Navigating the world of international trade, customs, and logistics can be complicated, but it doesn't have to be. Understanding key shipping terminologies such as 'consignee' and 'FCL' can help you avoid costly delays and mistakes. This article serves as a guide to common shipping terms for small businesses and e-commerce retailers based in Indonesia.
Essential Shipping Terms
Pelindo, the nation's state-owned port operator, reported a revenue of Rp 23.5 trillion (US$1.5 billion) by the 3rd quarter of 2024.1 The figure represents a 4% year-on-year increase, signaling that Indonesia's ports are only getting busier. Incomplete or incorrect shipping information, then, can understandably result in severe delays or the incurring of extra storage charges. Here is a summary of key international shipping terms every small business owner keen on global expansion should know.
1. Bill of Lading (BOL)
The Bill of Lading (BOL) is a legal document issued to the shipper by the carrier to acknowledge that their goods have been duly received and serves as the contract of carriage that binds both parties. It also acts as a title that transfers ownership of the goods to the buyer upon reception.
The Bill of Lading can also be used to process shipments, insurance claims and facilitate customs clearance.
2. Buyers Consolidation
Buyers Consolidation involves bundling orders from multiple suppliers in various countries into dedicated Full-Container-Load (FCL) containers for direct delivery. This process is designed to reduce overall shipping costs for the buyer by increasing the container’s load factor compared to managing individual Less-Than-Container-Load (LCL) shipments. LCL refers to a shipping method where the shipper has insufficient cargo to fill an entire container, while FCL describes the inverse.
3. CMR
CMR stands for "Convention on the Contract for the International Carriage of Goods by Road" in English and "Convention relative au contrat de transport international de merchandises par route" in French. It defines the legal dispositions pertaining to the international transportation of goods by road, known as the CMR Waybill.
4. Consignee
The consignee is the party designated to receive a shipment, typically the buyer. While they are often the final receiver of the goods, this is not always the case. Their name and address are essential details on the shipping documents, facilitating both the transfer of ownership and the delivery process.
5. Cross Trade
Cross Trade defines the movement of cargo directly from its origin country to its destination country without entering the country where the shipper is registered. This process offers significant time and cost savings by bypassing unnecessary customs procedures.
6. Dropshipping
Dropshipping is an e-commerce fulfillment method where the retailer doesn't maintain product inventory. Instead, when an order is placed, the supplier handles stocking and packing, before shipping the product directly to the customer. This model minimizes the retailer's upfront logistics costs.
7. Full Container Load (FCL)
This method of shipping reserves one whole container, regardless of its size or type, exclusively for your shipment. This method is economical for large shipments but often results in higher initial costs. FCL shipments are ideal for large, high-value or fragile shipments.2
8. House Airway Bill (HAWB)
A House Airway Bill (HAWB), or Airway Bill, is an essential shipping document which you will find in every glossary of shipping terms. It details the terms and conditions of the carriage of the goods. The HAWB is issued and signed by the freight forwarder upon receiving the shipment. It contains both the shipper’s and receiver's details and contains information on the shipment’s weight, dimensions, and contents.
9. Incoterms®
Incoterms® are international commercial terms that clearly define the rights and obligations of the seller and buyer regarding the delivery of goods. They provide a common framework for understanding who organizes transport, bears associated risks, and is responsible for customs compliance and security. The latest edition is Incoterms 2020, which replaced the previous set of rules from 2010.
10. Less Than Container Load (LCL)
Less Than Container Load (LCL) involves consolidating your cargo with shipments from other shippers into one container. This method is ideal if your goods don't require an entire container, offering significant reductions in both logistics costs and carbon emissions. LCL shipping is suitable for small to mid-sized shipments of non-perishable and cost-sensitive cargo.2
11. Third Party Billing
Third Party Billing occurs when the shipping costs for a commercial shipment are paid by a party who is neither the original shipper nor the consignee. This arrangement is common in complex global supply chains, where a central logistics partner manages and pays the transportation costs.
Glossary of Customs & Shipping Terms
Our courier services in Indonesia have been empowering the growth of small businesses for more than 50 years. Knowledge of customs-related and logistics terms has played a key role in navigating international shipping. Here is some terminology you should know.
1. Customs Clearance
Official permission from the Directorate General of Customs and Excise (DJBC) is necessary for the importing or exporting of goods. The customs clearance process requires several documents, such as a bill of lading, invoice and a packing list. Additional documentation such as a Certificate of Origin may also be required to determine eligibility for preferential tariffs.
2. Customs Duties
Customs Duties (or Import Duties) are taxes levied on goods brought into a country. These are generally assessed based on the goods' tariff classification using HS Codes. Besides standard duties, some goods may also be subject to other taxes, including excise or anti-dumping duties.
3. Harmonized System (HS Code)
Harmonized System (HS) Codes are internationally recognized numerical codes used for classifying goods. Implemented by the World Customs Organisation (WCO), these codes are recognized in over 200 member countries and territories. Utilizing the correct HS Code is crucial for standardized tariffs, accurate duty calculation, and ensuring smooth customs compliance globally. There are several ways you can validate HS Codes for goods in Indonesia. One way is to check the BTKI (Buku Tarif Kepabeanan Indonesia), or the Indonesian Customs Tariff Book. You may also access the Commodity Detail Search on the Indonesia National Single Window (INSW).3
Partner with the Right International Courier
Now that you have a better understanding of these shipping and logistics terms, it's time to step up your game. Simplify global shipping with DHL Express, a trusted international courier service that delivers more than 1.8 billion parcels each year to 3 million customers worldwide.4
Register for a DHL Express business account now to grow with us.
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