be understood that this does not imply any warranty payment.

Bank Guarantee - "BG" - The top 50 world prime banks guarantee the payment. Buyer's bank guarantees resources for the total value of the contract; therefore, the payment by BG means that the buyer has the money promised account.

Bill Of Lading - "BL" - Bill of landing is the receipt given by the shipping company when the goods are loaded on board the ship. BL is an important document and gives ownership of the goods. The buyer must obtain the goods from the port.

Certificate of Origin - "CO" - A Certificate of Origin (CO) is a document attesting that goods exported in a shipment have been wholly obtained, produced, manufactured or processed in a particular country.

Charter Party Agreement - "CPA" - A Charter Party Agreement is the copy of a contract signed between the Chatterer and the commercial operators of a vessel. The agreement specifies the total cost for the charter, method of payment and all relevant information about the vessel. Most TTT sellers require that the buyer should provide them with a copy of his charter party agreement. It is risky to provide Nigerian sellers with such documents; hence they can easily alter it for fraud-related activities. Please be careful while dealing with Nigerian sellers and suppliers.

China Inspection & Quarantine - "CIQ" - CIQ stands for China Inspection and Quarantine and operates directly under The General Administration of Quality Supervision, Inspection and Quarantine, one of the major quality management institutes.

"CI" Or CI - Commercial invoice.

Draft Contract - "DC" - It is a draft or outline of the original contract, which is drawn up and sent from the seller to the buyer. The buyer has the opportunity to make changes and send it back to the seller for consideration. This process continues until both parties are satisfied with the terms of the contract.

Expected Time of Arrival - "ETA" - - ETA is a marine document issued by a vessel captain in response to a NOR he received from a fellow captain. The captain informs the originator of the document the time he is expected to arrive at the mutually agreed location in the ocean for a TTT transaction. See NOR.

Freight On Board - "FOB" - In FOB transactions, the buyer provides his vessel and a copy of his charter party agreement (CPA) to the seller or the supplier. His vessel sails to the loading destination (port) and his vessel load the cargo. This method is also good because the buyer pays after his vessel is loaded and inspected to ascertain (Q&Q) Quality and Quantity.The next main abbreviations are adopted in the commercial practice for line transportations between ports:

FIOS - Free in/out (loading/discharging is at consigner's cost);

FIFO - Free in/Free out (vide FIOS);

FILO - Free in/Liner out (loading is at consigner's cost, discharging is at liner cost);

LIFO - Liner in/Free out (loading is at liner cost, discharging is at consigner's cost);

LILO - Liner in/out (loading and discharging is at liner cost).Depending on the shipping line or a particular port practice, the different surcharges can be added to rate:

CAF (Currency Adjustment Factor) is a fee applied to the shipping costs to compensate for exchange rate fluctuations;

BAF (Bunker Adjustment Factor) refers to floating part of sea freight charges which represents additions due to oil prices;

Wharfage is a port duty;

CUC (Chassis Using Charge) is a duty for using chassis;

Documentation Fee is a duty for executing documents, etc. Depending on the shipping line extension of activity in the given territory, the container can be delivered to the container yard located nearby port or to the hinterland. Also, it can be delivered to the client's "door". , the next additional terms can be added to the mainline ones:

FICY - Free in/Container yard (loading is at consigner's cost, delivering is provided to container yard);

LI-Door - Liner in / Door (loading is at liner cost, delivering is provided to client's door). As a rule, if line provides door-to-door container delivering it hardly ever stuff or un-stuff container. This question is resolved by consigner's efforts or with the help of forwarder.

"ULCC" - Ultra Large Crude Carrier.

USD Or $ US - United States Dollar.

"VLCC" - Very Large Crude Carrier.

Banking Abbreviations

Full Corporate Offer - "FCO" - The seller issues when the preliminary stages of negotiations are completed, as the issuance of a letter of intent by the buyer, and to hold a "soft probe" (proof of funds) in their accounts by the salesman. An FCO is a document with commitment and defining the terms of the sale.

Genetically Modified Organism - "GMO" - The GMO acronym refers to any food product that has been altered in terms of the gene. Genetically modified foods are also often described as "genetically modified".

Gross Negligence - Gross negligence generally means a standard of conduct beyond negligence whereby a person acts with reckless disregard for the consequences of his action or inaction.

"Ic45" - It is a worldwide body, which brings together the activities of the National Committees for Sugar Analysis in more than thirty member countries.

