Difficult import terminology explained

Logistics service providers or customs forwarding agents use jargon and abbreviations. In part because those terms are used internationally. Do you come across things in your work that require further explanation? Then contact the KVK Advice team. In this article, we explain 13 export terms in simple languages. For example, groupage, FCL and detention.

BAF

In international trade, the abbreviation BAF means Bunker Adjustment Factor is an increase on the freight costs charged by shipping companies. Fuel prices change frequently. At the time the shipping company makes a price quotation, the fuel price is sometimes lower than at the time the customer pays. With this surcharge, shipping companies reduce the risk of price fluctuations on fuel.

CAF

CAF stands for Currency Adjustment Factor. Shipping companies use this surcharge to absorb currency fluctuations. For example, when they make a price quotation in US Dollars. And the customer pays in euros. Sometimes there are several months between the price quotation and payment. In that time, the exchange rate can change. Shipping companies avoid negative consequences for their prices with the CAF.   

Demurrage

Sometimes loading or unloading containers at the terminal takes longer than planned. Suppose a ship is allowed 6 hours at the port. Due to unloading problems, it takes 10 hours. The shipping company then charges demurrage. There is often a fixed rate per day or hour. Ultimately, you pay these extra costs to your carrier. 

Detention

Detention is similar to demurrage. In detention, the importer uses the container longer than agreed. For example, you receive a full container of goods. After releasing the container at the terminal, the carrier deposits it at your business. Due to illness of your staff, unloading takes longer than you had agreed with the carrier. For holding the container longer, the service provider charges detention fees. Usually a fixed rate per day or hour applies.

Customs forwarding agent

Customs forwarding agents are also called customs agents. These people or businesses handle customs formalities for you. Think of import and export declarations of your products at customs. They also check whether your shipment is accompanied by the correct licences, certificates and other export documents. And whether you have filled in these forms correctly.

Forwarding agent

Forwarding agents are intermediaries who organise the international transport of your products. Such as arranging freight transport, storage, and distribution. They also arrange transport insurance and prepare the necessary documents for you. To do this, they conclude contracts with various parties within the logistics chain. For example, carriers, airlines, customs agents, and shipping companies.

FCL

FCL stands for Full Container Load. All goods in the container belong to one owner. The Bill of Lading (B/L) is in their name. The shipper pays for a full container, whether it is full or not.

Fumigation

Some suppliers use wooden packaging. Unwanted fungi and pests can live in this packing material. Specialist companies use fumigation to kill pests with gases. Next, the shipment is stamped and certified. And the shipment goes on transport. When the container arrives in the Netherlands, it is first disinfected and degassed. This is called defumigation. Only then does customs open and check your shipment in the container.

Groupage

In groupage, carriers combine smaller loads from several customers. Several small shipments combine to form one big cargo. The owners of the loads share the cost of the container or truck. The advantage for smaller businesses is that they can easily arrange their transport at a lower cost. Groupage in a container is also called LCL.

LCL

In container transport, groupage is also called LCL. This stands for Less than Container Load. In an LCL shipment, the container goes to a warehouse for unloading and sorting the goods. Shippers only pay for the space they use in a container. This container holds shipments from different customers. They share the cost of the container.

Release into free circulation

In the customs declaration, you specify what you want to do with the goods. This is called placing goods under a customs regulation (in Dutch). For example, you specify 'release into free circulation'. After checking and receiving import duties and VAT, customs releases your products. The goods are now so-called union goods. You can use and sell them freely on the EU market.

Import declaration

When importing products from countries outside the EU, you declare the goods to customs. When making the import declaration, you tell customs what you want to do with the products. For example, that you want to release them into free circulation. At that point, you pay import duties, taxes and perhaps other levies.

You declare digitally. For this, you need a registration with customs and special software. Usually, a carrier or logistics service provider arranges the import declaration. You can also do this yourself. In the import declaration, you provide information about the products in the shipment. About the type of product and the value, for example. And from which country you receive the goods. Completing your import declaration correctly prevents delays at customs.

THC

Terminal Handling Charges (THC) are fees you pay to shipping companies for various activities at the port. For example, loading, unloading, storage, or moving a container to a truck or train. Charges vary by country, port terminal, and shipping company. The size of your container and the duration of storage also count towards the price. The agreed Incoterm® determines who pays these costs. The sender or the receiver.