Trade vocabulary.
Plain-English definitions of the terms, acronyms, and incoterms you'll see in any physical commodity deal.
Payment & banking
LC (Letter of Credit)
Bank-issued payment instrument guaranteeing the seller will be paid on presentation of compliant shipping documents.
MT-103
SWIFT message format for a single customer credit transfer between banks.
MT-700
SWIFT message used to issue a documentary letter of credit between banks.
MT-799
SWIFT bank-to-bank message used as 'pre-advice' of a financial instrument.
T/T Payment
Telegraphic Transfer — bank-to-bank wire payment, often used as deposit or balance payment.
POF (Proof of Funds)
Bank-issued document evidencing buyer's available funds.
BCL (Bank Comfort Letter)
Letter from the buyer's bank confirming sufficient funds and capacity to execute the transaction. Not a payment guarantee.
Performance Bond
Bank guarantee that the seller will perform the contract; usually 2% of cargo value.
Logistics & delivery
Incoterms
ICC-published rules defining seller and buyer responsibilities for delivery, risk and cost in international trade.
EXW (Ex Works)
Incoterms rule with the seller's minimum obligation: goods are made available at the seller's premises, and the buyer bears every cost and risk from collection to destination — loading, export clearance, freight and insurance included.
FCA
Free Carrier — seller hands the goods, export-cleared, to the buyer's carrier at a named place; works for any transport mode.
FOB
Free On Board — seller delivers when goods cross the ship's rail at the named origin port.
CFR
Cost and Freight — seller pays freight to the destination port, but does not insure; risk passes on board at loading.
CIF
Cost, Insurance and Freight — seller pays freight and insurance to destination port.
DAP
Delivered at Place — seller delivers to a named destination, ready for unloading, but the buyer handles import clearance and duties.
DDP
Delivered Duty Paid — seller bears all costs and risks until delivery to buyer's named place.
TTV
Tank to Vessel — product held in a shore tank is pumped into a vessel the buyer nominates. An operation, not a trade term.
TTT
Tank to Tank — product moves from the seller's storage tank into the buyer's, usually at the same terminal. The buyer needs a tank, not a vessel.
TTO
Tank Takeover — the buyer takes over the tank itself, with the product in it. Nothing is pumped; the storage agreement changes hands.
B/L (Bill of Lading)
Document issued by a carrier acknowledging receipt of cargo for shipment. Acts as title to the goods.
Laycan
Window of dates during which the vessel must arrive at the loading port.
Demurrage
Charge paid to the shipowner if loading/discharge takes longer than agreed laytime.
Deal flow & documents
LOI (Letter of Intent)
Non-binding document from the buyer expressing intent to purchase, outlining commodity, quantity, target price, Incoterm, destination and payment instrument.
ICPO (Irrevocable Corporate Purchase Order)
Buyer's binding purchase order including commodity, quantity, terms, and banking information.
FCO (Full Corporate Offer)
Seller's binding offer with full commercial and delivery terms, valid for a stated period.
POP (Proof of Product)
Seller's evidence that the commodity exists and is allocated for the buyer.
SGS Report
Independent inspection certificate from SGS confirming quantity, quality and condition of a shipment.