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Navigating Logistics and Supply Chain Terminology can be confusing. To help guide you, below is a list of acronyms, terms, words, and phrases to help clarify and define many of the things you may encounter.
Act of God
A natural event, such as flood, storms, or lightning, that a carrier has no control over and therefore cannot be held accountable for.
All-Risk Cargo Insurance
One of the broadest forms of coverage available, providing protection against all risks of physical loss or damage from any external cause except for what may be excluded in the policy.
Antidumping Duty (ADD)
Antidumping duty is a trade remedy in the form of a special duty on goods being sold foreign companies into U.S. commerce at less than fair market value.
ATA Carnet
An international customs document allowing the temporary import and export of goods without paying duties or taxes.
Bill of Lading (BOL)
A legal document issued by a carrier detailing the goods being shipped and serving as a receipt and contract of carriage.
Bonded Carrier
A custodian of merchandise who transports goods that have not been cleared by CBP for entry into U.S. commerce by truck or rail from one CBP port to another on an in-bond basis.
Bonded Warehouse
A secure storage facility where goods can be stored duty-free until they are officially imported.
Broker-Carrier Agreement
A contract outlining the terms and conditions between a freight broker and a carrier.
Burden of Proof
Responsibility of the shipper to prove that a loss is due to the negligence of a third party such as the carrier.
C-TPAT (Customs Trade Partnership Against Terrorism)
A voluntary program promoting security in supply chains and partnerships with U.S. Customs and Border Protection.
Cargo Insurance
Protection against financial losses due to the damage, loss, or theft of goods during transit.
Cargo Legal Liability Insurance
Insurance coverage that protects carriers or freight forwarders against legal liability for loss or damage to cargo while in their custody or control.
CARM (CBSA Assessment and Revenue Management)
A digital platform developed by the CBSA to modernize and streamline the collection of duties and taxes for importers and trade partners in Canada.
Carrier Limits of Liability
Restrictions on a carrier’s financial responsibility for loss or damage to cargo.
CBP (U.S. Customs and Border Protection)
The federal agency responsible for enforcing customs laws, regulating trade, and securing U.S. borders by overseeing the entry of goods and travelers.
CBSA (Canada Border Services Agency)
The Canadian government agency responsible for border enforcement, customs processing, and trade facilitation, ensuring compliance with import and export regulations.
Commercial Invoice
A key document in international trade outlining the transaction details, including the buyer, seller, goods, and value.
Countervailing Duty (CVD)
A trade remedy in the form of a special duty (countervailing duty) assessed on goods being sold by a foreign company to the U.S. with the benefit to the seller of a bounty, grant, or countervailable subsidy paid by a foreign government.
Customs Bond
A surety bond protecting CBP from loss or damage due to non-payment of DTF or failure to comply with legal/regulatory requirements applicable to imported goods or other trade or port-related activities.
Customs Broker
A licensed professional who facilitates the import and export of goods by ensuring compliance with customs regulations and managing documentation.
Customs Clearance
The process of submitting documentation and paying duties to allow goods to enter or leave a country.
Customs Duties
Taxes imposed by governments on goods imported or exported across borders.
Customs Valuation
The process of determining the value of imported goods for duty assessment.
Cyber Liability
The risk and financial loss associated with cyberattacks or breaches of sensitive data.
Declared Value
The shipper may increase the carrier’s stated limits of liability by declaring value for an agreed upon price. Declared value is not insurance.
Demurrage Fees
Charges levied when cargo remains at a terminal beyond the allotted time for loading or unloading.
Detention Charges
Fees incurred when a container is held by the consignee beyond the agreed free time.
Digital Freight Forwarding
A technology-driven approach to managing freight operations, including quoting, booking, and tracking.
Duration Clause
Time frames typically defined in Warehouse to Warehouse, Duration of Risk, Marine Extension Clauses, or something similar, these clauses define when cargo insurance coverage begins and when it ceases.
Electronic Data Interchange (EDI)
A digital method for exchanging business documents, such as invoices and purchase orders, between companies.
Errors and Omissions Insurance
A liability insurance policy covering businesses for professional mistakes, negligence, or failure to meet contractual obligations.
Excluded Perils
Certain perils may be excluded from coverage in an All Risk policy. These perils may be found in the Exclusions in the policy language.
Export Declaration
A document required by customs to declare the details of goods being exported, including value and destination.
FMC (Federal Maritime Commission)
The Federal Maritime Commission is an agency regulating the activities of ocean freight forwarders, NVOCCs, & ocean carriers.
FMCSA (Federal Motor Carrier Safety Administration)
A division of the U.S. Department of Transportation that regulates and enforces safety standards for commercial motor vehicles to improve road safety and reduce accidents.
Foreign Trade Zone
A foreign trade zone is a structure or area officially designated as a place for storage, manipulation, assembly, etc. of goods that have not been entered into U.S. commerce after importation and prior to either entry or exportation.
Fourth-Party Logistics (4PL)
A logistics model where a single provider manages all aspects of the supply chain for a company.
Free of Particular Average (FPA) Cargo Insurance
Sometimes referred to as ‘named perils’ a coverage type that limits recovery of partial losses to specified perils.
Freight Classification
A categorization system used in shipping to determine the cost and handling requirements of goods.
