Glossary of shipping, insurance and commercial terms
Below is a just a brief summary of key trade terminology. To access a complete dictionary of key trade terms, the ECA recommends companies keep a copy of the Australian Export Handbook handy!
Abandonment: The right a marine assured has to abandon property in order to establish a constructive total loss. An underwriter
is not obliged to accept abandonment, but if he does he accepts responsibility for the property and liabilities attaching thereto, in addition
to being liable for the full sum insured.
Ab Initio: From the beginning.
Acceptance: A bill of exchange signed by the party upon whom it is drawn in token of acceptance of responsibility for its payment.
Act of God: An inevitable event occurring without the intervention of man — such as flood, tempest, or death —
operating in case of certain contracts, such as those of insurers or carriers.
Actual Container Gross Weight: Total weight of a container, i.e. the weight of the payload plus empty container weight,together
with any loose internal fittings.
Actual Pay Load: The difference between the actual gross weight and the gross tare weight of a container.
- The property is completely destroyed;
- The owner is irretrievably deprived of the property;
- Goods change their character to such a degree that they can be said to be no longer the thing insured by the policy;
- The subject matter of the insurance, be it ship or goods on board the ship,
Ad Valorem: According to the value. An advalorum stamp on deeds or documents is one fixed in proportion to the amount of rent
reserved or other element of value expressed in the deed.
Advance Note: A draft on a shipowner for wages, given to a seaman on signing Articles of Agreement and redeemable after the ship
has sailed with the seaman on board.
Air Waybill: A document which is receipt for cargo received by an airline and is evidence of a contract between the consignor
Affidavit: A written declaration on oath.
Affreightment: A contract to carry goods by ship. Charter parties and Bills of Lading are contracts of freightment.
All Containership: Vessel designed to carry containers only and no other cargo.
Allonge: An attachment to a bill of exchange for carrying additional endorsements after the back of the bill has been filled with
All Risks: An insurance term which means that the policy covers the insured property for loss caused by any fortuity. The policy
does not cover inevitable loss.
Ambient Temperature: The temperature of a substance surrounding a body. Thus the ambient temperature of a container would be the temperature of the air to which it is exposed outside.
And arrival: A term relating to return of premiums on a hull policy. The ship must be safe at expiry of the policy; otherwise
no return of premium will be paid.
Arbitration: The submitting of matters of controversy to judgment by persons selected by all parties to the dispute.
Arrest: The detention of a vessel until the purpose of the arrest has been fulfilled.
Assessor: A person who officially estimates the value of goods for the purpose of apportioning the sum payable in the settlement
Assignment: The documentary transfer of title to the contents of a container when signed over to an interested party.
Average: Loss or damage at sea. The distribution of loss among underwriters.
Average (General): Partial loss of the whole adventure deliberately made to prevent total loss of the whole adventure. It may
be sacrifice of property or expenditure incurred to save the adventure. Parties who benefit from a general average loss are required to make
good that loss by contributing in the proportion that the saved value of the party's property bears to the saved value of all interest involved
in the adventure.
Average (Particular): A fortuitous partial loss of insured property proximately caused by an insured peril, but which is not a
general average loss.
Average Adjuster: A person appointed by a shipowner to collect data, guarantees, etc. In relation to general aver age, and to
calculate contributions due from the parties concerned to make good general average losses. The adjuster may also adjust claims on hull insurance
policies on behalf of underwriters.
Average Bond: An agreement signed by all interested parties acknowledging their liability to pay a share of the loss under General
Average Disbursements: Expenditure incurred by the shipowner in connection with a general average act or an act of salvage. Such
expenditure, when properly incurred, is recoverable from the G.A. or salvage fund created by the average adjuster, not from hull underwriters.
Avoidance: The right of an underwriter to avoid a contract of marine insurance. This can occur in the event of a breach of good
faith by the assured or by his broker or, in the case of a voyage policy, where the voyage does not commence within a reason able time after
acceptance of the risk by the underwriter.
Award: The decision given by an arbitrator, to whom a matter in dispute has been referred. An arbitrator states only the effect
of his decision, without reasons — thus differing from a judge, who usually states the grounds of his judgment.
Back Freight: Payment due to the shipowner for the carriage of goods beyond the contract port owing to circum stances beyond the
control of the shipowner.
