Reference

The importing glossary

79 terms from sourcing, freight, customs and fulfillment, written plainly and without the padding. If a supplier, forwarder or broker has used a word at you and moved on, it is probably here.

Search the glossary Start-to-finish guide

Search 79 terms

79 terms

Sourcing and manufacturing Freight and shipping Customs and compliance Fulfillment and 3PL Crowdfunding Money and terms

Sourcing and manufacturing

1688: Alibaba's domestic Chinese marketplace. Cheaper than the international site and aimed at Chinese buyers, so it generally assumes a domestic address, Chinese-language dealing and no export handling.
AQL: Acceptable quality limit: the sampling standard that decides how many units an inspector pulls and how many defects fail the lot. Agree the AQL and the defect classifications before the inspection, not after it.
BOM: Bill of materials: every component and material that goes into one unit, with quantities. It is what a factory prices against, and what tells you which cost went up when a quote moves.
Canton Fair: The China Import and Export Fair in Guangzhou, held each spring and autumn in three themed phases per session. The most efficient way to meet a large number of manufacturers in person. Read more
DUPRO: During production inspection: a check partway through the run, when there is still time to correct a systematic fault instead of discovering it on a finished container.
Factory audit: A third-party visit verifying that a company is a real manufacturer with the machines, staff and quality system it claims. Proportionate once order values grow; a floor video call may be enough for a first small run. Read more
Golden sample: The approved reference unit, signed off by both sides and kept by both. Every later production unit and every inspection is judged against it. Without one, quality arguments have no referee.
Lead time: The time from a confirmed order to goods ready to ship. It almost never includes sampling, tooling or freight, so read any quoted lead time as one stage of the calendar rather than the whole of it. Read more
MOQ: Minimum order quantity: the smallest run a factory will accept. Treat a listed MOQ as an opening position rather than a rule. It is usually more negotiable if you accept standard materials and colors on a first run.
ODM: Original design manufacturer: a factory that already has a design and adapts it for you. Faster and cheaper than OEM, but you rarely own the design and neither does your competitor using the same factory.
OEM: Original equipment manufacturer: a factory that builds to your design and your specification.
Pre-shipment inspection: A third-party check of finished goods before they leave the factory, usually on a sample drawn from the packed run. The last moment a problem is still cheap, which is why the balance payment should depend on passing it.
Private label: Selling an existing product under your own brand, usually with your own packaging and minimal changes. The fastest route to market and the easiest to copy.
Sourcing agent: Someone who finds, vets and manages factories on your behalf. Paid by flat fee, by commission on order value, or by a margin on the factory price, and which one applies should be in writing. Read more
Spec sheet: The one-page definition of your product: materials, dimensions, tolerances, finishes, certifications and packaging. Sending the same one to every factory is the only way quotes are comparable.
Tolerance: The amount a dimension is allowed to vary and still be acceptable. Unstated tolerances are the most common cause of a sample you like and a production run you do not.
Tooling: The molds, dies and fixtures made specifically for your product. Usually the first large payment in a custom project, and the thing to settle ownership of in writing before any money moves.
Trading company: A reseller that buys from factories and sells to you, often presenting as the manufacturer. Not automatically wrong, and sometimes the only route at small volumes, but you should know which one you are dealing with before comparing prices. Read more

