International Import/Export & Petroleum Industry

Glossary of Standard Trade Terms:

 

·       AHTS:

Anchor Handling Tug Supply. Offshore vessel used for jobs such as the relocation of oil rigs and anchors of the oil rigs.
 
·       API:
American Petroleum Institute
 
·       API Gravity:
An arbitrary scale expressing the gravity or density of liquid petroleum products. The measuring scale is calibrated in terms of degrees API. The higher the API gravity, the lighter the compound. Light crudes generally exceed 38 degrees API and heavy crudes are commonly labeled as all crudes with an API gravity of 22 degrees or below.
 
·       ASWP - Any Safe World Port.
It is quite common for commodity sellers to offer delivery to any safe world port of the buyer’s choice.
 
·       Barrel:
A volumetric unit measure for crude oil and petroleum products equivalent to 42 U.S. gallons, or approximately 159 liters.
 
·       BCL - Bank Comfort Letter
Also known as a Bank Capability Letter, or Bank Confirmation Letter, this is a letter from the Buyer's bank confirming his ability to meet a certain level payment requirements. This letter states that the Buyer has sufficient funds to cover the cost of the order. It should however be understood that this does not imply any guarantee of payment.
 
·       BHP:
Break Horse Power. The amount of engine horsepower.

 

·       Blue Screen:

Blue screen is an ultra-secure bank transaction method of closing global trade deals. In this business, lots of people try to use your banking information and purchase the item you want or obtain a line of credit. Blue screen allows the buyer and the seller to view the other's information. The seller shows his proof of the item (which is usually worth a lot of money and secured in a bank) while the buyer shows his proof of money. It is just a more secure way to gather this information with blue screen. A log in and pin number is needed to complete this transaction.
 
·       BOL or B/L - Bill of Lading
This is the receipt given by the shipping company when goods are loaded on board the vessel. This is an important document and gives title to the goods. It is needed by the buyer to obtain the goods from the port
 
·       Bow thrusters:
Propeller in the front of the ship enabling it to turn sideways without forward momentum.
 
·       Brent:
Term used for crude oil from the North Sea. Brent oil is traded at the International Petroleum Exchange in London, and the price of Brent is used as a benchmark for several other types of European oil.
 
·       Bulk vessel:
Description of vessels transporting large cargo quantities, including coal, iron ore, steel, grain, gravel, oil, etc.
 
·       Bunker:
Fuel for vessels
 
·       Capesize:
Dry bulk carrier of more than approximately 80,000 dwt; too large to pass through the Panama Canal.
 
·       Cbm:
Cubic Meter.
 
·       Ceu:
Car equivalent unit. Unit of measurement indicating the car carrying capacity of a vessel.
 
·       Cgt:
Compensated Gross Tonnage. International unit of measurement that facilitates a comparison of different shipyards' production regardless of the types of vessel produced.
 
·       CIRR:
Commercial Interest Reference Rate – for further details, see the OECD website.
 
·       CFR - Cost and Freight
The price includes the cost of the goods, loading, and freight to the named DestinationPort. This does not include unloading charges.
 
·       CIF - Cost, Insurance and Freight
This is the same as CNF, but also includes insurance to the named DestinationPort. e.g. CIF Miami.
 
 
·       Clean products:
Refers to light, refined oil products such as jet fuel, gasoline, diesel oil and naphtha. 
 
·       CoA:
Contract of Affreightment. Contract between shipping company and charterer concerning the freight of a predetermined volume of goods within a given period of time and/or at given intervals.
 
·       Coating:
The internal coatings applied to the tanks of a product tanker. Coated tanks enable the ship to transport corrosive refined oil products and it facilitates extensive cleaning of the tanks, which may be required in the transportation of certain oil product types. 
 
·       Container conference:
Collaboration agreement between a number of container shipping lines on trade routes or regions for the purpose of enhancing efficiency of the vessel capacity and harmonizing price/teu.
 
·       DC - Draft Contract
A draft contract is an initial contract which is drawn up and sent from the Seller to the Buyer. The Buyer has the opportunity to make amendments and send it back to the Seller for consideration. This process continues until both parties are satisfied with the terms of the contract.
 
