Comprehensive Trade Terminology Guide: 150+ Essential Terms
Master 150+ essential trade terms including Incoterms 2020, payment methods (L/C, T/T, D/P), shipping documents, customs terminology, marine insurance (FPA, WPA, All Risks), and Iran-specific terms (NTSW, Commercial Card). Complete English-Persian glossary for Iranian traders.
Essential Trade Terminology Guide
Introduction
International trade has its own language - a specialized vocabulary of terms, acronyms, and jargon that can be confusing for newcomers. This comprehensive guide covers 100+ essential terms every Iranian trader must know, organized by category for easy reference.
Shipping Terms (Incoterms)
FOB - Free on Board
Definition: Seller delivers goods on board the ship at the port of origin. Buyer pays all costs from that point.
Usage: "FOB Bandar Abbas"
Responsibility Transfer: When goods cross the ship's rail
Most Common Use: Iranian exports
Example: You export pistachios FOB Bandar Abbas. You pay all costs until the pistachios are loaded on the ship. The buyer pays freight, insurance, and all costs after that point.
CIF - Cost, Insurance, Freight
Definition: Seller pays for shipping and insurance to the destination port. Buyer pays from port to final destination.
Usage: "CIF Hamburg"
Most Common Use: Iranian imports
Example: You import machinery CIF Bandar Abbas. The supplier pays for shipping from their country and insurance. You only pay customs duties, port charges, and inland transport.
EXW - Ex Works
Definition: Buyer collects goods from seller's premises. Seller has minimum responsibility.
Usage: "EXW Tehran Factory"
Advantage: Lowest price for buyer Disadvantage: Buyer handles all logistics
FCA - Free Carrier
Definition: Seller delivers goods to carrier chosen by buyer at seller's premises or another location.
Usage: "FCA Isfahan Warehouse"
CPT - Carriage Paid To
Definition: Seller pays freight to named destination. Risk transfers when goods are handed to first carrier.
Usage: "CPT Dubai"
CIP - Carriage and Insurance Paid To
Definition: Like CPT but seller also pays insurance.
Usage: "CIP Istanbul"
DAP - Delivered at Place
Definition: Seller delivers when goods are ready for unloading at named destination. Seller bears all risks and costs.
Usage: "DAP Baghdad"
Common Use: Land transport to neighboring countries
DDP - Delivered Duty Paid
Definition: Seller pays all costs including import duties. Maximum obligation for seller.
Usage: "DDP Customer Warehouse Moscow"
Rare Use: Due to complexity of foreign import regulations
Payment Terms
L/C or LC - Letter of Credit (اعتبار اسنادی)
Definition: Bank guarantee for payment. Bank pays seller if documents are in order.
Types:
- Sight LC: Payment upon presentation of documents
- Usance LC: Payment after 30/60/90 days
- Confirmed LC: Second bank also guarantees payment
- Irrevocable LC: Cannot be changed without all parties' agreement
Usage: Most common for first-time transactions
Cost: 1-2% of LC value
Example: Buyer opens LC for $50,000 with their bank. Bank sends LC to your bank. You ship goods and present documents. Bank pays you $50,000.
D/P - Documents against Payment
Definition: Bank releases documents to buyer only after payment.
Risk Level: Medium (lower than open account, higher than LC)
D/A - Documents against Acceptance
Definition: Bank releases documents when buyer accepts (promises to pay) a time draft.
Risk Level: Higher than D/P
T/T - Telegraphic Transfer (حواله بانکی)
Definition: Direct bank transfer from buyer to seller.
Types:
- T/T in Advance: Full payment before shipment
- T/T after Sight: Payment after receiving documents
- Partial T/T: 30% advance, 70% against documents
Advantage: Fast, low cost Disadvantage: Higher trust required
Open Account
Definition: Seller ships goods, buyer pays later (30/60/90 days).
Risk Level: Highest for seller
Usage: Only with established, trusted partners
Shipping Documents
B/L - Bill of Lading (بارنامه)
Definition: Document of title for goods shipped by sea. Issued by shipping line or freight forwarder.
Types:
- Original B/L: Negotiable, required to collect goods
- Sea Waybill: Non-negotiable, faster
- Telex Release: Electronic, most common now
Importance: Proof of shipment, title document, receipt
AWB - Air Waybill (بارنامه هوایی)
Definition: Receipt for air cargo. Non-negotiable.
Difference from B/L: Cannot be used as title document
Commercial Invoice (فاکتور تجاری)
Definition: Bill for goods sold. Most important export document.
Must Include:
- Seller and buyer details
- Description of goods
- HS codes
- Quantity and unit price
- Total value
- Payment terms
- Delivery terms (Incoterm)
Packing List (لیست بستهبندی)
Definition: Detailed list of how goods are packed.
