UNCTAD Regional Course on Key Issues on the International Economic Agenda Module 4: International Transport and Trade Facilitation

Glossary for Participants

This glossary has been produced to assist participants to understand the technical terms and jargons employed in the curriculum for this module. Participants are encouraged to read and if necessary make use of the links provided below to enhance their understanding of these terms.

Bill of Lading (BOL, or B/L)
A document which evidences a contract of carriage by sea and the taking over or loading of the goods by the carrier, and by which the carrier undertakes to deliver the goods against surrender of the document. A provision in the document that the goods are to be delivered to the order of a named person, or to order, constitutes such an undertaking. A bill of lading functions as a receipt for shipment and as evidence of the contract of carriage. Moreover, it is a document of title which provides its holder with constructive possession of the goods and the exclusive right to demand delivery of the goods from the carrier; if the bill of lading is made out “to order”, the rights embodied in the document may be transferred to another holder. It is this quality of a document of title which distinguishes the bill of lading from other transport documents and explains its importance in international trade and trade financing.
United Nations Convention on the Carriage of Goods by Sea (1978), Article 1(7) http://www.unctad.org/ttl/legal The Use of Transport Documents in International Trade (UNCTAD/SDTE/TLB/2003/3) http://www.unctad.org/ttl/legal

Bulk Cargo
Cargo, either dry or liquid, that is not packaged, such as minerals (oil, coal, and iron ore) and grains. This cargo is usually shipped in large volumes, handled with pumps, shovels and scoops, and transferred through pipelines, tubes and conveyer belts. It often requires the use of specialized ships such as oil tankers and dry bulk carriers, as well as specialized transhipment and storage facilities in ports. Bulk cargo tends to have a single origin, destination and client per ship load.
American Association of Port Authorities, http://www.aapa-ports.org/Industry/content.cfm?ItemNumber=1077&navItemNumber=545 Bureau of Transportation Statistics, http://www.bts.gov/publications/the_changing_face_of_transportation/appendix_c.html

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http://www. air. inland waterway. insurance and freight (CIF) basis in percentage of the value of the same goods measured on a free on board (FOB) basis. because transport costs are usually charged per container. per unit or per tonne and not as a percentage of the goods’ value. 2006. UNECE. Comparing cif/fob ratios of landlocked countries with coastal countries is not appropriate. pp. Note that this ratio does not imply that the INCOTERMS used for the transaction actually correspond to the “c.org/trans/wp24/documents/term. United Nations Convention on the Carriage of Goods by Sea (1978).unctad. "Transport and International Trade: Conclusions of Round Table 131” Combined Transport In Europe.3/80.o. 10. "Efficient transport and trade facilitation to improve participation by developing countries in international trade. in a contract of carriage. because a coastal country will usually only report the transport costs up to the port even though the final destination will always involve some land transport as well. Annex http://www. undertakes to perform or to procure the performance of carriage by sea.b.unctad. “combined transport” refers to intermodal transport where the major part of the European journey is by rail. rail.org/glossary/detail.Carrier Any person or entity who.19 “Code for Modes of Transport”.” or “f.pdf. More generally. EC Terminology on Combined Transport (2001) http://www.org/ttl/legal CIF/FOB ratio The so-called cif/fob ratio is the value of imported merchandise measured on a cost.pdf UNECE Recommendation No.” INCOTERMS.asp?ID=4303 2 . any person by whom or in whose name a contract of carriage of goods by sea has been concluded with a shipper. IMF Financial Statistics UNCTAD. Article 1(1) http://www." TD/B/COM. OECD Glossary of Statistical Terms http://stats. road. For port-to-port transactions.org/cefact/recommendations/rec19/rec19_ecetrd138. The cif/fob ratio does not necessarily provide appropriate information on transport costs. For seaborne trade.org/en/docs/c3d80_en. inland waterways or sea and any initial and/or final legs carried out by road are as short as possible. 2005.i. the term refers to a combination of means of transport where one (passive) transport means is carried by another (active) means which provides traction and consumes energy. just as it does for the landlocked country. ECMT. it thus compares the value of goods at Customs entry of the importing country with the value of the goods at Customs exit at the exporting country. This ratio is sometimes used as an indicator of transport and insurance costs for imports to a country.f. or by a combination of such modes.pdf EMCT.unece.oecd.unece.