"ICC" - ICC is the International Chamber of Commerce.

IRDLC + BG (3 Months) - Payment by irrevocable bank guarantees transferable to the value three months to be held by the seller as payment guarantee. This warranty bank will be returned to the buyer at the end of the contract period. Each consignment must be paid by telegraphic transfer (TT) within 24 hours of receipt of shipping documents. This irrevocable, transferable bank guarantee of three months shall be issued, confirmed and guaranteed by Top 50 Prime World Banks acceptable to the seller.

Irrevocable Corporate Purchase Order - "ICPO" - This is a document drawn up by commercial buyers and contains the quantities and type of required goods, and other conditions that the buyer would like the sale once occurred. Once submitted to the seller, this is considered mandatory, and the corporation is obliged to complete the sale.

Irrevocable Documentary Letter Of Credit - "IRDLC" - Letter of Credit (Documentary Letter Of Credit (L/C, DLC) is the bank's obligation to pay the seller of goods or services a certain amount of money in the timely submission of documents confirming shipment of goods or performance of contractual services. Documentary Letter Of Credit is one of the most important means of financing in the international trade, as the letter of credit is a tool that removes most of the risks as from the buyer (importer) and the seller (exporter). Documentary Letter Of Credit is a very flexible and convenient tool of calculations, which have the widest recognition and acceptance in the world.

Following are the forms of letter of credit:

Revocable Letter of Credit - This letter of credit can be changed or cancelled by the issuing bank without prior notice to the recipient of funds. Revoke of letter of credit does not create any obligation of the issuing bank to the payee. The nominated bank is obligated to make a payment or other operations on a revocable letter of credit if at the time of their commission they have not received notice of the change of conditions or cancelling credit. A letter of credit is revocable if its text does not explicitly state otherwise.

Irrevocable Letter of Credit -- Is a firm obligation of the issuing bank to pay money in order and the terms defined by the conditions of the letter of credit, if the documents provided for by it, submitted to the bank specified in the credit. An irrevocable letter of credit guarantees that the exporter will make payment to the performance of its obligations, even if an importer wants to abandon the deal. Therefore, exporter, performing a special order, for which most likely will not be another buyer, chooses exactly this kind of letter of credit.

Irrevocable Unconfirmed Letter of Credit - When making an unconfirmed letter of the credit-issuing bank, providing a letter of credit, is the only party that is responsible for the disbursement to the seller. The nominated bank has to pay only after receiving the money from the issuing bank. The nominated bank simply acts on behalf of the bank providing credit, so it does not take any risk.

Irrevocable Confirmed Letter of Credit - The obligation of the issuing bank is confirmed by another bank. Confirmation is an additional guarantee of payment from another bank (Bank of the exporter or prime bank). The bank confirming letter of credit is committed to paying for documents according to the conditions of the letter of credit if the issuing bank fails to make the payment.

Irrevocable Master Fee Protection Agreement - (IMFPA)is anirrevocable Master Fee Protection Agreement that is generally applied to a commodity transaction. It is an irrevocable and binding legal agreement between a buyer, a seller and an intermediary. In an IMFPA, the objective is to reach a private agreement for the placement or purchase of a commodity or other piece of merchandise that has been identified and negotiated in bulk. The buyer or seller offers a private business broker a fee (either a fixed sum or a percentage) for arranging the transaction. The fee is only paid if and when the transaction is completed. The commission and when it will be paid is determined by the fee mentioned above agreement. Usually, the fees are automatically transferred from the bank account of the buyer to the business broker when the buyer pays for the product.

Irrevocable Payment Order - "IPO" - An irrevocable payment order is a document issued by the buyer to bank to effect payment irrevocably to all agents, facilitators, consultants, mandates and any party whose banking (information) coordinates were provided in the banking coordinate page(s) of the contract (SPA) and in (MFPA) master fee protection agreement. When the paying bank receives the payment order, they will effect payment irrevocably by the specific instructions in the IPO and IMFPA.

Irrevocable Revolving Documentary Letter Of Credit + Bank Guarantee - Unconditional Bank Guarantee for the value of the shipment a month held as collateral for the payment and then monthly payments by irrevocable, transferable, Auto – Revolving for a monthly shipment value, Documentary Letter of Credit, confirmed by Top 50 Prime Bank, with 100% at sight of the load.