Includes:
- Number of packages
- Weight (gross and net)
- Dimensions
- Marks and numbers on packages
Certificate of Origin (گواهی مبدا)
Definition: Certifies where goods were produced.
Issuer: Chamber of Commerce
Purpose: Determines applicable tariffs and trade agreements
Cost: 3-5 million IRR
Example: Certificate of Origin showing "Made in Iran" helps Iranian goods enter EAEU countries with preferential tariffs.
Certificate of Conformity (گواهی انطباق)
Definition: Certifies goods meet destination country standards.
Also Known As: COC, Pre-Shipment Inspection Certificate
Proforma Invoice (پیشفاکتور)
Definition: Preliminary bill of sale sent before shipping.
Purpose:
- Quotation for buyer
- Basis for LC application
- Customs reference
Not: Final invoice for payment
Customs Terms
HS Code - Harmonized System Code (کد هارمونیک)
Definition: 6-10 digit code classifying traded goods globally.
Format in Iran: 10 digits
- First 6 digits: International standard
- Last 4 digits: Iran-specific
Example:
- 0802.12.0000 = Almonds, shelled
- 8703.23.1000 = Cars, 1500-3000cc, gasoline
Importance: Determines customs duties, regulations, permits needed
Where to Find: IRICA tariff database, customs consultants
Customs Declaration (اظهارنامه گمرکی)
Definition: Official document declaring imported/exported goods to customs.
Filed Through: NTSW system
Includes:
- Importer/exporter details
- Goods description
- HS code
- Value
- Origin
- Supporting documents
Customs Duty (حقوق گمرکی)
Definition: Tax on imported goods.
Rate in Iran: 4-55% depending on HS code
Calculation: Based on CIF value
Example: Import machinery worth $100,000 CIF. HS code has 15% duty. You pay $15,000 customs duty plus 10% VAT.
Drawback (استرداد حقوق گمرکی)
Definition: Refund of import duties on goods that are re-exported.
Eligibility: Must re-export within specified time
Bonded Warehouse (انبار گمرکی)
Definition: Secure storage for goods awaiting customs clearance.
Benefit: Delay paying duties until goods are released
Transit (ترانزیت)
Definition: Goods passing through Iran to another country.
Special Status: Lower/no duties if properly declared
Trade Procedures
Customs Clearance (ترخیص گمرکی)
Definition: Process of getting customs approval to import/export.
Steps: Declaration → Valuation → Payment → Inspection → Release
Duration in Iran: 3-5 days (with NTSW)
NTSW - National Trade Single Window (پنجره واحد تجارت ملی)
Definition: Online portal integrating all trade-related government services.
Website: ntsw.ir
Features:
- Customs declarations
- License applications
- Payment of duties
- Tracking shipments
- Digital signatures
Benefit: Faster, paperless trade procedures
Pre-Shipment Inspection (PSI - بازرسی قبل از حمل)
Definition: Third-party inspection of goods before shipping.
Purpose: Verify quantity, quality, price
Required For: Some countries/high-value goods
Inspectors: SGS, Bureau Veritas, Intertek
Quarantine (قرنطینه)
Definition: Inspection and potential isolation of agricultural/animal products.
Authority: Veterinary Organization, Plant Protection Organization
Duration: 1-14 days depending on product
Trade Finance Terms
Export Credit (اعتبار صادراتی)
Definition: Loan for exporters to finance production before payment.
Provider: Export Development Bank of Iran
Rate: 18-22%
Amount: Up to 80% of LC value
Trade Credit Insurance (بیمه اعتبار صادراتی)
Definition: Insurance against non-payment by foreign buyers.
Provider: Export Guarantee Fund of Iran (EGFI)
Coverage: Political and commercial risks
Premium: 0.5-2% of export value
Factoring (فاکتورینگ)
Definition: Selling your accounts receivable (invoices) to a financial company at a discount.
Use Case: Improve cash flow while waiting for payment
Container & Shipping Terms
FCL - Full Container Load (کانتینر کامل)
Definition: Entire container used by one shipper.
Types:
- 20ft container: ~20-25 tons
- 40ft container: ~25-28 tons
- 40ft HC (High Cube): Extra height for voluminous goods
Cost: More economical for large shipments
LCL - Less than Container Load (محموله تجمیعی)
Definition: Share container space with other shippers.
Cost: Higher per unit, but economical for small shipments
Consolidation: Freight forwarder combines multiple LCL shipments
TEU - Twenty-Foot Equivalent Unit
Definition: Standard measure of container capacity.
Usage: "Port handled 5 million TEU last year"
Freight Forwarder (حملکننده)
Definition: Company arranging transportation and documentation for shippers.
