Cargo Insurance Terminology




GLOSSARY

The purpose of this glossary is to provide a very broad interpretation of some commonly used insurance clauses and terms. It is not intended as a legal interpretation.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | Y
3PL - An abbreviation for third party logistics providers that provide warehousing, distribution and transport services.
4PL - An abbreviation for Fourth Party Logistics invented by Anderson Consulting. Fourth party logistics providers pool various product and supply chain flows together for their clients.

A

Abandonement - Giving up the proprietary rights in insured property to the Underwriter in exchange for payment of a constructive total loss.
Acknowledgement - In marine insurance, a form issued to acknowledge that insurance is in effect for a specific shipment. Usually issued to a consignee by the shipper or someone acting on their behalf, such as a freight forwarder. The issuer may not have details of the actual coverage provided by the policy.
Actual Cash Value - The actual value of the subject matter at the time of loss. This is the cost to replace the merchandise less depreciation.
Actual Total Loss - An actual total loss occurs when (1) the insured property is completely destroyed or (2) the Assured is irretrievably deprived of the insured property or (3) cargo changes in character so that it is no longer the thing that was insured or (4) a ship is posted "missing" at Lloyd's, in which case both the ship and its cargo are deemed to be an actual total loss.
Admitted Insurance - Insurance which must be placed in a domestic (local) insurance market with an appropriately licensed insurance company made necessary by local country or state laws and regulations which mandate such coverage.
Ad Valorem - Latin for "according to the value." 1. An ad valorem duty is an import duty based on the value of an article as defined in the customs law of a particular country, rather than on weight or volume. A percentage of that value is charged, for example, 5% ad valorem. 2. A freight rate set at a certain percentage of the value of an article is known as an ad valorem rate.
Advance - Part of the formula used to determine insured value. It is an agreed percentage increase, commonly 10%, applied to the total of invoice and freight. This provides for unknown expenses at the time of shipment, such as port fees, clearance charges and inland freight in the country of destination, commissions to sales people and a portion of the assured's profit.
Advising Bank - A bank, usually in the country of origin, that receives a letter of credit from the issuing bank and advises the shipper, or other party named in the letter of credit as the beneficiary, that a letter of credit has been opened in their favor and of the steps they must take to collect payment. The advising bank assumes no obligation to pay the credit.
AES - An abbreviation for Automated Export System.
Affreightment, Contract of - An agreement by a steamship line to provide cargo space on a vessel at a specified time and for a specified price to accommodate an exporter or importer who then becomes liable for payment even though he is later unable to make the shipment.
Agreed Value - The value the vessel or merchandise is said to be worth.
AICC - An abbreviation for American Institute Cargo Clauses.
AIMU - A trade organization An abbreviation for American Institute of Marine Underwriters.
Air Cargo Agent - A type of freight forwarder who specializes in air cargo and acts for airlines that pays him a fee (usually 5%). He is registered with the International Air Transport Association (IATA).
Air Waybill - A non-negotiable contract for carriage of air transportation between an air carrier and a shipper, or an air carrier and an air freight forwarder. In the latter case the forwarder, as an indirect air carrier, issues his own house air waybill to the shipper.
All Other Like Perils and Misfortunes - A phrase in cargo policies meaning perils of the same nature as those enumerated in the basic Perils clause. May also read "all other perils and misfortunes…" which has been given the same meaning in American courts.
All-Risk Insurance - The broadest form of coverage available, providing protection against all risk of physical loss or damage from any external cause. Does not cover loss or damage due to delay, inherent vice, pre-shipment conditions, inadequate packaging, or loss of market. Loss must be fortuitous to be covered.
American Institute Cargo Clauses - A set of standard insurance clauses adopted by the American Institute of Marine Underwriters for voluntary usage by member companies. These clauses have worldwide recognition and acceptance.
American Institute of Marine Underwriters - A non-governmental, non-profit trade association representing ocean marine insurers in the United States. Primarily through committees comprised of individuals from member companies, AIMU established voluntary standards practices and claim procedures.
AMS - An abbreviation for Automated Manifest System.
Anti-dumping Laws - A term used to denote laws enacted to penalize anyone involved in the unfair trade practice of dumping. Penalties may be imposed in the form of additional duties, fines, penalties or imprisonment.
Anti-Dumping Tariffs - A tariff imposed on imported goods to discourage sales which may be injurious to domestically manufactured goods. Usually to prohibit sales of goods at less than they would be sold for in the domestic market of the country of origin.
Arbitration Clause - A standard clause to be included in the contracts of exporters and importers, as suggested by the American Arbitration Association. It states that any controversy or claim will be settled by arbitration in accordance with the rules of the American Arbitration Association.
Assailing Thieves - Forcible taking of property but not sneak thievery.
Assignee - A party to whom certain rights or benefits have been transferred.
Assignment - In general, the transfer of a right or benefit to another party. An assured may transfer certain of their rights under a cargo policy to another usually by issuing a Special Cargo Policy.
Assured - The party insured by a marine policy of insurance. The Insured.
Assurer - The company providing insurance under a marine policy of insurance. The Insurer.
Automated Broker Interface - An EDI facility available to Customs Brokers for the reporting of customs entry information to U.S. Customs and which facilitates release of cargo.
Automated Commercial System - An electronic system of U.S. Customs which allows on line access to certain trade information.
Automated Export System - An EDI facility enabling exporters to electronically file SED data with multiple federal agencies simultaneously.
Automated Manifest System - An EDI facility enabling carriers and port authorities to file required ship's manifest information with U.S. Customs.
Average - Any partial loss or damage due to insured perils.