Letter Of Credit - "LC" Of "LOC" - The letter of credit is a document issued by the buyer's bank to the seller who guarantees payment to the beneficiary of the letter of credit (the seller), provided that compliance with the terms and conditions set out in the letter of credit. LC is almost always irrevocable and may be transferable to regular shipments.

Letter Of Intent - "LOI" - Letter of Intent is a document issued by the buyer to the seller, indicating that the buyer would like to enter into negotiations with the seller, hoping to buy the product. The letter of intent is not legally binding but provides a point of departure for the negotiations.

Month - A calendar month.

"MOQ" - Minimum Ordered Quantity.

"MT-103" - SWIFT MT-103's is the most commonly used form of SWIFT communications and one which many people will have utilized without even knowing it. For most bank customers, they are known not as MT-103's at all, but rather as wire transfers, telegraphic transfers, or SWIFT transfers. A SWIFT MT-103 is used by the bank when its customers wish to make payment to customers of another bank in another country.

"MT-700" - MT-700 is a swift message type that is used by issuing banks when opening a letter of credit; the issuing bank sends this quick message to the advising bank, it is used to indicate the terms and conditions of a documentary credit which has been originated by the Sender (issuing bank), according to latest UCP rules, UCP 600, unless otherwise specified, a documentary credit advised to the beneficiary or another advising bank based on a SWIFT message constitutes an operative credit instrument which means that MT-700 swift message is an operative letter of credit. No written message needs to follow, the advising bank must advise a documentary credit, including all its details, in a way that is clear and unambiguous to the beneficiary.

"MT-760" - Standby Letter of Credit /SBLC, MT-760 is a written commitment of a bank that issues it to pay a certain amount of money on behalf of the bank's client in favor of a beneficiary in case the client/buyer is not able to fulfill its financial obligation to the beneficiary/seller. Using a Standby LC in business transactions is an indication of good faith and proof of financial credibility and repayment capabilities of a buyer.

Standby LC is widely used in commodities trading when it is necessary to buy the goods from a local supplier or foreign exporter. SBLC can also be used as a security to obtain credit lines and is ideal for the company, which plans to expand its business but does not want to utilize its assets. Standby LC should always be issued as an irrevocable financial instrument and cannot be cancelled or revoked since it has been issued & transmitted via authenticated MT-760 SWIFT message by an issuing bank. It is possible to assign a Standby LC to another beneficiary by written instruction from the first beneficiary. The bank, which performs such transfer, has to notify the issuing bank the amount to be transferred and the effective date of the transfer.

With Standby Letters of Credit or SBLC, clients can create assurance that invoices or loans will be paid as promised. A Standby Letter of Credit is an obligation taken on by a bank to make a payment once certain criteria are met. Once these terms are completed and confirmed, the bank will transfer the funds. This ensures the payment will be made as long as the services are performed. The primary use of Standby Letters of Credits is to serve as a reinforcement payment option for buyers. SBLC's are commonly used in international and domestic trade transactions, and act as powerful tools to establish trust between suppliers and vendors. Our cash-backed accounts provide the collateral back up these letters. This gives sellers greater assurance of payment, especially for larger transactions.

"MT-799" - The MT-799 is a free format SWIFT message type in which a banking institution confirms that funds are in place to cover a potential trade. This can, on occasion, be used as an irrevocable undertaking, depending on the language used in the MT-799, but is not a promise to pay or any form of bank guarantee in its standard format. The function of the MT-799 is to assure the seller that the buyer does have the necessary funds to complete the trade. The MT-799 is usually issued before a contract is signed and before a letter of credit or bank guarantee is issued. After the seller's bank has received the MT-799, it is then normally the responsibility of the seller's bank to send a POP (proof of product) to the buyer's bank, at which point the trade continues towards commencement.

Non-Circumvention Non-Disclosure Agreement - NCNDA as it stands is a document, which protects all parties' financial interest. All involved parties usually sign a Non-Circumvention Non-Disclosure Agreement before the SPA is signed could be embedded in the SPA. This protects all parties from being circumvented by any greedy participant in any given deal. It is always advisable to have this document signed by all the players in any particular deal. It is very important to have this document embedded in a contract as an integral part rather than as an addendum to a contract.

Performance Bond - "PB" - This is a type of bank guarantee which is issued from the seller to the buyer. He ensures that the seller will meet the terms of the contract. Usually issued amounting to 2% of the total contract value, a performance guarantee may be used by the buyer, the seller in the case of breaking the contract and not providing the product that was no contract stipulated.