3 ft3) or more.Container In transportation.4/75. "Unitization of Cargo". pp. a box. (b) specially designed to facilitate the carriage of goods by one or more modes of transport. particularly its transfer from one mode of transport to another.htm?refid=Ref1045 Donald F. 16. 7. As regards freight containers. The extension of the use of containers to international deep-sea trades began in the middle of the 1960s in the North Atlantic trades between North America and Western Europe. usually 8 feet wide. ISO 668 and 830 provide the following definition: “a freight container is an article of transport equipment (a) of a permanent character and accordingly strong enough to be suitable for repeated use. (c) fitted with devices permitting its ready handling. sometimes with an unusual shape that fits the fuselage’s contours. 35. ISO. developed first in the domestic trades of the United States of America. In the containerization of cargo. http://www. that is carried on a truck. 3 . UNCTAD. containerization refers to a system that unitizes cargo in a container for transport through various modes and phases of transport without the intermediate handling of the cargo carried. TD/B/C. The first sea-container was employed in 1956. using containers. the word container may refer to:    The package enclosing a product. “Contemporary Transportation” Containerization Containerization refers to the historical spread of the use of containers in unitizing of internationally traded goods. and was then employed in the trades from the United States to the east coast of Latin America. 40 or 55 feet long. or a box carried aboard an airplane. according to the International Standard Setting Organization. and 20. 28. Johnson.org/iso/freight_06. Wood and James C. (d) so designed as to be easy to fill and empty. 8. Cargo unitization.” The term “freight container” includes neither vehicles nor conventional packing. without intermediate reloading.org/iso/pressrelease. a railcar. 1996. 1992. ISO Standards Handbook: freight containers. 1970.iso. or a vessel.5 feet high (or higher). (e) having an internal volume of 1 m3 (35.iso.pdf http://www.

but does not undertake that the goods will arrive. CIF terms denotes a sale on “shipment terms”.pdf Customs Automation Customs automation aims at facilitating and accelerating Customs procedures by establishing an automatic system of computer aided control on the collection. In particular. and analysis of cross-border trade information in determining any applicable duties and fees on traded goods. management. which have the incentive to modernize their IT to fully make use of expedited Customs procedures. ASYCUDA (2007) http://www. Streamlining and simplification of Customs procedures and documents are often required and included in the process of developing such a system. clear the goods for export.asp UNCTAD Technical Notes on Trade Facilitation http://r0. a commercial invoice.htm 4 . provide (minimum cover) cargo insurance and tender the appropriate documentation.org/incoterms/preambles/pdf/CIF. as well as export documentation and other certificates). Customs automation can also trigger ICT renewal of private enterprises or government agencies.org/aboutas. Insurance and Freight (CIF) An INCOTERM defining the division of costs and risk in trade transactions involving carriage of goods by sea or inland waterways.Cost. The buyer bears the risk of loss of or damage to the goods during transit. International Chamber of Commerce http://www. The seller must arrange for transportation of the goods on board a vessel bound for a named port of destination.unctad. CIF terms are often used where sale of goods in transit is envisaged as delivery under the sale contract may be performed by tendering documents while the goods are in the physical possession of the carrier.asycuda. it increases the transparency and predictability of the imposition of duties and reduces the processing time of shipments.org/ttl/technical-notes. usually a bill of lading. Besides acting at times as a catalyst in a broader Customs modernization strategy. The introduction of computer-aided customs automation systems can greatly facilitate and accelerate border-crossing procedures. whereby the seller only undertakes to arrange and pay for dispatch of the goods to the buyer and to provide corresponding documentation (including a transport document.iccwbo. use. an insurance policy.