B

Ballast - Any substance, usually seawater, carried in the ballast tanks of a ship to ensure stability and handling. Liquid cargoes may also be used as ballast.
Barge - A barge is a flat-bottomed vessel mainly used on rivers and canals. Most do not operate under their own power and require a tugboat to propel it.
Barratry - Fraudulent, criminal, or wrongful act by ship's captain or crew, which causes loss or damage to the ship or cargo.
Bill of Lading (B/L) - The contract of carriage between the shipper and the carrier that serves as a receipt for the goods delivered to the carrier for shipment and evidence of title to the goods.
Bonded Shipments -shipments on which duty is payable, but which are permitted to travel to inland destinations before customs inspection is made and duty is actually paid.
Bonded Warehouse - A warehouse authorized by customs authorities for storage of goods on which payment of duties is deferred until the goods are removed.
Breakbulk - In general, a term used to denote cargo that is not carried in containers, or which is not shipped as liquid or dry bulk.
Breakbulk Vessel - A vessel designed to handle palletized, pre-slung, boxed, and unitized cargo. Holds can be at the open bay or between deck types. Between deck means the hold can be converted from multi levels to open bay. This type of vessel is usually self-sustaining.
Brown Water - A term used in marine insurance to denote that coverage is confined to inland and/or coastal waters only.
Bulk - A bulk shipment is merchandise that is shipped as loose cargo that is loaded directly into a ship's or aircraft's hold or on a flatbed truck/railcar. It is not inside of a metal shipping container. Example: Bulk grains, liquids or oversized heavy equipment.
Bulk Carrier - There are two types of bulk carriers, the dry-bulk carrier and the liquid-bulk carrier, better known as a tanker. Bulk cargo is a shipment such as oil, grain, or one which is not packaged, bundled, bottled, or otherwise packed and is loaded without counting or marking.