Freight and shipping

40HC: Forty-foot high cube container: a foot taller inside than a standard forty, giving roughly 76 CBM against 68. The default for light bulky cargo that runs out of space before it runs out of weight. Read more
Air waybill: The air equivalent of a bill of lading. It is a receipt and a contract of carriage but not a document of title, so it does not control release the way an original ocean B/L does.
Bill of lading: The ocean carrier's document: receipt for the goods, evidence of the contract of carriage, and for an original B/L a document of title. Whoever holds it controls release of the cargo.
CBM: Cubic meter, the unit ocean freight is quoted in. Length by width by height in centimeters, divided by one million, times the number of cartons. Read more
Chargeable weight: Whichever is greater, the actual gross weight or a volumetric weight derived from the dimensions. Carriers sell space as well as lift, so light bulky cargo is billed on the room it takes. Read more
Consolidation: Combining shipments from several suppliers into one before departure. Usually cheaper than shipping each separately, and it means one arrival to receive rather than four.
Demurrage: Charges for leaving cargo at the terminal beyond the free time. Charged by the terminal, accrues daily, and grows faster than anyone expects.
Detention: Charges for keeping the carrier's container outside the terminal beyond the free time. Demurrage is the box sitting at the port; detention is the box sitting at your yard.
Drayage: The short truck move between port or rail terminal and a warehouse. Shorter when the warehouse is near the port of entry, which is most of the argument for choosing the right one. Read more
FCL: Full container load: you buy the whole container. Simpler, usually cheaper per unit once you have the volume, and your goods are not handled with anyone else's.
Free time: The days after arrival during which storage and container use are included before demurrage and detention start. Worth knowing exactly, in writing, before the vessel lands.
Freight forwarder: The company that arranges transport on your behalf: books the space, handles origin paperwork and coordinates the moving parts. They arrange carriage rather than owning the ships or aircraft. Read more
Incoterms: The eleven ICC rules that define where the seller's responsibility ends and the buyer's begins. Always write the rule, the named place and the edition together, as in FOB Shenzhen Incoterms 2020. Read more
LCL: Less than container load: your pallets share a container with other shippers' freight. Right for smaller volumes, but consolidation at origin and deconsolidation at destination add both cost and days.
NVOCC: Non-vessel operating common carrier: a licensed party that issues its own bills of lading and sells space it has bought from the actual vessel operator.
Revenue ton: The ocean LCL billing unit, written W/M for weight or measurement: the greater of your cubic meters or your metric tons, treating one CBM as 1,000 kg. Read more
Rolled cargo: Freight that was booked on a sailing and did not make it, usually because the vessel was overbooked. Most common in the weeks before Chinese New Year. Read more
Telex release: Instruction from the shipper letting the destination agent release cargo without presenting original paper bills. Faster than couriering originals, and normally only issued once the shipper has been paid.
Transshipment: Moving cargo from one vessel to another partway. Common on cheaper routings, and each transfer is a place the schedule can slip.
Volumetric weight: Dimensions converted into a weight. Air freight divides cubic centimeters by 6000 as the IATA standard; many express couriers divide by 5000 instead, which costs more. Read more

Customs and compliance

Certificate of origin: A document attesting where goods were produced, sometimes required for preferential duty rates under a trade agreement.
Commercial invoice: The document declaring what is being shipped, to whom, and at what value. It is the basis of the customs entry, and undervaluing it is fraud rather than a negotiating tactic.
Country of origin: Where the goods were substantially made, which is not always where they were shipped from. It drives the duty rate and it must be marked on the product itself, not only on the carton.
Customs bond: A financial guarantee that duties and penalties will be paid. A single-entry bond covers one shipment; a continuous bond covers a year and is normally cheaper by the third or fourth import.
Customs broker: A licensed party that files entries with CBP on your behalf. Customs clearance is licensed work; we coordinate with licensed brokers rather than performing it ourselves. Read more
De minimis: The threshold below which a shipment could historically enter the US duty free, formerly $800 under Section 321. That exemption is suspended, so low-value shipments now require informal or formal entry with duty paid. Any guide still assuming duty-free entry under $800 is out of date, and this is a rule worth re-checking with your broker rather than trusting any page, including this one.
Duty: The tax charged on imported goods, calculated from the HTS classification and the customs value. Estimating duty from a photograph is guesswork; classification is the broker's job.
HTS code: The Harmonized Tariff Schedule classification for your product, ten digits in the US. It determines the duty rate, which makes classifying it correctly the most financially significant paperwork decision in importing.
Importer of record: The party legally responsible for the entry being correct and the duty being paid. Under DDP terms this becomes the seller, which sounds convenient until a classification is wrong and the goods are still yours. Read more
ISF: Importer Security Filing, also called 10+2: data that must reach CBP at least 24 hours before the cargo is loaded onto the vessel at origin. Late filings carry penalties, and it is filed for ocean shipments only.
Packing list: The document detailing cartons, contents, weights and dimensions. It is what customs and your warehouse both check the physical shipment against on arrival.
Section 301: US tariffs applied to specified goods from China under the Trade Act of 1974, stacked on top of normal duty. Which products are covered and at what rate has changed repeatedly, so check the current list against your HTS code.
Tariff: A duty applied to a category of goods, often as trade policy rather than general revenue. Rates move with policy, so treat any published figure as needing confirmation on the day.

