The commodity-trade glossary.

CFR (Cost and Freight)

An Incoterms 2020 sea-transport rule where the seller pays the cost and freight to bring the goods to the named destination port, but risk transfers to the buyer once the goods are on board at the origin port.

CIF (Cost, Insurance and Freight)

An Incoterms 2020 sea-transport rule like CFR, but the seller also buys marine insurance (minimum cover) for the buyer during carriage. Risk still transfers when the goods are on board at the origin port.

CIP (Carriage and Insurance Paid To)

An Incoterms 2020 rule like CPT, but the seller also provides insurance for the buyer — all-risks cover under the 2020 revision. Risk transfers when the goods are handed to the first carrier.

CPT (Carriage Paid To)

An Incoterms 2020 rule for any transport mode where the seller pays carriage to the named destination, but risk transfers to the buyer when the goods are handed to the first carrier.

DAP (Delivered at Place)

An Incoterms 2020 rule where the seller bears cost and risk to deliver the goods, ready for unloading, at the named destination. Import clearance and unloading are the buyer responsibilities.

DDP (Delivered Duty Paid)

An Incoterms 2020 rule representing the seller maximum obligation: the seller delivers the goods cleared for import, with all duties and taxes paid, at the named destination.

DPU (Delivered at Place Unloaded)

An Incoterms 2020 rule where the seller bears cost and risk to deliver and unload the goods at the named destination. It is the only Incoterm that requires the seller to unload.

EXW (Ex Works)

An Incoterms 2020 rule where the seller makes the goods available at their own premises and the buyer bears all costs and risk from that point, including loading and export clearance. It places the least obligation on the seller.

FAS (Free Alongside Ship)

An Incoterms 2020 rule for sea and inland waterway transport where the seller delivers when the goods are placed alongside the vessel at the named port of shipment. Risk and onward cost pass to the buyer there.

FCA (Free Carrier)

An Incoterms 2020 rule where the seller delivers the goods, cleared for export, to a carrier nominated by the buyer at a named place. Risk transfers at that hand-over. It suits any transport mode, including containers.

FOB (Free on Board)

An Incoterms 2020 rule for sea and inland waterway transport where the seller delivers when the goods are on board the vessel at the named port of shipment. Risk transfers at that point and the buyer arranges and pays for the main carriage.

Advance Payment

Payment made by the buyer before the goods are shipped. It removes the seller payment risk and shifts performance risk to the buyer.

Documentary Collection

A payment method where banks handle the shipping documents and release them to the buyer against payment (D/P) or against acceptance of a draft (D/A). It is cheaper than a letter of credit but offers less payment assurance.

Factoring

The sale of trade receivables to a financier at a discount for immediate cash, transferring collection of the invoice to the factor.

Forfaiting

The purchase of an exporter medium-term receivables, often backed by a letter of credit, by a financier without recourse — giving the exporter immediate non-recourse cash.

Letter of Credit (LC)

A bank written undertaking to pay the seller once compliant shipping documents are presented. It substitutes the bank creditworthiness for the buyer, reducing payment risk in cross-border trade.

Open Account

A trade arrangement where goods are shipped and delivered before payment is due, leaving the seller to carry the credit risk. It is common between trusted, established counterparties.

Chain of Custody

The documented, unbroken record of who handled a commodity at each stage from origin to export, used to prove provenance and support compliance and certification claims.

Due Diligence Statement (DDS)

A formal declaration, required under EUDR, in which an operator confirms it has assessed and mitigated the risk that a consignment is linked to deforestation, referencing supporting evidence and geolocation.

EUDR (EU Deforestation Regulation)

Regulation (EU) 2023/1115, which requires operators placing listed commodities on the EU market to prove they are deforestation-free and legally produced, with plot-level geolocation evidence.

HS Code

The Harmonized System code: a standardized international numbering system that classifies traded goods for customs, tariffs, and trade statistics.

Traceability

The ability to follow a commodity and its attributes through the supply chain, linking an exported lot back to its origin — farm, plot, or mine.

Bill of Lading

A document issued by a carrier acknowledging receipt of cargo for shipment. It serves as a receipt, evidence of the contract of carriage, and — when negotiable — a document of title to the goods.

Certificate of Origin

A document certifying the country in which a commodity was produced, used for customs clearance, tariff preferences, and trade-agreement eligibility.

Phytosanitary Certificate

An official document issued by a plant-health authority certifying that a plant or plant product meets the importing country phytosanitary (pest and disease) requirements.

Assay

A laboratory analysis that determines the composition, purity, or metal content of a mineral sample, used to value and verify mineral consignments.

Grade

A quality classification assigned to a commodity against a defined standard — for example screen size, defect count, or moisture — which determines its market value.

Aggregator

An intermediary that consolidates output from many smallholder farmers or small producers into export-scale volumes, often handling bulking, grading, and first-mile logistics.

Consignment

A quantity of goods shipped together under a single contract or transport document — the unit at which trade, inspection, and compliance are typically assessed.