C

Cargo - Merchandise/commodities carried by means of transportation.
Cargo Insurance - Insurance to protect the financial interest of the cargo owner during transportation in the event of a loss.
Carnet - A customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries without paying duties or posting bonds.
Carriage Of Goods by Sea Act (COGSA) - The U.S. equivalent of The Hague Rules. All shipments of cargo, for which Bills of Lading are issued between the United States and foreign ports, are subject to the provisions of this act.
Carrier - In general, the firm which transports merchandise from one point to another. May be a vessel owner, an airline, a trucking company or a railroad.
Cash in Advance (CIA) - A method of payment for goods whereby the buyer pays the seller prior to shipping the goods.
Certificate of Insurance or Special Cargo Policy - A document that provides evidence of insurance to the buyer or bank for an export/import shipment. The certificate contains an abstract of the more important conditions in the policy. The Special Cargo Policy is a negotiable document which can be assigned to the consignee by endorsing (signing) the policy as indicated.
Certificate of Inspection - A certificate usually required for industrial equipment and meat products. There are companies in every port city that specialize in issuing certificates of inspection for machinery. The Meat Inspection Division of the U.S. Department of Agriculture issues certificates of inspection for meat products that are recognized throughout the world.
Certificate of Origin - A document required by certain countries which certifies the actual origin of the goods. May be incorporated as a clause appearing on a Commercial Invoice.
CIF (Cost, Insurance and Freight) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. In addition, the seller must procure the marine insurance against the buyer's risk of loss of or damage to the goods during the carriage. The seller must clear the goods for export.
CFR (Cost and Freight) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. The seller must clear the goods for export.
CFS (Container Freight Station) - The term CFS at loading port means the location designated by carriers for the receiving of cargo to be packed into containers by the carrier. At discharge ports, the term CFS means the bonded location designated by carriers in the port area for unpacking and delivery of cargo.
Charter - Originally meant a flight where a shipper contracted hire of an aircraft from an airline, but has usually come to mean any non-scheduled commercial service.
Charter Agreement/Charter Party - A lease or agreement to hire an airplane, vessel, or other means of conveyance to transport goods to one or more designated locations. Among other specifications, the contract usually stipulates the exact obligations of the vessel owner (loading the goods, carrying the goods to a certain point, returning to the charterer with other goods, etc.), or it provides for an outright leasing of the vessel to the charterer, who then is responsible for his own loading and delivery. In either case, the charter party sets forth the exact conditions and requirements agreed upon by both sides.
Charter Party Bill of Lading - A bill of lading issued under a charter party. It is not acceptable by banks under letters of credit unless so authorized in the credit.
CIP (Carriage and Insurance Paid To) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier, is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier. In addition, the seller must procure cargo insurance against the buyer's risk of loss of or damage to the goods during the carriage. The seller must clear the goods for export.
Clean Bill of Lading - A Bill of Lading on which the carrier has made no indication of any problems with the condition or quantity of the cargo at the time of acceptance for carriage.
Clean Receipt - A delivery receipt upon which no exceptions for damage or shortage have been noted by the party receiving the merchandise.
COGSA - See Carriage of Goods by Sea Act.
Commercial Invoice - An itemized list of goods shipped that is usually included among an exporter's collection papers.
Commercial Set - A term used to denote the basic documents required to satisfy letters of credit or drafts. This usually includes the Commercial Invoice, the Bill of Lading or Waybill and a Special Cargo Policy or Certificate of Insurance.
Common Carrier - A publicly or privately owned firm or corporation that transports the goods of others over land, sea, or through the air, for a stated freight rate. By government regulation, a common carrier is required to carry all goods offered if accommodations are available and the established rate is paid.
Confiscation - The taking and holding of private property by a government or an agency acting for a government. Compensation may or may not be given to the owner of the property.
Connecting Conveyance - Any conveyance used to transport goods to or from the principal conveyance. Could be a vessel, truck, aircraft, or rail.
Consequential Loss - An insurance term used to denote a loss which is not directly caused by an insured peril but which occurs as an indirect result. Consequential losses are not covered by insurance policies unless expressly stated in the policy.
Consignee - The individual or company to whom a seller or shipper sends merchandise and who, upon presentation of necessary documents, is recognized as the merchandise owner for the purpose of declaring and paying customs duties.
Consignor - A term used to describe any person who consigns goods to himself or to another party in a bill of lading or equivalent document. A consignor might be the owner of the goods, or a freight forwarder who consigns goods on behalf of his principal.
Consolidated Shipment - An arrangement whereby various shippers pool their boxed goods on the same shipment, sharing the total weight charge for the shipment.
Consolidator - An agent who brings together a number of shipments for one destination to qualify for preferential rates. Container (Air Cargo) - Air cargo containers are designed in various sizes and irregular shapes to conform to the inside dimensions of a specific aircraft.
Consumption Entry - A U.S. Customs entry where the importer pays applicable duty and merchandise is released from customs custody at a U.S. port, foreign trade zone or from a customs bonded warehouse.
Container/Containerized - Means that the cargo, however packed, is shipped inside a metal shipping container. A container is a single, rigid, sealed, reusable metal "box" in which merchandise is shipped by vessel, truck, or rail. The average outside dimensions are generally 20, 35, 40 or 52 feet in length, 8 feet wide, and 8 feet high. Aircraft have their own reusable containers with varied dimensions to fit the various aircraft.
Container Number - A unique identifying number affixed to a container. See Container.
Container Ship - An ocean-going ship designed to carry containers both internally and on deck.
Contracts for the International Sale of Goods - A United Nations convention which establishes uniform legal rules governing formation of international sales contracts and the rights and obligations of the buyer and seller.
Correspondent Bank - A bank which performs certain functions on behalf of another bank, such as accepting payments or dispersing funds to others.
Countervailing Duties - Special duties imposed on imports to offset the benefits of subsidies to producers or exporters of the exporting country.
CPT (Carriage Paid To) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier, is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier. The seller must clear the goods for export.
Credit Insurance - Insurance a seller may purchase which responds in the event a buyer does not pay for goods received.
CTL (Constructive Total Loss) - An instance in which the cost of recovering and/or repairing damaged goods would, when recovered or repaired, exceed the insured value. Customs Broker - An individual or service company that transacts customhouse formalities on behalf of an importer. In the U.S.A., a customs broker must be licensed by the Treasury Department and pass a government examination.
Customs Broker - A firm which specializes in clearing imported merchandise for transit to the interior. Normally responsible for obtaining and submitting all documents for clearing merchandise through customs and arranging inland transport as well as paying all charges related to these functions.
Customs Entry Form - A form required by U.S. Customs for all merchandise entering the United States. It indicates country of origin, description of merchandise and amount of estimated duty to be paid. It must be filed with Customs before merchandise is will be released by Customs, unless other arrangements have been made.