·       DDP - Delivered Duty Paid
to the named Destination (which can be customer's works) e.g. DDP New York. All delivery charges and duties to the named destination are paid by the exporter.
 
 
·       Dirty products:
Refers to heavy oils such as crude oil or refined oil products such as fuel oil or bunker oil.
 
·       DP:
Dynamic Positioning. Special instruments on board that in conjunction with bow thrusters and main propellers enable the ship to position itself in a fixed position in relation to the seabed
 
·       Dwt:
Dead Weight Tons. International unit of measurement that indicates the loading capabilities in metric tonnes of the particular vessel, including the weight of crew, passengers, stores, bunkers etc.
 
·       EXW - Ex-Works
The buyer pays all costs of transport from pickup at the suppliers premises. e.g. EXW Hong Kong.
 
·       FAS - Free Alongside Ship
The supplier pays costs only to the port of loading. Loading and shipment are responsibility of the Buyer. However the supplier must clear the goods for export. e.g. FAS
Los Angeles.
 
·       FCA - Free Carrier
The supplier must deliver the goods, cleared for export, to the carrier nominated by the buyer at the named place.
 
·       FCL - Full Container Load
The goods fill a container, no other purchaser's goods will share the container. Often suppliers will not supply less then one full container.
 
·       FCO - Full Corporate Offer.
Issued by the seller after the preliminary stages of negotiation are complete, such as a letter of intent having been issued by the buyer, and a soft probe having been conducted on their accounts by the Seller. A full corporate offer is a document which outlines the conditions of the sale.
 
 
·       Feeder:
Small container carrier.
 
·       FOB - Free on Board
This means that the supplier pays only to the point where the goods are loaded on board the carrying vessel. The seller must clear the goods for export. As soon as the goods are over the ship's rail they become the responsibility of the buyer. e.g. FOB
London.
 
·       FPSO:
F(P)SO: Floating (Production) Storage Offloading Unit. Ship used as substitute for a conventional oil platform at oil fields that are either to deep in the ground or to small to justify the use of a conventional oil platform. If the ship is an FPSO the ship has oil (or gas) processing capabilities.
 
·       Geared:
Indicates that a vessel is equipped with a crane or other lifting device.
 
·       Gearless:
Indicates that a vessel is not equipped with a crane or other lifting device.
 
·       Gravity:
Volume weight ratio of a substance calculated against the same volume of water at normal temperature and pressure.
 
·       Gt:
Gross Tons. Unit of 100 cubic feet or 2.831 cubic meters, used in arriving at the calculation of gross tonnage.
 
·       Handy, tank:
Crude oil tanker, product tanker or chemical tanker of between 10,000 and 25,000 dwt
 
·       Handymax, dry cargo
Dry bulk carrier of between approximately 40,000 and 60,000 dwt.<
 
·       Handysize, dry cargo
Dry bulk carrier of between approximately 10,000 and 40,000 dwt.
 
·       ICPO - Irrevocable Corporate Purchase Order.
This is a document drawn up by commercial Buyers, and contains the quantities and type of commodity required,  and other conditions that the buyer would like the sale to proceed under. Once submitted to the Seller, this is deemed to be binding and the corporation is obliged to complete the sale.
 
·       IMO:
International Maritime Organization. {0>Søfartsorganistion under FN.<}96{>A maritime organization under the UN, www.imo.org
 
·       IMO I-III:
Quality grades for tankers for the permission to transport different chemical and oil products. IMO I are the most hazardous products, IMO III the least hazardous.
 
·       Chemical tanker:
Tanker with coated or stainless steel tanks (IMO I-III).
 
·       L/C or LOC - Letter of Credit
Letter of credit is a document issued from the Buyer’s bank to the Seller which guarantee payment to the beneficiary of the letter of credit (the Seller), as long as the terms and conditions set out in the letter of credit are met. L/C are almost always irrevocable, can be transferable, and subject to terms (e.g. on SIGHT, 30 days, 60 days, 180 days, etc.). For regular shipments a Revolving L/C is often utilized.
 