Bandwidth: Bandwidth of a communications channel refers to the width of the frequency spectrum that can be transmitted over it.
Therefore, it is one of the factors that determine the channel's capacity (or speed) to carry information. The unit of bandwidth is the Hertz
Banker's Indemnity or Guarantee: A form which may be required in the following circumstances by a shipowner to be completed by
the consignee and countersigned by the consignee's bank:
- When release of goods is required without production of the Bill of Lading (e.g. if the B/L has been lost).
- When a clean B/L is called for on the Documentary Credit and the shipowner, for various reasons, wishes to clause the B/L.
- By the Chamber of Commerce and Industry when issuing an ATA Carnet for goods to be temporarily exported from Australia.
Bare Boat Charter: Charterer hires a vessel for a long period, appoints the master and crew, and pays all running expenses.
Barratry: An illegal or fraudulent act committed by the master or crew to the prejudice of the owner or charterer.
Basic Service Charge (BSC): Amount arrived at by the multiplication of freight in tonnes, by the Basic Service Rate (BSR).
Basic Service Rate (BSR): Costs of ocean liner freight, wharfage and other port charges (at both port of departure and port of
Beaufort Scale: A windscale and sea disturbance table by which mariners grade the force of wind and height of waves, thus communicating
the general condition of the sea to others by the use of a wind force number.
Bill of Exchange: An order in writing from one person or firm to another requiring them to pay a certain sum to a person named.
Bill of Lading: A document which is a receipt for cargo received on board and is evidence of the contract between shipper and shipowner. It is also evidence of title to the goods described on it.
Bonded Goods: Imported goods deposited in a Government ware house until duty is paid.
Bonding Company: An organisation that is prepared to undertake an agreement to make good a financial guarantee on behalf of another
responsible for such guarantee. Owners of “arrested” vessels may obtain such a bond to satisfy a court and to obtain release
of the vessel.
Bottomry Bill or Bond: The pledge of a ship, or of her cargo, as security for repayment of money advanced to the master in an emergency, and of no avail if the ship be lost.
Bow Thruster: A propeller used to provide a transverse thrust to the bow of a ship and to assist movement in confined spaces.
BPAY: A national electronic bill payment service operated by the major Australian banks
Break Bulk Cargo: An assembled variety of shipments in a vessel, or one hold of a vessel, to be sorted disseminated) after discharge.
The opposite to bulk cargo where one shipment occupies the hold, or the ship alone.
Breaking Bulk: The initial opening of hatches on entering port and the commencement of discharge of cargo.
Broker: An agent employed (at a customary or an agreed rate of commission or remuneration) to buy or sell goods, merchandise or
marketable securities, or to negotiate insurances, freight rates or other matters, for a principal; the sales of trans actions being negotiated
not in his own name but in that of the principal.
Bulk Terminals: Berths with facilities for mechanical loading or unloading of bulk products such as oil,grain, coal or mineral
Bunker Adjustment Factor (BAF): Surcharge, either as an addition or subtraction from the total freight rate, according to variation in the cost of ship fuel oil.
Byte: Eight bits (see above) grouped together to form a unit of information. Used as a measure of capacity of information storage
media, with kilo (1000; k), Mega (1000 000; M) and Giga (1000 000 000; G) as the commonly used multipliers (that is kB, MB, GB)
Cabotage: Coastal navigation, also used for reservation of transport within a country to its own shipping.
Cargo Shed/Warehouse: Holding sheds, next to shipping berths, where goods are held prior to or after loading.
Carnet: A temporary exportation/importation customs clearance document issued by Chambers of Commerce.
Carriage of Goods by Sea Act 1991: Act of Commonwealth parliament which came into force in 1991, repealing the Sea Carriage of Goods Act 1924 and giving force to the Hague Rules as amended by the Visby and SDR (Special Drawing Rights) Protocols for export of goods by sea from Australia. The Act also makes provision for entry into force of the Hamburg Rules on a date to be proclaimed.
Carrier's Lien: The right to retain possession of goods pending payment of overdue freight charges.
Cars Knocked Down, completely Knocked Down (CKD): Cars completely unassembled and packed into cases. Part knocked down (PKD) i.e.
cars partly assembled and packed into cases.