D

DAF (Delivered at Frontier (at named place)) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when the goods have been made available, cleared for export, at the named point and place at the frontier, but before the customs border of the adjoining country. Primarily used for rail or truck shipments.
Dangerous Goods - Articles or substances capable of posing a significant risk to health, safety, or property, and that ordinarily require special attention when being transported.
DDP (Delivered Duty Paid (at named place)) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when the goods have been made available to the buyer at the named place in the country of importation. The seller has to bear the costs and risks, including duties, taxes and other charges of delivering the goods thereto, cleared for importation. This term represents the maximum obligation to the seller.
DDU (Delivered Duty Unpaid (at named place)) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when the goods have been made available to the buyer at the named place in the country of importation. The seller has to bear the costs and risks involved in bringing the goods thereto (excluding duties, taxes and other official charges payable upon importation as well as the costs and risks of carrying out customs formalities). The buyer has to pay any additional costs and to bear any risks caused by his failure to clear the goods for import in time.
Debris Removal - In cargo insurance, a term used to identify an additional insurance coverage which will pay the costs of removing the debris, or residue, of a cargo damaged by an insured peril. Some insurers provide coverage as part of their basic policies, others do not. A separate limit is usually applied to this coverage.
Deductible - Used in conjunction with insuring terms. It is a specific dollar amount, or percentage of the insured value of the shipment, which will be deducted from all losses recoverable under a policy.
Delivery Receipt - A document used by carriers to signify delivery of the merchandise to the intended party. May be a copy of the Bill of Lading or Waybill.
Demurrage - A penalty for exceeding free time allowed for loading or unloading at a pier or freight terminal. It is also a charge for undue detention of transportation equipment or carriers in port while loading or unloading.
DEQ (Delivered Ex Quay (at named place)) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when the goods have been made available to the buyer on the quay (wharf) at the named port of destination, cleared for importation. The seller has to bear all risks and costs including duties, taxes and other charges of delivering the goods thereto.
DES (Delivered Ex Ship (at named place)) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when the goods have been made available to the buyer on board the ship uncleared for import at the named port of destination. The seller has to bear all costs and risks involved in bringing the goods to the named port of destination.
Detention - In general, any time merchandise is stopped in transit short of final destination. Also used to describe merchandise prohibited entry into the United States by the Food and Drug Administration or other government agency.
Deviation - A vessel's going to some other point or taking some course other than that described in the Bill of Lading. Dock Receipt - When cargo is delivered to a steamship company at the pier, the receiving clerk issues a dock receipt. DOT - U.S. Department of Transportation.
Dock Receipt - A form issued by a carrier or his representative as evidence that merchandise was in fact received by the carrier for shipment. Often referred to as a Received For Shipment Bill of Lading.
Documentary Collection - A method of effecting payment for goods whereby the seller/exporter ships goods to the buyer, but instructs his bank to collect a certain sum from the buyer/importer in exchange for the transfer of title, shipping and other documentation enabling the buyer/importer to take possession of the goods.
Domestic Transit - In general, a term used to denote transit within the contiguous boundaries of a single country.
Door to Door - Refers to merchandise shipped in containers, trailers or vans from the original point of manufacture to the final destination. Also referred to as House to House and CY/CY.
Draft - An unconditional order in writing from one person (the Drawer) to another (the Drawee), directing the drawee to pay a specified amount to a named drawer on a fixed date.
Drawback - A refund of duties paid on imported goods which are substantially further processed and re-exported.
Dumping - The selling of goods at a price below the cost of the goods or at an unusually low price in order to gain a competitive advantage. This is considered as an unfair trade practice by most international trade organizations.
Dunnage - Any material, but usually wood, used to brace, separate, and secure cargo in the hold of a ship or in a container.