pdf "The Economist” (2007).cfm?ItemNumber=1077&navItemNumber=545 INCOTERMS INCOTERMS (INternational COmmercial TERMS) is a set of internationally accepted standard terms used to identify the obligations of contracting parties in international sale contracts.pdf General Cargo Cargo consisting of goods. crates.org/incoterms/preambles/pdf/FOB. The seller pays the loading costs plus the transport costs to the port of shipment. Economics A-Z: A glossary of economics-related terms. USA. agricultural equipment that are not conducive to packaging or unitization. http://www. bags or bales.com/research/Economics/alphabetic. American Association of Port Authorities http://www.economist.org/Industry/content. Council of Supply Chain Management Professionals (CSCMP). http://www. characterize a state of production where the cost of producing an additional unit is decreasing as the volume of output increases. for example in cartons. Free On Board (FOB) An INCOTERM defining the division of costs and risk in trade transactions involving carriage of goods by sea or inland waterways.aapa-ports. structural steel. International Chamber of Commerce http://www. International Chamber of Commerce http://www. often palletised. FOB denotes a sale on "shipment terms" whereby the seller undertakes to ship the goods on board a vessel nominated by the buyer at a named port of loading and to provide certain documentation.org/Downloads/Public/Resources/glossary03. INCOTERMS were first published by the International Chamber of Commerce in 1936 and have since been updated a number of times.cscmp. Each INCOTERM. unpacked or packed.Economies of Scale Economies of scale. General cargo can be shipped either in breakbulk or containerised. The buyer arranges and pays for transportation by sea and bears the risk of loss of or damage to the goods during transit.iccwbo. Supply Chain and Logistics: Terms and Glossary (Updated October 2006). defines the delivery point under the sale contract. (2007). The latest version dates from the year 2000 (INCOTERMS 2000). yet it will less than double the energy required to move the cargo through water. whereas the buyer covers any further costs. rolled newsprint.iccwbo. containerized and Roll on-Roll off cargo. Contracting parties chose the most appropriate INCOTERM according to their requirements. as well as the division of costs and risks as between the parties. referred to by a three letter abbreviation. doubling the dwt of a ship will approximately double the volume of cargo that can be carried. General cargo may also consist of those products or commodities such as timber.org/incoterms/id3042/index. or increasing returns to scale. As an example. Breakbulk cargo is a type of general cargo that is conventionally stowed as opposed to unitized. concrete forms.html 5 .cfm?letter=E#economiesofscale.

Logistics Logistics refers to the process of planning.org/Downloads/Public/Resources/glossary03. services. The definition includes inbound. Most liner shipping services specialize on containerized cargo. http://www. USA. Wood and James C. Schary and Tage Skjøtt-Larsen. "Managing the global supply chain". 6 .org/glossary/detail.Intermodal Transport The movement of goods in one and the same loading unit or road vehicle. EC Terminology on Combined Transport (2001) http://www. USA. 2007 Supply Chain and Logistics: Terms and Glossary.cscmp. Supply Chain and Logistics: Terms and Glossary (Updated October 2006). http://www. pp. Council of Logistics Management Professionals.unece.oecd. 584. 383. The largest components of logistics expenditures are for (a) transport and (b) inventory holding. 1995.cscmp. "Contemporary Transportation".pdf Philip B.pdf Donald F.. UNECE. Council of Supply Chain Management Professionals (CSCMP).org/trans/wp24/documents/term.pdf OECD Glossary of Statistical Terms: http://stats. In general. 1995.Supply Chain Management and Logistics Management Definitions.asp Philip B. internal and external movements and return of materials for environmental purposes. and related information from point-of-origin to point-of-consumption. It is also part of an inventory reduction strategy that feeds production lines with products delivered "just in time”. ocean cargo liners carry large number of small lots of relatively high-value general cargo.org/AboutCSCMP/Definitions/Definitions. http://cscmp. ECMT.org/Downloads/Public/Resources/glossary03. Johnson. 1996. (2007). outbound. flow and storage of goods. Council of Supply Chain Management Professionals (CSCMP). which uses successively two or more modes of transport without handling the goods themselves in changing modes. Liner Shipping Liner shipping refers to the sea-borne shipping of cargo on published schedules. implementing and controlling the efficient. Usually various goods belonging to different owners are carried in the same vessel. pp. Schary and Tage Skjøtt-Larsen. "Managing the global supply chain".asp?ID=4303 Just in Time (JIT) JIT is an inventory control system that controls material flow into assembly and manufacturing plants by coordinating demand and supply to the point where desired materials arrive just in time for use.

