Mini Glossary of Cargo Terms
All Risks - All fortuitous causes of loss. It does not embrace inevitable loss such as wear and tear.
Air Waybill - A bill of lading issued by an airline acknowledging receipt of merchandise and indicating conditions of carriage.
Basis of Valuation - A formula for calculating the basis of settlement of claims for losses which occur prior to declaration.
Bill of Lading - The most common form of evidence of contract of affreightment, usually a negotiable document, serving three purposes:
- Evidence of a contract of carriage between ship owner and shipper.
- Ship owner's receipt for the goods.
- Evidence to claim delivery of cargo from carrier.
Certificate of Insurance - A document produced by the insurance company (or the insured or by brokers on their behalf) as evidence that insurance is in effect. The assured may assign his rights under this negotiable document to a third party, usually the consignee, by endorsing the reverse of the certificate.
C and F (CFR) - Cost and Freight, an Incoterm sale term under which the buyer makes his own insurance arrangements for goods throughout the period of transit.
CargO - Online Certificate Issuing facility for Your Marine Open Covers. A service from Norwich Union to enable you to generate Marine certificates online. Online instructions for use.
Commercial Invoice - A document issued by the seller to the buyer which gives details of the merchandise sold, number of units being shipped, cost per unit and terms of sale.
Consignee - Person or firm to whom the cargo is shipped, often the buyer.
Consignor - Person or firm who ships the cargo to the consignee, also called the shipper, often the seller.
Facultative Policy - Single Voyage insurance for those clients who require transit cover on an infrequent basis.
Free on Board (FOB) - An Incoterm. Goods sold under such terms are at the risk of the seller until loaded onto the vessel.
General Average - Loss arising through an extraordinary, voluntary sacrifice of any part of the ship or cargo, or an expenditure, to safeguard the ship and the rest of the cargo.
House Airway Bill - An air waybill issued by a freight forwarder/consolidator for air shipments.
ICC - Institute Cargo Clauses. There are three basic sets of these clauses (A, B and C). The (A) clauses cover All Risks, subject to specified exclusions. The (B) and (C) clauses cover specified risks also subject to specified exclusions.
Letter of Credit - In simple terms this is a method of payment between buyer and seller. The buyer opens a letter of credit in favour of the seller at his local bank by depositing the amount of the purchase price and dictating certain documents which the seller must present in order to obtain payment. The Letter of Credit will be sent to a bank in the vicinity of the seller and upon presentation of the documents called for, the local bank will release payment.
Ordinary (or Normal) Course of Transit - Orderly transit of merchandise from the point of origin to the final destination, without interruptions or delays resulting from the action or inaction of any party at interest, i.e: seller or buyer.
Seaworthiness - There is an implied warranty in every voyage policy that the ship must be seaworthy at the commencement of the insured voyage or, if the voyage is carried out in stages, at the commencement of each stage of the voyage. To be seaworthy, the ship must be reasonably fit in all respects to encounter the ordinary perils of the contemplated voyage, properly crewed, fuelled and provisioned, and with all her equipment in proper working order. Cargo policies waive breach of the warranty except where the insured or their servants are privy to the unseaworthiness.
Strikes Cover - Limited to damage caused to insured property by strikers, locked out workers and persons involved in a labour dispute. Does not include loss or expense incurred as a result of strikes.