E

E-commerce - The developing practice of transacting business by way of proprietary systems interface or via internet.
EDI, Electronic Data Interchange - In the broadest sense, the exchange of data directly from one business partner's computer to the other's another's.
Embargo - In general. a governmental order prohibiting the shipment of goods to or from specified countries.
Endorsement - In general, an attachment to an insurance policy which adds, deletes or changes coverage provided by the basic policy form. An addendum.
Endorsement in Blank - 1. Commonly used on a bank check, an endorsement in blank is an endorsement to the bearer. It contains only the name of the endorser and specifies no particular payee. 2. Also, a common means of endorsing bills of lading drawn to the order of the shipper.
Exceptions - Notations on a delivery receipt, made by the person receiving the merchandise, stating that the container or shipping package or merchandise was received in a damaged condition or that total quantity was not received. Establishes evidence that the shipment was not sound, or complete, at time of delivery. If no exceptions are taken during the course of shipment, it may be difficult for a claimant to prove that a loss actually occurred prior to their receiving the merchandise.
Exclusion - A term used to denote certain types of losses or causes of loss which are not covered by an insurance policy. Exclusions may be expressed in a policy or implied by law or custom.
EXW (Ex Works) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when he has made the goods available at his own premises to the buyer. He is not responsible for loading the goods on the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer bears all costs and risks involved in taking the goods from the seller's premises to the desired destination. This term thus represents the minimum obligation for the seller.

F

Factor/Factoring - In general, a credit practice of advancing monies at a discount to a seller in return for title to the proceeds of sale. Usually involves lower value, short term obligations.
FAK (Freight All Kinds) - A carrier's tariff description for products pooled and all shipped at one rate. FAK cargo is usually shipped in a container filled with different merchandise or commodities.
FAS (Free Alongside Ship) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment. The buyer must clear the goods for export. Can only be used for sea or inland waterway transport.
FCA (Free Carrier) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point.
FCL - Full Container Load, Full Car Load.
FC&S - Free of Capture and Seizure - An insurance clause providing that loss is not insured if due to capture, seizure, confiscation, and like actions, whether legal or not, or from such acts as piracy, civil war, rebellion, and civil strife.
Federal Maritime Commission (FMC) - The U.S. Federal agency responsible for overseeing rates and practices of ocean carriers that handle cargo at U.S. ports.
Feeder Vessel - A vessel that connects with a line vessel to service a port not directly served by that line vessel. Flag Carrier - An airline or vessel of one national registry whose government gives it partial or total monopoly over international routes. Flat Rack - A container without sides or frame members at the front and back. It can be loaded from the sides and top.
FEU - An abbreviation for forty-foot equivalent units which refers to the container carrying capacity of a vessel.
Flat Rack - An overseas container with four corner posts and no top or sides. Corner posts may be fixed or collapsible. Designed primarily for carrying odd shaped cargo and cargoes difficult to secure within a standard container.
FOB (Free On Board) - An INCOTERM describing a term of sale that details the responsibilities of the buyer and seller for the international trade transaction. Under this term, the seller fulfills his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The seller must clear the goods for export.
Force Majeure - The title of a standard clause found in marine contracts exempting the parties for nonfulfillment of their obligations by reasons of occurrences beyond their control, such as earthquakes, floods, or war.
Forfaiting – The selling, at a discount, of medium or longer term accounts receivable or promissory notes of a foreign buyer for immediate payment.
Fortuitous - In general, an accidental occurrence.
FPA - Free of Particular Average - A marine insurance clause relating to the recoverability of partial and total losses from perils of the sea. The American and English coverages vary as follows:
  • American Conditions (FPAAC): The underwriter does not assume responsibility for partial losses unless caused by sinking, stranding, burning, or colliding with another vessel.
  • English Conditions (FPAEC): The underwriter assumes responsibility for partial losses if the vessel is sunk, stranded, burned, on fire, or in collision, even though such an event did not actually cause the damage suffered by the goods.
  • Free Trade Zone - A geographic area licensed by a government agency to which goods can be imported without payment of duty for the purposes of manufacturing, processing and assembly and eventual re-export. Goods entering domestic commerce from a FTZ must pay all applicable duties at the time of entry.
    Freight -The remuneration earned by a ship owner or manager for the carriage of goods; including the profit derived from carrying his own goods. Freight Forwarder - An independent business that dispatches shipments for exporters for a fee. The firm may ship by land, air, or sea, or it may specialize. Usually it handles all the services connected with an export shipment, including preparation of documents, booking cargo space, warehousing, pier delivery, and export clearance.
    Freight Forwarder - Firm specializing in arranging transport of merchandise and completing documentation required for the orderly transport of merchandise. Occasionally, they will take merchandise for the purpose of packing or consolidating with other cargo for export to the same country.
    Full Value Declared (FVD) - A notation on an air waybill which indicates that a specific value has been declared to the carrier for carriage of the merchandise.