pp.unctad. are not considered as international multimodal transport.pdf World Customs Organization http://www. United Nations Publication UNCTAD/SDTE/TLB/2005/2. the taking in charge of the goods by the multimodal transport operator. Article 1(1) http://www. EC Terminology on Combined Transport (2001) http://www.org 7 . 64-67 http://www. to perform or to procure the performance of international multimodal transport.org/ttl/legal Multimodal Transport Contract A contract whereby a multimodal transport operator undertakes. and an undertaking by him to deliver the goods in accordance with the terms of the contract. release may even be authorized prior to the actual arrival of the goods.wcoomd. against payment of freight.org/ttl/legal Pre-arrival Customs Processing A function allowing traders to submit clearance data to Customs for advance processing and release of the goods immediately upon arrival to the country. Article 1(3) http://www.Multimodal Transport Carriage of goods by two or more modes of transport. Article 1(4) http://www. as defined in such contract. UNCTAD Trade Facilitation Handbook Part II: Technical Notes on Essential Trade Facilitation Measures. New York and Geneva 2006. “International multimodal transport” is defined as the carriage of goods by at least two different modes of transport on the basis of a multimodal transport contract from a place in one country at which the goods are taken in charge by the multimodal transport operator to a place designated for delivery situated in a different country.org/ttl/legal Multimodal Transport Document A document which evidences a multimodal transport contract.pdf United Nations Convention on International Multimodal Transport of Goods (1980).org/trans/wp24/documents/term. The operations of pick-up and delivery of goods carried out in the performance of a unimodal transport contract. ECMT.unctad.org/en/docs/sdtetlb20052_en.unctad. Under the UN Convention on International Multimodal Transport of Goods. United Nations Convention on International Multimodal Transport of Goods (1980). provided all necessary details have been communicated and screened by Customs in advance. UNECE.unctad. United Nations Convention on International Multimodal Transport of Goods (1980).unece.

which either posed a security risk or did not declare goods correctly. including the control of cargo and people. it can be applied to nearly every decision-making situation. while using its employees more efficiently for examining high-risk consignments. which benefits from more efficient company-oriented controls and a more efficient use of employees. The audit can take place either at a Customs office or on the premises of a company. risk management represents a modern.org/en/docs/sdtetlb20052_en. pp. By comparing these findings with current shipments. Such audit may take into account individual transactions or cover imports/exports undertaken over a certain period.unctad. Risk management is also linked to deciding whether to apply other measures. which are instantly released.wcoomd. and deliver better results with the same or fewer resources.pdf 8 .pdf Risk Management Risk management attempts to control and manage risk.org UNCTAD Trade Facilitation Handbook Part II: Technical Notes on Essential Trade Facilitation Measures. and for Customs. UNCTAD Trust Fund for Trade Facilitation Negotiations. WCO brochure containing Executive Summary on Risk Management. while at the same time decreasing the number of physical inspections and other controls. Risk management in Customs procedures is used to resolve the trade-off between quick processing and appropriate controls of cross-border shipments.unctad. In the Customs context. risk-assessment techniques are applied to identify lowrisk shipments. 05. which benefit from lower transaction costs and quicker shipments. effective and efficient way of working and importantly assisting Customs Administrations to:     Effectively manage Customs’ operational functions. Nevertheless. 55-59 http://www. Effective risk management will increase the likelihood of identifying irregularities.pdf WCO Information Sheets on Key Trade Facilitation Measures: http://www. hereby inspecting documents and books and questioning employees on the company's premises. such as pre-arrival processing or post-clearance audit. http://www. Seeking to expedite traditional Customs procedures.wcoomd.Post-Clearance Audit Post clearance audit means Customs audit performed subsequent to the release of cargo from Customs custody. customs reserves the right to audit companies after the event.%20Public%20files/PDFandDocuments/Procedures%20and%20Facilitati on/Risk%20Management. employ an appropriate level of resources to the greatest areas of risk. effectively manage non-operational functions such as IT support services. checking and release of goods could take several days. By analyzing past shipments. Post-clearance audit can be advantageous both for traders. October 2005: http://r0. Customs can apply expedited processing to most transactions. in order to achieve the best possible outcomes. Technical Note No. United Nations Publication UNCTAD/SDTE/TLB/2005/2.org/ttl/technical-notes/TN05_PostClearanceAudit. New York and Geneva 2006. Post-clearance audit is often part of a comprehensive trade-facilitation strategy. states try to identify patterns and characteristics of high-risk deliveries.org/files/1. where storage.