Freight Consolidation
Combining multiple smaller shipments into one larger load to optimize transportation costs and efficiency.
Freight Forwarder
A logistics expert or company that arranges the transportation of goods, including handling regulatory, documentation, and routing needs.
General Average
A maritime principle where all parties involved in a sea voyage share the costs associated with a voluntary sacrifice to save the vessel or cargo.
General Indemnity Agreement (GIA)
A contract in which one party agrees to reimburse another for any losses, damages, or costs incurred as a result of a specific obligation or liability, often used in surety bonding.
Geographic Limits
The Geographic Limits in a cargo insurance policy state where in the world the policy covers a loss and where a loss would not be covered.
Harmonized Tariff Schedule (HTS)
A standardized classification system for goods used to determine customs duties and trade regulations.
Hazmat Regulations
Rules governing the transportation of hazardous materials to ensure safety and compliance.
Import Bond
A type of surety bond ensuring that import duties and fees will be paid to customs authorities.
Import Quotas
Limits on the quantity or value of certain goods that can be imported during a specific timeframe.
Importer Security Filing (ISF)
A requirement of CBP for an electronic data filing which contains advance information on shipments laden onto ocean vessels which will arrive at a U.S. port.
Incoterms® Rules
Standardized trade terms that define the responsibilities of buyers and sellers in the shipping and delivery of goods.
Inherent Vice
A loss caused by the inherent nature of the thing insured and not the result of a casualty or external cause.
Insurable Interest
In order to be able to collect under a cargo policy, a company or individual must suffer a financial loss if the insured cargo is lost or damaged while covered by the policy.
Insurance
A contract that transfers risk of loss from a policy holder to an insurance company in exchange for paid premium and adherence to terms and conditions.
Insured
The policy holder in an insurance contract.
Insurer
The insurance company in an insurance contract.
IoT in Logistics
The integration of Internet of Things (IoT) devices to enhance visibility, tracking, and efficiency in logistics operations.
Letter of Credit (LOC)
A financial instrument issued by a bank guaranteeing payment to a seller if specific conditions are met.
Logistics Automation
The application of technology to optimize logistics processes, such as routing, tracking, and warehousing.
Logistics Provider Liability
The legal responsibility of logistics providers for loss, damage, or delays involving transported goods.
Logistics Service Provider (LSP)
Any company who assists a cargo owner with some aspect of the logistical or clerical side of transportation of goods.
Manifest
A detailed document listing the cargo, passengers, or contents of a shipment for customs or legal purposes.
Monetary Limits
The Monetary Limits of a policy determines how much the policy will cover.
Non-Vessel-Operating Common Carrier (NVOCC)
A company that provides ocean freight services without owning or operating the vessels used for transport.
Peril
A cause of loss in an insurance policy. Perils may be covered on an ‘all risks’ basis or a ‘named perils’ basis, and perils may be specifically excluded in the policy.
Perils of the Sea
A peril specific to transportation on a navigable water, such as stranding, sinking, collision of the vessel, striking a submerged object or encountering heavy weather or other unusual force of nature.
RPP Bond (Release Prior to Payment Bond)
A financial guarantee allowing Canadian importers to obtain the release of goods before paying duties and taxes, ensuring timely movement of shipments while deferring payment obligations.
Sanctions Compliance
Adherence to government-imposed restrictions on trade with specific countries, entities, or individuals.
Shipper’s Declaration of Dangerous Goods (DGD)
A document certifying that hazardous materials are properly packed, labeled, and declared for transport.
Subrogation
An effort on the part of a surety or insurer to recover or mitigate losses paid under a bond or policy from a third party and sometimes in the case of a surety from the bond principal.
Supply Chain Risk Management
The process of identifying, assessing, and mitigating risks throughout the supply chain to ensure smooth operations.
Surety Bond
A financial guarantee involving three parties: a principal, an obligee, and a surety, ensuring obligations or regulations are met.
Tariff Classification
The categorization of goods under a tariff code to determine applicable duties or restrictions.
Third-Party Logistics (3PL)
Outsourcing logistics services, such as warehousing and transportation, to a specialized provider.
Track-and-Trace Technology
Tools and systems enabling real-time tracking of goods throughout the supply chain.
Transfer of Risk
The risk management strategy of moving the financial burden of loss from one party to another. Insurance is a form of transfer of risk.
Transportation Management System (TMS)
A software platform designed to plan, execute, and optimize the transportation of goods.
Transshipment
The process of transferring goods from one mode of transport to another during their journey to the final destination.
Valuation Clause
The clause in the cargo agreed upon by the assured and the underwriter which establishes the insured value of the merchandise and determines the amount payable under any recoverable loss or General Average contribution.
Warehouse Legal Liability Insurance
Insurance coverage that protects warehouse operators against claims for loss or damage to goods in their care.
DISCLAIMER
All rights reserved. The material contained herein should be considered general information only and is considered to be correct at the time of publication. Roanoke Insurance Group Inc. assumes no obligation to update any information contained herein.
The descriptions of coverage are generalized and are subject to the specific policy’s terms, conditions, and exclusions. For full coverage details, please refer to the actual policy forms. This content is not an offer of insurance, nor does it provide insurance coverage to the reader.
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