Fulfillment and 3PL

3PL: Third-party logistics: a company that stores your inventory and ships your orders. Warehousing, pick and pack, and the carrier relationships, run as a service. Read more
Amazon FBA prep: Preparing inventory to Amazon's inbound requirements before it ships to their fulfillment centers: labeling, poly-bagging, cartonization and shipment plans. Getting it wrong means a rejected or charged-back shipment. Read more
Cross-dock: Moving goods from an inbound truck to an outbound one without putting them into storage. Saves handling and time when the destination is already known on arrival.
Cycle count: Counting a portion of inventory regularly rather than counting everything once a year. Catches drift while it is still small enough to explain.
Dimensional weight: The parcel carrier version of volumetric weight: your box billed on its size when that exceeds its actual weight. Oversized packaging is a recurring cost, not a one-off one. Read more
FIFO: First in, first out: shipping the oldest stock first. Matters most for anything dated, and for anything where packaging changed between production runs.
Kitting: Assembling multiple items into one saleable unit before orders arrive, so a bundle picks as one SKU instead of five. Worth doing whenever a bundle sells in volume.
Last mile: The final leg to the customer's door. The most expensive part of the journey per mile, and the part most visibly affected by how far your inventory started from the customer. Read more
Pick and pack: Pulling the items for an order from storage and packing them for shipment. The core per-order work of fulfillment and usually the largest line on a 3PL invoice. Read more
Putaway: Moving received stock to its storage location and recording where it went. The step that makes inventory findable rather than merely present.
Receiving: Checking an arriving shipment in: counting it, comparing it against the packing list, and recording it. Nothing can be sold until it is received, so a slow receiving process is a stockout in waiting.
Safety stock: Inventory held deliberately above forecast demand to absorb a late shipment or a demand spike. The alternative to it is a stockout, which costs more than the storage.
SKU: Stock keeping unit: the unique code for one specific sellable variant. Every size, color and bundle is its own SKU, and getting this wrong early makes every later count wrong.
WMS: Warehouse management system: the software tracking what is in the building, where it is, and what has been promised to whom.
Zone skipping: Trucking a batch of parcels closer to their destination before injecting them into the carrier network, so they cross fewer zones. Cheaper per parcel at volume, and one reason multiple warehouse locations matter. Read more

Crowdfunding

Add-on: An extra item a backer buys on top of their tier. Add-ons multiply the number of distinct pack combinations, which is where campaign fulfillment complexity actually comes from. Read more
Backer: Someone who pledged to a campaign. Not quite a customer and not quite an investor: they paid months before the product existed and their patience is finite. Read more
Backer survey: The post-campaign process of collecting and confirming addresses. Addresses given at pledge time are months old by the time you ship, and chasing the non-responders takes longer than anyone plans for. Read more
InDemand: Indiegogo's mechanism for continuing to sell after the campaign ends. It keeps orders flowing into the same fulfillment run instead of ending it at the deadline. Read more
Late pledge: A pledge taken after the campaign has ended but before fulfillment, usually through the pledge manager. Real additional revenue, and a reason to keep the quantity decision open as long as the factory allows.
Pledge manager: The tool used after a campaign closes to collect addresses, sell add-ons and take shipping payment. It is where the real shipping list is built, because the campaign data is not one. Read more
Reward tier: A defined pledge level with a defined set of items. Each tier is effectively its own SKU to pick and pack, which is why campaign fulfillment is slower per order than ecommerce. Read more

Money and terms

30/70: The common payment split: thirty percent deposit to start production, seventy percent balance before shipping. The balance is the leverage, so tie it to passing inspection rather than to a date.
L/C: Letter of credit: a bank undertaking to pay the seller once specified documents are presented. Protective for both sides on large orders, and unforgiving about paperwork errors.
Landed cost: The true all-in cost of one unit delivered to your warehouse: unit price, tooling amortized, freight, duty, insurance and handling. It is the only cost number worth pricing against.
T/T: Telegraphic transfer: an international bank wire, the usual way factory payments are made. Fast, cheap and effectively irreversible, which is why the inspection should happen before the balance.
Trade Assurance: Alibaba's order protection program, which holds payment and offers a dispute process for orders placed and paid through the platform. It covers the transaction, not the quality judgment. Read more
Unit cost: The factory's price per piece, before everything else. Comparing unit costs between quotes without comparing landed costs is how the cheapest quote turns out to be the most expensive order. Read more

Still unclear

Ask, and we will answer plainly

If a supplier or forwarder has used a term you cannot pin down, send it over. We would rather explain it than have you agree to something you had to guess at, and if it belongs in this glossary we will add it.

Ask a question Incoterms in full Common questions