In the entire process of export trade, professional terms undoubtedly play a key role as the backbone. From the initial negotiation between the two parties to the contract, to the transportation and handover of goods, and the subsequent customs declaration, settlement of foreign exchange and other links, professional terms are like precise navigation, clearly guiding the behavior of buyers and sellers, and clarifying important matters such as the scope of their respective responsibilities, the limits of risk bearing, and the division of costs. Therefore, it is very necessary for people engaged in export trade to master these professional terms. The following is a list of commonly used professional terms in export trade. See how much you know?

1. Trade Terms

1. FOB（Free On Board）：FOB means Free on Board, also known as "Free on Board". In export trade, according to the provisions of this term, the seller needs to bear many responsibilities. First of all, the seller must load the goods on the vessel designated by the buyer at the port of shipment and within the specified period specified in the contract, and notify the buyer of this situation in a timely manner. At the same time, the risk transfer of goods also has clear boundaries, that is, when the goods cross the ship's rail at the port of shipment, the risk of loss or damage of the goods is transferred from the seller to the buyer. In addition, the seller must obtain an export license or other official documents at his own risk and expense, and is responsible for handling export formalities and providing the buyer with relevant documents that can prove that he has fulfilled his delivery obligations as required.

2. CFR（Cost and Freight）： Refers to cost and freight (specified port of destination). In the transaction process, the seller has a clear division of responsibilities. He needs to be responsible for chartering a ship or booking a container, delivering the goods to the ship bound for the designated port of destination within the shipping period specified in the contract, and bear all costs and risks until the goods cross the ship's rail at the port of shipment, and pay the freight. It should be noted that the basis for the division of CFR and CIF is the same in many aspects, but the key difference lies in the insurance handling aspect.

3. The CIF（Cost, Insurance and Freight）: Cost, Insurance and Freight, commonly known as "CIF". The seller's scope of responsibility is increased compared to CFR. In addition to being responsible for chartering ships and booking cargo space, paying freight, loading the goods on board at the specified port of shipment and within the specified period, and notifying the buyer in a timely manner after loading, the seller also needs to arrange cargo insurance for the buyer and pay the insurance premium, so as to ensure that the risks of the goods during transportation can be protected and the buyer's rights and interests can be better implemented.

4. EXW（Ex Works）: Ex-works price, the buyer is responsible for picking up the goods from the seller's factory or warehouse and is responsible for transportation and insurance costs. The seller does not handle export customs clearance procedures or load the goods on any means of transport.

5. FCA（Free Carrier）: Free Carrier means that the seller has completed the delivery of the goods as long as he hands over the goods to the carrier designated by the buyer at the designated location and completes the export customs clearance procedures.

2. Transport and related terms

1. B/L（Bill of Lading）: Bill of lading, a receipt issued by a shipping company, proves that the goods have been loaded on board and is the main document used by importers to pick up the goods.

2. not（Twenty-foot Equivalent Unit）: Twenty-foot equivalent unit used to measure the cargo capacity of container ships.

3. LCL（Less than Container Load）: LCL, goods that are less than a full container can be transported in the same container with other goods.

4. FCL（Full Container Load）： Full container refers to a whole container of goods.

5. AND（Estimated Time of Arrival）: Estimated time of arrival.

6. ETD（Estimated Time of Departure）: Estimated departure time.

3. Payment and related terms

1. T/T（Telegraphic Transfer）: Telegraphic transfer, a common payment method that uses foreign exchange cash for settlement, and is divided into front TT and back TT.

Advance TT means that the buyer remits the payment to the foreign exchange bank account designated by the seller through the bank before the seller ships the goods. For the seller, this method can receive the payment in advance and the risk is relatively small. However, for the buyer, the payment needs to be made first, and there is a risk that the goods cannot be received on time, in accordance with quality and quantity. Therefore, it is usually suitable for situations where the buyer trusts the seller or the transaction amount is small.

Post TT means that the seller ships the goods first, and then the buyer remits the payment to the seller. The seller needs to provide documents to prove that the goods have been shipped. This method is more favorable for the buyer, who can first inspect the goods to confirm that they meet the requirements before paying, but it is more risky for the seller.

2. L/C（Letter of Credit）： Letter of credit is divided into clean letter of credit and documentary letter of credit. In the actual operation of export trade, documentary letter of credit is more widely used. Documentary letter of credit is a kind of bank credit, which has a unique operating mode and characteristics in ensuring that exporters can recover the payment for goods.

As for documentary letters of credit, when the buyer and seller reach a transaction intention, the buyer will apply to the bank where he opened an account to open a documentary letter of credit. The bank will review the buyer's credit status, transaction amount and other factors. After the review is passed, the letter of credit will be issued and the seller's bank will be notified. The seller's bank will then transfer the letter of credit to the seller. The letter of credit will specify in detail various transaction conditions such as the specifications, quantity, shipping period, and document requirements of the goods. After receiving the letter of credit, the seller will prepare and ship the goods according to its requirements, and prepare the corresponding documents, such as bills of lading, invoices, packing lists, etc., and then submit these documents to the bank. As long as the documents submitted by the seller meet the requirements of the letter of credit, the issuing bank must bear the payment responsibility, which greatly protects the exporter's rights and interests in receiving payments.

3. D/P（Document against Payment）: Payment against documents. After the exporter sends the goods, he obtains the bill of lading from the freight forwarder and then submits the full set of documents to the bank. The importer can only get the documents for picking up the goods and clearing customs after paying the full amount of the goods to the importer's entrusted bank.

4. D/A（Document against Acceptance）D/A: After the exporter ships the goods, it will issue a forward bill of exchange and present it to the importer through the bank together with the commercial documents. After the importer accepts the bill of exchange, he can obtain the commercial documents, collect the goods, and pay when the bill of exchange matures.

IV. Fees and related terms

1. DemurrageDemurrage: An additional charge imposed by a warehouse or port when goods are not picked up within a specified time.

2. DetentionDetention fee: An additional fee is charged when the container is not returned to the shipping company within the specified time.

3. BAF（Bunker Adjustment Factor）: Fuel surcharge, which is applicable on most routes, but the standards vary.

4. THC（Terminal Handling Charge）: Terminal handling fees will be charged in Hong Kong and other places.

Conclusion

Export trade is a field that is constantly evolving and highly professional. The relevant professional terminology also needs to be continuously studied in depth and applied flexibly in actual business. We cannot be satisfied with the basic understanding of common terminology alone. We must continue to expand and update our knowledge reserves as the trade situation changes, the rise of new modes of transportation, and the adjustment of policies and regulations.