    G

    GATT (General Agreement on Tariffs and Trade) - A multilateral treaty intended to help reduce trade barriers and promote tariff concessions.
    General Average - Loss resulting from a voluntary sacrifice of any part of the vessel or cargo, or expenditure to safeguard the vessel and the rest of the cargo. When such a loss occurs, the ship owner and all cargo owners pay it on a pro rata basis.
    General Average Agreement - Document signed by cargo owners by terms of which they agree to pay any General Average contribution properly due so that cargo may be released after a General Average loss has occurred.

    H

    Harmonized Code - An internationally accepted and uniform description system for classifying goods for customs, statistical, and other purposes.
    Hatch - The cover of, or opening in, the deck of a vessel through which cargo is loaded.
    Held Covered - A provisional acceptance of risk, subject to confirmation at a later date that the agreed cover is needed. Where applicable to an existing insurance, cover is conditional, in practice, on prompt advice to the Underwriter as soon as the Assured is aware of the circumstances to be held covered coming into effect, and a reasonable additional premium is payable if the risk held covered comes into effect.
    HAWB - House Air waybill issued by carrying airlines' agent, normally freight forwarder.

    I

    Igloo - A container designed to occupy the full main deck width of carrying aircraft. Inchamaree Clause - Covers losses resulting from a latent defect in the vessel's hull or machinery and losses resulting from errors in navigation or management of the vessel by the master or crew.
    INCOTERMS - A set of international rules promulgated by the International Chamber of Commerce for the uniform interpretation of commonly used trade terms in foreign trade. They describe in detail the responsibilities of the sellers and buyers in international trade. They are: EXW (Ex Works), FCA (Free Carrier), FAS (Free Alongside), FOB (Free on Board), CFR (Cost and Freight), CIF (Cost, Insurance, Freight), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid to), DAF (Delivered at Frontier), DES (Delivered Ex Ship), DEQ (Delivered Ex Quay), DDU (Delivered Duty Unpaid) and DDP (Delivered Duty Paid).
    Insured Value - Usually computed by adding the invoice cost, guaranteed freight, other costs plus a percentage, commonly 10%. This usually represents landed value.
    Integrated Carriers - Carriers that have both air and ground fleets; or other combinations, such as sea, rail, and truck. Since they usually handle thousands of small parcels an hour, they are less expensive and offer more diverse services than regular carriers.
    Intermodal - This refers to the capacity to go from ship to train to truck or the like. The adjective generally refers to containerized shipping or the capacity to handle the same.
    ISO 9000 - A series of voluntary international quality standards.

    J

    Jettison - Voluntary dumping either of cargo or of ship's material or stores overboard, to protect other property from a common danger.
    Jetsam - Goods from a ship's cargo or parts of its equipment that have been thrown overboard to lighten the load in time of danger or to set a stranded ship adrift. Jones Act - An act of the U.S. Congress prohibiting foreign flag carriers from participating in the U.S. intercoastal trade by water. It currently is applicable in such trade lanes as the U.S. continental states to and from Hawaii and Alaska.

    K

    Knocked Down (KD) - An article taken apart, folded, or telescoped in such a manner as to reduce its bulk at least 33-l/3% below its assembled bulk.
    Knot, Nautical - The unit of speed equivalent to one nautical mile: 6,080.20 feet per hour or 1.85 kilometers per hour.

    L

    LASH - Lighter Aboard Ship. Lash Vessels - Barges specifically designed to load on a vessel internally and for quick vessel turnaround. The concept is to quickly float the barges to the vessel (using tugs or ships wenches), load the barges through the rear of the vessel, then sail. Upon arrival at the foreign port, the reverse happens. Barges are quickly floated away from the vessel and another set of waiting barges quickly is loaded. Usually crane-equipped, these barges handle mostly breakbulk cargo.
    LCL - Less than Container Load; Less than Car load.
    Letter of Credit (L/C) - A document issued by a bank per instructions by a buyer of goods authorizing the seller to draw a specified sum of money under specified terms. Issued as revocable or irrevocable. Lighter - An open or covered barge equipped with a crane and towed by a tugboat. Used mostly in harbors and inland waterways.
    Lighterage - The cost of loading or unloading a vessel by means of barges alongside.