Proof of Funds - "POF" - Usually, proof of funds is obtained by performing a soft probe on Buyer accounts. A seller normally requires proof of funds to continue with the negotiation of a sale of a product.

Proof of Product - "POP" - It is often asked by clients or agents who believe that will give them some assurance the existence of the product and the supplier's ability to deliver the product. The POP It is usually provided only when the buyer's bank issues a Letter of Confirmation to the seller or the seller's bank via SWIFT. Then the bank seller can check the availability of funds in the buyer's bank and issue a POP to the buyer's bank within an agreed period (e.g., five days).

"R&E" - Rolls and Extensions.

Ready, Willing & Able - "RWA" - This is a document that is issued by the buyer's bank. The bank confirms that their client has sufficient funds in your account and is willing and able to take on the contract.

Sales And Purchase Agreement - "SPA" - SPA stands for Sale and Purchase Agreement, and it is the same document we refer to as a contract. The buyer and the seller or their mandates must sign and seal the contract before it becomes binding. If the contract is not signed and sealed by the parties, (buyer and seller), such contract is not effective.

Societe General De Surveillance - "SGS" - The inspection leader, verification, testing and Certification Company worldwide. SGS is recognized as the global benchmark in quality and integrity. The main services offered by SGS can be divided into three categories:

✓ Certification Services, SGS certifies that products, systems or services meet the requirements of standards set by governments, standardization bodies (e.g. ISO 9000) or by customers of SGS.

✓ Inspection Services, SGS inspects and verifies the quantity, weight and quality of traded goods. The inspection usually occurs on the premises of the manufacturer/supplier or the time of shipment or at destination during discharge / offloading.

✓ Testing Services, SGS tests product quality and performance in health, safety and standards regulations. SGS operates state of the art laboratories on or close to facilities client.

Society For Worldwide Interbank Financial Telecommunication - "SWIFT" - SWA global service, which is responsible for facilitating communication between banks. Most payments are made via SWIFT.

Soft Corporate Offer - "SCO" - The seller or client issues it in the preliminary stages of negotiation. It should be understood that this is essentially soft offer an indication that it is possible to achieve the sale, which issues are not making a guarantee that the price indications/amount will be available in the future.

Soft Probe - A soft probe is a means by which a bank conducts brief creditworthiness of a customer and also confirms if that customer's account is in good standing. It could be summarized as a "light credit check".

T2L Certificate - "T2L" - T2L certificate is a single administrative document that is used in all countries European Community for control of imports, exports and goods traffic. This certificate is issued by the customs authorities of member states individual.

Transferable Letter Of Credit - "TLC"- This is the favorite instrument of traders and middlemen to offer conditions secure payments to third parties, as their suppliers (second beneficiaries of the letter credit). When the buyer pays the letter of credit, part of the value is transferred to a second beneficiary.

Container Shipping Terms: Main Abbreviations:

The next main abbreviations are adopted in the commercial practice for line transportations between ports:

FIOS - Free in/out (loading/discharging is at consigner's cost);

FIFO - Free in/Free out (vide FIOS);

FILO- Free in/Liner out (loading is at consigner's cost, discharging is at liner cost);

LIFO - Liner in/Free out (loading is at liner cost, discharging is at consigner's cost);

LILO - Liner in/out (loading and discharging is at liner cost).

Depending on the shipping line or a particular port practice, the different surcharges can be added to rate:

CAF(Currency Adjustment Factor) is a fee applied to the shipping costs to compensate for exchange rate fluctuations;

BAF (Bunker Adjustment Factor) refers to floating part of sea freight charges which represents additions due to oil prices;

Wharfage is a port duty;

CUC (Chassis Using Charge) is a duty for using chassis;

Documentation Fee is a duty for executing documents, etc. Depending on the shipping line extension of activity in the given territory, the container can be delivered to the container yard located nearby port or to the hinterland. Also, it can be delivered to the client's "door". The next additional terms can be added to the mainline ones:

FICY -Free in/Container yard (loading is at consigner's cost, delivering is provided to container yard);

LI-Door - Liner in/Door (loading is at liner cost, delivering is provided to client's door).

As a rule, if line provides door-to-door container delivering it hardly ever stuff or un-stuff container. This question is resolved by consigner's efforts or with the help of forwarder.

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