The international trade glossary

BAF (Bunker Adjustment Factor)Freight

A surcharge that adjusts ocean freight to fuel costs. It can change from month to month.

Bonded facility (recinto fiscalizado)Customs

An authorized facility where goods are stored under customs control until cleared.

CabotageOperations

Moving freight between two points within the same country by a foreign carrier. Mexican carriers are not allowed to perform cabotage in the US.

Cross-dockOperations

Transferring cargo from one vehicle to another with little or no storage, to speed up flow and consolidate or break down shipments.

Customs broker (agente aduanal)Customs

A professional licensed by Mexican authorities to clear goods and sign customs entries (pedimentos) on behalf of importers and exporters.

Demurrage and detentionFreight

Carrier charges for using its container beyond the free days: demurrage while it sits in port, detention while it is out and not returned empty.

DrayageFreight

Short-haul trucking of a container between a port, rail terminal, bonded facility or nearby warehouse.

Freight forwarderFreight

A company that arranges international transport for shippers: it books space with carriers, airlines or truckers and coordinates documents and legs.

FulfillmentOperations

Storing inventory, picking and packing orders, shipping them and handling returns on behalf of a brand.

IMMEXCustoms

A Mexican program that allows temporary import of inputs and machinery without paying certain taxes, as long as they are used to produce exports.

Importer of record (IOR)Customs

The party responsible to US Customs (CBP) for an import’s compliance and duty payment. It is registered with CBP Form 5106.

IncotermsTrade

International Chamber of Commerce rules that define where costs and risks pass from seller to buyer. Examples: EXW, FOB, CIF, DAP, DDP.

Landed costTrade

The total cost of getting a product to its destination: price, freight, insurance, duties, taxes, local charges and delivery.

Last mileOperations

The final delivery leg, from the distribution center to the customer’s door. Usually the most expensive per unit and the most visible to the consumer.

Lead timeOperations

The total time from placing an order until the goods are available to use or sell.

NearshoringTrade

Relocating production or sourcing to a country close to the end market, such as moving to Mexico manufacturing that served the US from Asia.

OTIF (On Time In Full)Operations

The share of orders delivered on time and complete. One of the most widely used service-level metrics in supply chain.

PedimentoCustoms

The Mexican customs declaration for an import or export: goods, value, origin, classification and taxes.

Rules of originTrade

Criteria that determine whether a product counts as originating in the treaty region, for example by regional content or tariff shift.

Tariff classification (HS code)Customs

The code that classifies goods in the tariff schedule and sets the duty rate and applicable regulations. It is based on the Harmonized System.

TEUFreight

Twenty-foot equivalent unit: one 20-foot container. A 40-foot container equals 2 TEU. The standard measure of ocean capacity.

TransloadOperations

Moving cargo from one piece of equipment to another, such as from an ocean container to a dry van, or from a Mexican to a US truck at the border.

USMCA certification of originTrade

A statement showing that goods meet USMCA rules of origin and qualify for preferential tariff treatment. Without it, the general duty applies.

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