Cash against documents (D/P): Full shipping documents are sent to a bank or an agent at the port of destination with instructions
that they are to be handed over to the consignee only in exchange for the sum due.
Causa Causans: The cause of a cause of loss.
Causa Proxima: Proximate cause.
Cellular Vessel: Ship specialised for container transport. The holds have vertical guides into which containers are lowered to form secure stacks restrained at all four corners.
Certificate of Origin (CO): A document to prove the place of growth, production or manufacture of goods specified thereon.
Charter-party: An agreement wherein the shipowner hires his vessel to the charterer subject to certain conditions.
Classification Clause: A clause in a cargo insurance contract which specifies the minimum class of vessel required to carry the insured goods. If the carrying vessel is below the class specified, an additional premium is charged by underwriters for the additional risk involved.
Clean Bill of Lading: One in which there is nothing to qualify the admission that the goods are shipped in good order and condition.
Clearance Label: Denotes that a vessel has complied with all the regulations for clearance outward. It is attached to the Victualling Bill by the Customs officer who clears the vessel, and is then known as Outward Clearance.
Clip-on-Unit (COU): A separate refrigeration unit which can be clipped on to an insulated container.
Co-Insurance: The sharing of an insurance risk between two or more parties, other than a contract of reinsurance.
Collapsible Container: Container with hinged sides, top etc. designed to be folded down to a small proportion (mostly about one quarter) of its erected volume. The term may also denote freight container, the major components of which can be dissembled and later reassembled for use.
Combined Transport: Means the carriage of goods by at least two different modes of transport, from a place at which the goods
are taken in charge situated in one country to a place designated for delivery situated in a different country.
Combi Ship: A ship designed to carry both conventional and containerised cargo.
Comite Maritime International (CMI): The international agency of national maritime law associations, authors of the Hague Rules.
Commercial Bill: A fixed short term (up to 180 days) finance facility at a fixed interest rate. An alternative to floating rate overdraft finance.
Commercial Invoice: A document which provides details of the con tract of sale between buyer and seller.
Commixture: A mixture of two or more cargoes which cannot be separated into the relevant consignments.
Common Carrier: One who carries any type of goods, other than a carrier of special goods.
Conference Ship: A ship operated by a signatory to a shipping conference agreement.
Consignee: The firm or persons authorised to receive the cargo and to whom it is consigned.
Consolidator: A transport contractor, carrier, or forwarder who undertakes the transportation of small shipments (see LCL) in
groupage. The consolidator assembles such LCL shipments in a container which will be stripped by his receiving agent in the destination area.
Consortia: Number of shipping companies who have combined their vessel facilities and capital resources in order to offer a shipping
service for the carriage of containers.
Constructive Total Loss: Right of marine assured to claim a total loss on the policy because of either:
- the property has been lost and recovery is unlikely; or
- an actual total loss appears to be unavoidable; or
- to prevent an actual total loss it would be necessary to incur an expenditure which would exceed the saved value of the property. To establish
a claim for constructive total loss the assured must abandon what remains of the property to underwriters and give notice of his intention
to do so.
Consular Invoice: An invoice, prepared on a special form and legalised by the Consul of the importing country, usually required
by the Customs of that country to confirm details and origin.
Container Freight Station (CFS): Other names: container base; consolidation depot; depot;—where parcels of cargo are
grouped and packedm into containers.
Container Load (CL): See FCL. A shipment sufficient in size to ‘fill’ a container either by cubic measurement
or weight, depending upon governing tariff to meet the provided minimums.
Container Part Load: See LCL. Consignment which does not occupy the full capacity of a container nor equals the maximum payload and will, therefore, allow the inclusion of another or other part-loads.
Container Pooling: System whereby ship-owners, manufacturers or operators create a container pool for common use and maximum utilisation.
Container Ship: Vessel specially fitted out for carrying containers. The hold consists of wells into which the containers can
be lowered and stacked in up to eight layers. Containers may be stowed on deck up to four high on top of any one hatch.
Container Tanks: Specially constructed cylindrical container for the carriage of bulk liquids, powders or gases, being supported
within a frame 8ft x 8ft lattice construction and in lengths 20, 30 and 40ft with corner castings and normally fitted with a bottom pick-up
Container Terminal (CT): Area where large-scale container handling parking and storage facilities are available and used for transfer of containers between at least two different transport media (rail, road,sea, barge, air).