* The various types of Letters of Credit can be defined as follows:
v                  CL/C (Confirmed Letter of Credit) A letter of credit, issued by a foreign bank, with validity confirmed by a First Class (usually US or European) bank. A seller with CL/C terms is assured of payment even if the foreign buyer or the foreign bank defaults.
 
v                  DL/C (Documentary Letter of Credit) A document issued by a bank which guarantees the payment of a buyer's drafts for a specified period and up to a specified amount. The Documentary Letter of Credit provides a more secure means of carrying out transactions in import-export trade than by documentary bills collection (see Bill of Exchange). A letter of credit when transmitted through a bank, usually in the seller's country, becomes the means by which the seller obtains payment. The necessary documents, correctly completed, are presented to a bank by an agreed date. If the terms of the credit are met, a seller can receive payment from a bank immediately.
 
v                  IL/C (Irrevocable Letter of Credit) An Irrevocable Letter of Credit cannot be amended or cancelled without the consent of the issuing bank, the confirming bank (if confirmed), and the beneficiary. The payment is guaranteed by the bank if the credit terms and conditions are fully met by the beneficiary. The words Irrevocable Documentary Credit or Irrevocable Credit may be indicated in the L/C. It means that once the buyer's conditions in the letter have been agreed to by the seller, they constitute a definite undertaking by the buyer's bank and cannot be revoked without the seller's agreement.

* Revocable Letters of Credit are rarely used as the terms of the credit can be cancelled or amended by an overseas buyer at any time without notice to the seller.
 
v                  RL/C (Revolving Letter of Credit) When a letter of credit (L/C) is specifically designated a Revolving Letter of Credit, the amount involved when utilized is automatically reinstated, that is, the amount becomes available again without issuing another L/C and usually under the same terms and conditions within a period of time (usually several months to one year). This saves administration when multiple shipments are involved.
 
v                  SL/C (Stand-by Letter of Credit) is a financial guarantee or performance bond issued by a bank on behalf of a buyer. i.e. a written obligation of the issuing bank to pay a sum to a beneficiary on behalf of their customer in the event that the customer himself does not pay the beneficiary. The SL/C is regulated by the ICC-500 rules.
 
 
·       LNG vessels:
Liquefied Natural Gas. Vessels for transporting liquefied natural gas (methane gas).
 
·       LOI - Letter of Intent
Letter of Intent is a document issued from the Buyer to the Seller which indicates that the Buyer would like to enter into negotiations with the Seller in the hope of purchasing commodity. The letter of intent is not legally binding, but it does provide a starting point for negotiations. 
 
 
·       LO-LO: (Lift on – Lift off).
Cargo carrying vessel that has its cargo lifted on and/or off. This type of ship may also have passenger carrying capacity (Pax-Lo) and/or Ro-Ro features (Ro-Lo).
 
·       LPG vessels:
Liquefied Petroleum Gas. Vessels used to transport ammonia and liquid gases (ethane, ethylene, propane, propylene, butane, butylenes, isobutene and isobutylene).The gases are transported under pressure and/or refrigerated.
 
·       LR1, product tanker:
LongRange 1. Product tanker with the maximum dimensions for passing through the Panama Canal (width of 32.21 meters and length of 289.5 meters) of approximately 50,000—80,000 dwt.
 
·       LR2, product tanker:
LongRange 2. Product tanker too large to pass through the Panama Canal of approximately 80,000 dwt.
 
·       Mbtu:
Million British Thermal Unit. Unit of measurement indicating the amount of energy included – equivalent to joule or calorie.
 
·       Medium, tanker (MR):
MediumRange. Product tanker of between 25,000 and 50,000 dwt.
 
·       MMboe:
Million Barrels of Oil Equivalent. Measure of the amount of barrels of oil/gas contained in a field.
 
·       Multi-Purpose:
Dry bulk carrier with multiple applications, mainly as a feeder vessel or for special cargo.
 
·       Nautical Mile:
Distance unit measure of 1,852 meters, or 6,076.12 ft.
 
·       Offshore vessel:
Vessel serving the offshore oil industry.
 
·       OPEC:
Organization of Petroleum Exporting Countries.
 
·       Panamax, container:
Container carrier with the maximum dimensions for passing through the Panama Canal (width of 32.21 metres, length of 291 metres) of approximately 3,000—5,000 teu
 
·       Panamax, tanker:
Crude oil tanker or product tanker with the maximum dimensions for passing through the Panama Canal (width of 32.21 metres and length of 289.5 metres) of approximately 50,000—80,000 dwt.
 