    M

    Manifest - A list of the goods being transported by a carrier. Maquiladora - A foreign plant operating under an in-bond program whereby components may be shipped into Mexico duty-free for assembly and subsequent re-export.
    Marine Extension Clause - Cargo policy clause that continues coverage on goods during deviation, delay, re-shipment, and transshipment, or any other variation in normal transit beyond the shipper's control. Marine Surveyor - Specialist who determines the nature, extent and cause of loss and/or damage.
    Maritime Administration (MARAD) - A U.S. government agency, while not actively involved in vessel operation, that administers laws for maintenance of merchant marine for the purposes of defense and commerce.
    Markings - The physical markings on a product indicating the country of origin where the article was produced.
    Master's Protest - Sworn statement by captain describing any unusual happening during the voyage.

    N

    NAFTA (North American Free Trade Agreement) - A free trade agreement comprising the U.S.A., Canada, and Mexico.
    Non-Vessel Operating Common Carrier (NVOCC) - An FMC licensed cargo consolidator of small shipments in ocean trade, generally soliciting business and arranging for or performing containerization functions at the port.
    Non-Delivery (ND) - Unexplained disappearance of an entire shipping package.
    NVD - No Value Declared. A notation on a bill of lading that indicates no specific value has been declared to the carrier for carriage of the merchandise. Liability of the carrier would therefore be as defined by statute or as incorporated in the bill of lading. This notation on a Bill of Lading would be a “Released Bill”.

    O

    Open Account - A trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment such as a note, mortgage, or other formal written evidence of indebtedness.
    Open Policy - A cargo insurance policy that is an open contract; e.g., it provides protection for all of an exporter's shipments afloat or in transit within a specified geographical trade area for an unlimited period of time, until the policy is cancelled by the insured or by the insurance company. It is "open" because the goods that are shipped are also detailed at that time. This usually is shown in a document called a marine insurance certificate.
    OS&D - Overages, Shortage and Damage.

    P

    Pallet - A load-carrying platform to which loose cargo is secured before placing aboard the aircraft/vessel.
    Particular Average (PA) - Partial loss or damage to goods.
    Perils of the Sea - Fortuitous accidents or casualties peculiar to transportation on navigable water, such as sinking, collision of vessel, striking a submerged object, or encountering heavy weather or other unusual forces of nature.
    Perishables - Any cargo that loses considerable value if it is delayed in transportation. This usually refers to fresh fruit and vegetables.
    Pilferage - As used in marine insurance policies, the term denotes petty thievery, the taking of small parts of a shipment, as opposed to the theft of a whole shipment or large unit. Some ordinary marine insurance policies do not cover against pilferage, and when this coverage is desired it must be added to the policy.
    Port of Discharge - A port where a vessel is off-loaded and cargo discharged.
    Port of Entry - A port at which foreign goods are admitted into the receiving country.
    Port of Loading - A port where cargo is loaded aboard the vessel, lashed, and stowed.
    Protest - U.S. Customs Form 19 allows for a refund of an overpayment of duty if filed within 90 days of liquidation.

    Q

    Quotas and Quota System - Quotas are established by Presidential Proclamations, Executive Orders, or other legislation. The Quota System, a part of Customs' Automated Commercial System, controls quota levels (quantities authorized) and quantities entered against those levels. Visas control exports from the country of origin. Visa authorizations are received from other countries and quantities entered against those visas are transmitted back to them. Control of visas and quotas simplify reconciliation of other countries' exports and U.S. imports. Absolute quotas permit a limited number of units of specified merchandise to be entered or withdrawn for consumption during specified periods. Tariff-rate quotas permit a specified quantity of merchandise to be entered or withdrawn at a reduced rate during a specified period.

    R

    Recovery - Amount recovered from a third party responsible for a loss on which a claim has been paid.
    Reefer - A refrigerated trailer or railcar for hauling perishables.
    Released Bill - Type of affreightment where no specific value has been declared for carriage (see No Value Declared). This term is not usual to ocean cargo insurance.
    Restrictive Insurance - Certain countries have enacted legislation or insurance regulations which require marine insurance to be placed in local insurance markets, or which restrict the purchase or sale of goods to trade terms which inhibit the placement of marine insurance. A summary of these countries is contained in the Resource section of the InsureCargo.com website.
    Ro/Ro (Roll-on/Roll-Off) Vessel - A ship designed to accommodate cargo that is rolled on and rolled off. Some Ro/Ro vessels can accommodate containers and/or breakbulk cargo.