Container Vessels: Ship designed to carry ISO (International Standards Organisation) containers, in vertical cells within the holds. The container vessel is designed for maximum speed and efficiency,with a minimum of labour necessary for loading and unloading.
Continuation Clause: A clause providing for the continuation of a hull policy beyond the natural expiry date.
Contract System: An alternative to the Deferred Rebate System. Shippers sign a contract in advance, either for yearly or indefinite
periods, in which they under take to confine all their shipments to Conference Line vessels.
Contributory Value: The value of property saved by a general salvage or salvage act, on which the contribution by each interest to the loss is calculated.
Conventional Berth: Berth suitable for conventional ships, either employing the ship's own derricks or supplementing with shore-based
Conventional Vessel: Ship designed with its own on-board derricks for the loading of goods into the holds.
Convertible Currency: Any currency other than sterling, U.S. dollars or Canadian dollars.
Counter Guarantee: An undertaking given by a cargo assured to an underwriter agreeing to reimburse the under writer in the event
that the issue of the underwriter's guarantee to pay a general average contribution results in payment in excess of the amount properly due
under the policy.
C.T. Document: Means Combined Transport Document which is a document evidencing a contract for the performance and/or procurement
of performance of combined transport of goods.
C.T.O. Combined Transport Operator: A person (including any corporation, company or legal entity) issuing a combined transport
Cube Out: When the volumetric capacity of the container has been reached in advance of the permitted weight limit.
Currency Adjustment Factor (CAF): A charge levied by the ‘Ocean Carrier’ over and above the ocean freight
rate to cater for fluctuations over a period in actual currency exchange rates as compared to those exchange rates set by the conferences as
applying to various sailings.
Current Domestic Value (CDV): Price at which the supplier is prepared to supply to any purchaser for home consumption in the country
of export and at the date of export, similar goods in the usual wholesale quantities.
Customary Deductions: New for old deductions made by an average adjuster from the cost of repairs for general average damage to a ship over 15 years old.
Dead Freight: Freight rate which is paid on empty space in the vessel when the charterer is responsible for the freight rate of a full cargo. It should be paid before sailing.
Deadweight Tonnage: This is the actual number of tons of cargo, bunkers, stores, etc., that can be put on board a ship to bring her down to her "marks".
Deals: Lengths of timber between 5ft. and 30ft in length and between 2 inches and 9 inches thick.
Deck Log: Ship's log recording general details concerning the running of the ship including accidents concerned with ship or cargo.
Defeasible Interest: An insurable interest that ceases during the transit of goods.
Deferred Account: A system allowing the shipowner to pay his annual premium by instalments.
Demise Charterparty: An agreement whereby the charterer takes over control costs and responsibilities of the vessel for an agreed
Demurrage: The sum agreed by charter to be paid as damage for delay beyond the stipulated time for loading or discharging. It
should be collected daily by the master or agent.
Deposit Receipt: A receipt given in respect of a general average deposit payment.
Derelict: A vessel that has been abandoned by the crew but has not sunk.
Detention: Where demurrage is paid for an agreed number of days, any further delay is termed "Detention".
Devanning: Removal of contents from a container (some times called stripping or discharging).
Deviation: A departure by a ship from the agreed customary route of the voyage, with the intention of returning to that route
to complete the voyage. Where the ship deviates without lawful excuse the underwriter, unless the policy provides otherwise, is discharged
from all liability from the time the vessel deviates, and insurance cover does not reattach if and when the vessel regains her original course.
Disbursements: Expenses incurred by the shipowner in connection with running a ship.
Dispatch Money: When so agreed in the charter-party, this is paid by the shipowner to the charterer as a result of the vessel
completing loading or discharging before the stipulated time.
Displacement Tonnage: This term is chiefly used when referring to warships and is the actual weight of water displaced by the
vessel when floating at her loaded draught.
Documents against Acceptance (D/A): The shipper forwards shipping documents attached to a draft for the sum due, to a bank or agent at the port of destination to present to the consignee who, upon acceptance of the draft, receives the documents to obtain release of the goods before payment for them.
Documents against Payment (D/P): See cash against documents.
Documentary Credit: (see Letter of Credit)
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