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 a number of export terms in simple language. For example, groupage, FCL and detention.

Anti-dumping duties

An anti-dumping duty is an additional tax on top of the import duty. You pay this levy if a supplier from outside the EU “dumps” products on the EU market at a significantly lower price than normal. The EU uses the anti-dumping duty to protect fair trade.

BAF (Bunker Adjustment Factor)

In international trade, BAF means 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 (Currency Adjustment Factor)

Shipping companies use the CAF 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.   

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.

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.

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 (Full Container Load)

With FCL, 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

The process of treating wooden products or packaging materials with gases to kill pests and mould is known as fumigation. Specialist firms carry out this work. After that, staff stamp the load and give a certificate before transport.

If a container still contains fumigation gases upon arrival in the Netherlands, staff must first degas it. This step is called defumigation. Only then can the Customs Administration of the Netherlands open and inspect your shipment.

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.

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.

LCL (Less than Container Load)

In container transport, groupage is also called LCL. 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.

Quota

A quota is a limit set by a country on the amount of imports. For example, a maximum you can import of a certain product. Sometimes a quota states up to what maximum of the imported product a reduction in import duties applies. This is called a tariff quota.

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.

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.