·       Panamax, dry cargo:
Dry bulk vessel with the maximum dimensions for passing through the Panama Canal (width of 32.21 metres and length of 289.5 metres) of approximately 60,000—80,000 dwt.
 
·       PB - Performance Bond
This is a type of bank guarantee which is issued from the Seller to the Buyer. It guarantees that the Seller will meet the terms of the contract. Normally issued in the amount of 10% to 15% of the total amount of the contract, a performance bond can be drawn upon by the Buyer in the event that the Seller breaks the contract and fails to provide the product which was stipulated in the contract. 
 
 
·       PCC:
Pure Car Carrier. Car carrier built exclusively to transport passenger cars.
 
·       PCTC:
Pure Car Truck Carrier. Car carrier built to transport small and large passenger cars (SUVs, MPVs, etc.), trucks and other contractor equipment.
 
·       POP - Proof of Product
A Proof of Product ('POP') is often requested by customers or agents who believe it will give them some guarantee of the existence of the product and ability of the supplier to deliver the product. In practice many POPs are false. POP offers no proof at all, because once a POP has been drafted it is automatically out of date - the product could have been sold to another buyer and therefore no longer exists. Nevertheless, a POP is still occasionally requested as apparent proof that a seller/broker has the product, which is possibly not the case.
A POP is realistically provided only when the Buyer's bank issue a Bank Confirmation Letter (BCL) to the Seller's bank via SWIFT. Then the Seller's bank can check the availability of funds in the Buyer's bank and issue a POP to the Buyer's bank within an agreed time period (e.g. 5 days). In reality, the best and only real proof of product is when the Seller can demonstrate the products in his possession at the dock side.
 
·       Post-Panamax:
Container vessel of approximately 4,000+ teu that is too large to pass through the Panama Canal.
 
·       Product tanker:
Tanker vessel with coated tanks used to transport refined oil products.
 
·       PSV:
Platform Supply Vessel. Offshore vessel serving the offshore oil installations.
 
·       Reefer:
Container vessel with cooling/freezing capacity.
 
·       Reefer vessel:
Bulk carriers with a large reefer capacity in the holds.
 
·       Ro-Con:
Ro-Ro vessel with container capacity
 
·       Ro-Pax:
Ro-Ro vessel with passenger capacity.
 
·       Ro-Ro: Roll On – Roll Off.
Common description of vessels on which the cargo is rolled on board and ashore.
 
·       ROV-Support Vessel:
Ship with Remotely Operated Vehicle (a robot) used e.g. to inspect underwater cables and pipes.
 
·       RWA - Ready, Willing and Able
This is a document which is issued by the Buyer's bank. The bank confirms that their client has the sufficient funds in their possession and is ready, willing and able to engage in the contract
 
·       Seismic Vessel:
Ship with on board sound and electromagnetic instruments for gauging the structure of the layers in the ground.  The results are used as a tool to best decide where the oil and gas formations are located in the ground.
 
·       Stand-by vessel:
Offshore vessel used to monitor and fight fires and environmental accidents on oil rigs.
 
·       Suezmax:
Crude oil tanker with the maximum dimensions for passing through the Suez Canal (approximately 120,000—200,000 dwt.).
 
·       SWIFT - Society for Worldwide Interbank Financial Telecommunication
a global service which is responsible for facilitating communication between banks. Most payments are made via SWIFT.
 
·       Teu:
Twenty Feet Equivalent Unit. Container boxes with a length of 20 feet (about 6 metres) which forms the basis of describing the capacity of a container vessel.
 
·       Ton-nautical mile:
Unit of measurement indicating the volume of cargo and how far it has been transported.
 
·       Tonnage:
Synonymous with “vessel”.
 
·       ULCC:
Ultra Large Crude Carrier. Crude oil tanker above 320,000 dwt.
 
·       Vetting:
Approval procedure whereby e.g. the technical standards of a ship are surveyed.
 
·       VLCC:
Very Large Crude Carrier. Crude oil tanker of between approximately 200,000 and 320,000 dwt.
 
·       VLGC:
Very Large Gas Carrier. LPG ship with capacity above 60,000 cbm.
 
·       WTI:
West Texas Intermediate. Oil price benchmark in the USA.