Shipping acronyms play a crucial role in simplifying complex operations in the shipping industry. In this guide, we’ll go over the most commonly used acronyms in Australian imports.
FOB (Free on Board)
Refers to delivery from the seller to the buyer at the shipping port. The seller is done with their obligation once the goods are placed on the vessel. The buyer takes care of the transportation costs and risks. For instance, the seller ships goods to the buyer and declares that they have been delivered FOB.
CIF (Cost, Insurance, and Freight)
Another delivery term is where the seller covers shipping and insurance costs while the buyer pays for unloading. For example, the seller delivers goods to the buyer at the shipping port with the cost of shipping and insurance included in the final price as per the CIF agreement.
EXW (Ex Works)
Delivery of goods from the seller’s location to the buyer’s location, with the buyer covering all transportation costs. For instance, the seller agrees to make the goods available for pickup, and the buyer takes care of all transportation costs, including customs clearance and insurance, as per the EXW agreement.
DDP (Delivered Duty Paid)
The seller covers all transportation costs, including customs clearance and payment of duties and taxes, from delivery to the buyer. For example, the seller agrees to deliver goods to the buyer’s doorstep, with all costs and risks associated with transportation covered, as per the DDP agreement.
DDU (Delivered Duty Unpaid)
The seller covers transportation costs, but the buyer pays duties and taxes upon receipt of goods. For instance, the seller agrees to deliver goods, with all transportation costs covered, but the buyer pays duties and taxes, as per the DDU agreement.
CIP (Carriage and Insurance Paid To)
Delivery term with the seller covering shipping and insurance costs and the buyer taking care of customs clearance and other transportation costs. For example, the seller delivers goods with the cost of shipping and insurance covered, and the buyer takes care of customs clearance and other transportation costs, as per the CIP agreement.
CAF (Currency Adjustment Factor)
A fee is added to the shipping cost to compensate for currency exchange rate fluctuations. For example, the shipping company adds a CAF fee to shipping costs due to fluctuations in currency exchange rates.
THC (Terminal Handling Charges)
Fees charged by shipping terminals for handling containers, including loading, unloading, storage, and processing fees. For instance, the shipping terminal charges a fee for handling and processing the container, including loading, unloading, and storage fees, as per THC.
BAF (Bunker Adjustment Factor)
A fee is added to shipping costs to compensate for fluctuations in bunker fuel used to power vessels. For example, the shipping company adds a BAF fee to the shipping cost to compensate for fluctuations in bunker fuel costs.
GRI (General Rate Increase)
A fee is added to the shipping cost to compensate for increases in shipping vessel operating costs, including labour and fuel expenses. For example, the shipping carrier imposes a GRI fee to compensate for the increased costs of operating a shipping vessel, including labour and fuel.
ETA (Estimated Time of Arrival)
Estimate of time for a vessel to reach its destination. For example, the shipping company provides an estimate of the vessel’s arrival based on route, weather, and speed.
ETS (Estimated Time of Sailing)
Estimate of time a vessel will depart its current location. For instance, the shipping company provides an estimate of the vessel’s departure based on route, weather, and speed.
TEU (Twenty-Foot Equivalent Unit)
Is a standard unit of measurement for the capacity of a shipping container, equivalent to a 20-foot container. Example: A shipping company calculates the total capacity of a shipping vessel in TEUs, with one TEU equivalent to a 20-foot-long shipping container.
FCL (Full Container Load)
Is a shipment that fills a single shipping container, making it more cost-effective than an LCL shipment. Example: The buyer is shipping a large number of goods and chooses to use an FCL shipment, filling a single shipping container with their goods.
LCL (Less Than Container Load)
Is a shipment that does not fill a single container, with goods from multiple shipments consolidated into a single container. Example: The buyer is shipping a smaller amount of goods and chooses to use an LCL shipment, consolidating their goods with those of other shipments into a single container.
In conclusion, understanding shipping acronyms is crucial for those involved in importing goods to Australia. By familiarising yourself with these terms, you can ensure a smoother and more efficient shipping process.