    S

    Salvage - The rescue of goods from loss at sea or by fire. Also, goods so saved, or payment made or due for their rescue.
    Shipper - Term used to describe an exporter (usually a manufacturing company).
    Short-Shipped - Cargo listed on a manifest but not actually loaded.
    Sight Draft - A draft payable upon presentation to the drawee.
    SL&C - Shipper's Load and Count.
    Special Marine Policy or Certificate of Insurance - A document that provides evidence of insurance to the buyer or bank for an export/import shipment. The certificate contains an abstract of the more important conditions in the policy. The Special Marine Policy is a negotiable document granting full policy rights to the named insured and loss payee.
    SR&CC - Strikes, Riots, and Civil Commotions - An insurance clause referring to physical loss or damage directly caused by strikers, locked-out workmen, persons' participation in labor disturbances, and riots.
    Steamship Line - A company usually having the following departments: vessel operations, container operations, tariff department, booking, outbound rates, inward rates, and sales.
    Stowage - The placing of cargo in a vessel in such a manner as to provide the utmost safety and efficiency for the ship and the goods it carries.
    Subrogation - The right of the Underwriter to step into the shoes of the Assured following payment of a claim to recover the payment from another party who was responsible for the loss. Limited to the amount paid on the policy.
    Sue & Labor Cause - A provision in marine insurance obligating the assured to do things necessary after a loss to prevent further loss and to act in the best interests of the insurer.
    Surety Bond - A bond insuring against loss or damage or for the completion of obligations.

    T

    Tally Sheet - A list of incoming and outgoing cargo checked by the tally clerk on the dock. Tariff - A listing of rates or charges.
    Temperature Controlled Cargo - Any cargo requiring carriage under controlled temperature. Terms of Sale - determines the obligations of the seller and buyer on international shipments.
    Temperature Recorder - A device, usually placed inside a refrigerated container and used to monitor the temperature inside the container over a period of time.
    TEU - A twenty-foot equivalent unit (6.1m). A standard unit for counting containers of various lengths and for describing container ship or terminal capacity. A standard 40' container equals 2 TEUs.
    Time Draft - A draft that matures in a certain number of days, either from acceptance or the date of the draft.
    Trade - A term used to define a geographic area or specific route served by carriers.
    Tramp - A vessel that does not operate along a definite route on a fixed schedule, but calls at any port where cargo is available.
    Transshipment - The transfer of a shipment from one carrier to another in international trade, most frequently from one ship to another. Because the unloading and reloading of delicate merchandise is likely to cause damage, transshipments are avoided whenever possible.
    Trip Transit - In marine insurance, a term used to describe insurance which has been provided on an individual shipment and not under an Open Policy. Usually purchased by firms which only have occasional shipments and do not want to pay minimum premiums usually required to maintain an Open Policy.

    U

    Unitization - The packing of single or multiple consignments into pallets.

    V

    Valuation Charges - Transportation charges assessed shippers who declare a value of goods higher than the value of carriers' limits of liability.
    Ventilated Container - A container with holes or grills along the top and bottom side rails to provide continuous ventilation to cargoes with high moisture content or which give off heat.
    Visa - An invoice properly validated by the Minister of Trade in regard to quota entries.
    Volume Weight - Used when calculating airfreight when the size of the carton is greater than the average weight. It is calculated by multiplying the length times the width times the height and dividing by 166.

    W

    War Risk - The possible aggressive actions against a ship and its cargo by a belligerent government. This risk can be insured by a marine insurance policy with a war risk clause.
    War Risk Insurance - Insurance issued by marine underwriters against war-like operations specifically described in the policy.
    Warehouse Receipt - A receipt of commodities deposited in a warehouse identifying the commodities deposited.
    Warehouse-to-Warehouse - A clause in marine insurance policy whereby the underwriter agrees to cover the goods while in transit between the initial point of shipment and the point of destination with certain limitations, and also subject to the law of insurable interest. The warehouse-to-warehouse clause was once extremely important, but marine extension clauses now often override its provisions.
    Warranties
  • Expressed Warranty: An agreement written in a marine underwriter's insurance policy which must be strictly and literally complied with. A violation voids the insurance, e.g., trading warranties.
  • Implied Warranty: Fundamental conditions implied in a contract of marine insurance are seaworthiness of the vessel and the legality of the venture.
  • Wharfage - A charge assessed by a pier or dock owner against the cargo or a steamship company for use of the pier or dock.
    With Average (WA) - A marine insurance term meaning that shipment is protected for partial damage for certain named perils whenever the damage exceeds a stated percentage.
    Without Prejudice - The claim is paid on this occasion, although the Underwriter feels it does not attach to the policy, but this action must not be treated as a precedent for future similar claims.

    Y

    Y/A (York-Antwerp Rules) - A code of rules adopted by an international convention in 1890, amended in 1924 and again in 1950, for the purpose of establishing a uniform basis for adjusting general average. Certain nationalities decline to observe some of the rules adopted.