org/cefact/publica/ece_trade_299. Supply chain management (SCM) refers to the set of activities involved in designing. while increasing transparency. tend to benefit from a Single Window due to an increased volume of trade. i. Governments.cscmp. http://www. Taylor. which are frequently located in different countries.org/Downloads/Resources/glossary03. the entire production and distribution process of a good from its raw materials to the final sale to the customer. pp.unece. A Single Window requires considerable coordination efforts from all concerned stake holders. 75-81 http://www. 344.e.A manager’s guide”. UNECE . UNECE: "Recommendation No.unece.Shipper Any person by whom or in whose name or on whose behalf a contract of carriage of goods by sea has been concluded with a carrier. wholesalers or intermediaries.pdf David A. Article 1(3) http://www.UN/CEFACT. and transit-related regulatory requirements.org/cefact/recommendations/rec33/rec33_trd352e. on the other hand. If information is electronic.org/ttl/legal Single Window A Single Window (for foreign trade) is a facility that allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfil all import. New York and Geneva 2003.unctad.htm "Trade Facilitation: The Challenges for Growth and Development”. 2004. United Nations Convention on the Carriage of Goods by Sea (1978). in order to streamline all pertinent border-crossing regulations . and cash across a supply chain. SCM plans and manages the supply chain. raising state revenues.like customs. The supply chain usually includes third parties like suppliers. pp.pdf Supply Chain Management (SCM) A supply chain is a network of facilities and transportation lanes that transforms raw materials into finished products and delivers those products to consumers. then individual data elements should only be submitted once. supply. speed and legal certainty of international transactions. health or environmental provisions . efficiency. "Supply chain .org/cefact/recommendations/rec_index. and executing the flow of demand. or any person by whom or in whose name or on whose behalf the goods are actually delivered to the carrier in the relation of the contract of carriage by sea.unece. planning. United Nations Publication ECE/TRADE/299. 33: Recommendation and Guidelines on Establishing a Single Window”. 9 . export. A Single Window is convenient for traders as it greatly reduces transaction costs.to one organization. transport. due to a more efficient deployment of state resources and due to an improved compliance of traders.pdf http://www. In a Single Window system an international trader has to approach only one government entity in order to submit all standardized trade documents at once and to receive accelerated clearance for a cross-border transaction. Glossary of the Council of Supply Chain Management Professionals (CSCMP): http://www.

44 m) in width. 8 ft (2.pdf Donald F. A forty-foot equivalent unit (FEU) equals two TEU. 1996. Johnson.pdf Council of Supply Chain Management Professionals (CSCMP). USA. 1995.e.22/2 http://www.unctad. in tramp shipping vessels are rented on-demand to a third party.cscmp. pp. and the University of Chicago (November 2006). USA. Supply Chain and Operations Management Glossary.pdf UNCTAD (2004). Supply Chain and Logistics: Terms and Glossary (Updated October 2006). http://www. usually carrying only one shipper’s cargo. Transit Trade A cross-border trade transaction. and not serving a regular schedule.org/Downloads/Public/Resources/glossary03. Council of Supply Chain Management Professionals (CSCMP). Supply Chain and Logistics: Terms and Glossary (Updated October 2006).org/en/docs/c3em22d2_en. Council of Supply Chain Management Professionals (CSCMP).cscmp.org/Downloads/Public/Resources/glossary03. and the University of Chicago (November 2006). Wood and James C. UNCTAD (2007). "Design and Implementation of Transit Transport Arrangements. Tramp Shipping Unlike linker shipping. pp. "Regional cooperation in transit transport: Solutions for landlocked and transit developing countries” TD/B/COM. http://www. 2007 Supply Chain and Logistics: Terms and Glossary.Third-Party Logistics (3PL) 3PL refers to external specialized companies that are hired to perform logistics functions that have traditionally been performed within an organization. http://www. Supply Chain and Operations Management Glossary. http://www.lindo.com/library/glossary.pdf ISO Standards Handbook: freight containers. http://www. 10 . "Managing the global supply chain". i.30/2 http://www. 385. where the transported goods cross one or several countries before arriving at the country of destination.com/library/glossary. A standard twenty-foot container has 20 ft (6.3/EM." TD/B/COM. 1992.unctad. 584. "Contemporary Transportation".lindo. and 8 ft 6 in (2.3/EM. 40 ft (12.org/Downloads/Public/Resources/glossary03. Lindo Systems Inc.pdf Lindo Systems Inc. Most of the containers used today are forty-foot containers having twice the length of a TEU. Schary and Tage Skjøtt-Larsen.pdf Philip B.org/en/docs/c3em30d2_en. ISO.pdf Twenty-foot Equivalent Unit (TEU) The standard unit of measurement for maritime freight containers and capacities of container ships and terminals as well as traffic and throughput. Article V of the General Agreement on Tariffs and Trade (GATT) provides for freedom of transit and nondiscriminatory treatment of transit trade.cscmp.59 m) in height.20 m).10 m) in length. The functions performed by the third party can encompass the entire logistics process or selected activities within that process.

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