Services:
- Booking shipping space
- Preparing documents
- Customs clearance
- Insurance
- Warehousing
- Door-to-door delivery
Freight Charges (هزینه حمل)
Components:
- Ocean/Air Freight: Main transportation cost
- BAF (Bunker Adjustment Factor): Fuel surcharge
- CAF (Currency Adjustment Factor): Exchange rate adjustment
- THC (Terminal Handling Charge): Port handling
- Documentation Fees
Quality & Standards
ISO - International Organization for Standardization
Definition: International standards for quality, safety, efficiency.
Key Standards:
- ISO 9001: Quality Management
- ISO 14001: Environmental Management
- ISO 22000: Food Safety (HACCP)
- ISO 45001: Occupational Health & Safety
Benefit: Required/preferred by many international buyers
CE Marking
Definition: European conformity marking for products.
Requirement: Mandatory for products sold in EU
FDA - Food and Drug Administration
Definition: US agency regulating food, drugs, cosmetics.
Important For: Exporters to United States
Halal Certification (گواهی حلال)
Definition: Certifies products meet Islamic dietary laws.
Important For: Food exports to Muslim countries
Business Terms
MOQ - Minimum Order Quantity
Definition: Smallest quantity a supplier will sell.
Example: "MOQ: 1000 units"
Purpose: Ensures production efficiency
FOB Price
Definition: Price excluding freight and insurance.
Usage: "Our FOB price is $50 per unit"
Landed Cost (هزینه تمامشده)
Definition: Total cost of goods including all expenses to bring them to buyer's location.
Includes:
- Product cost
- Freight
- Insurance
- Customs duties
- Port charges
- Inland transport
- Other fees
Critical For: Calculating profitability
Trade Margin (حاشیه سود)
Calculation: (Selling Price - Landed Cost) / Selling Price × 100
Target: 15-30% for most products
Demurrage (هزینه تاخیر)
Definition: Penalty for exceeding free time at port/container depot.
Typical Free Time: 3-7 days
Cost: $50-150 per container per day
Prevention: Prompt customs clearance
Market Terms
Target Market (بازار هدف)
Definition: Specific country/region you aim to sell in.
Selection Criteria:
- Market size
- Demand for your product
- Trade barriers
- Competition
- Payment risk
- Cultural fit
Market Share (سهم بازار)
Definition: Your sales as percentage of total market.
Calculation: Your Sales / Total Market Size × 100
Trade Deficit/Surplus (کسری/مازاد تجاری)
Deficit: Imports exceed exports Surplus: Exports exceed imports
Iran's Status: Generally trade surplus due to oil exports
Acronyms Quick Reference
Shipping:
- FAS: Free Alongside Ship
- FOB: Free on Board
- CFR: Cost and Freight
- CIF: Cost, Insurance, Freight
- EXW: Ex Works
- FCA: Free Carrier
Payment:
- L/C: Letter of Credit
- D/P: Documents against Payment
- D/A: Documents against Acceptance
- T/T: Telegraphic Transfer
- CAD: Cash Against Documents
Documents:
- B/L: Bill of Lading
- AWB: Air Waybill
- COO: Certificate of Origin
- C/I: Commercial Invoice
- P/L: Packing List
Organizations:
- TPO: Trade Promotion Organization
- ICCIMA: Iran Chamber of Commerce
- IRICA: Iran Customs
- CBI: Central Bank of Iran
- WTO: World Trade Organization
- ICC: International Chamber of Commerce
Trade Agreements:
- EAEU: Eurasian Economic Union
- FTA: Free Trade Agreement
- PTA: Preferential Trade Agreement
How to Use This Guide
- Bookmark: Save for quick reference during transactions
- Print Common Terms: Keep a physical copy at your desk
- Learn Gradually: Master 5-10 terms per week
- Use in Communication: Practice using correct terminology
- Update Knowledge: Terms and regulations change
Practice Exercise
Scenario: You're exporting saffron to Germany.
Question: Fill in the blanks with correct terms.
- You quote price as "_____ Bandar Abbas" (Incoterm showing buyer pays freight)
- Buyer opens a _____ through their bank to guarantee payment
- After shipping, you receive the _____ from shipping line
- Chamber of Commerce issues a _____ showing goods are from Iran
- You submit _____ through NTSW system to export the goods
Answers:
- FOB
- Letter of Credit (L/C)
- Bill of Lading (B/L)
- Certificate of Origin
- Customs Declaration
Conclusion
Mastering trade terminology is essential for:
- Professional communication with partners
- Understanding contracts and documents
- Avoiding costly mistakes
- Building credibility
- Smooth transaction execution
Remember: When in doubt, ask for clarification. Using terms incorrectly can lead to disputes and financial losses.
Marine Cargo Insurance Terms
FPA - Free from Particular Average (بیمه افپیای)
Definition: Basic marine cargo insurance providing minimum coverage. Covers total loss and partial loss only from stranding, sinking, burning, or collision.
Coverage: Narrowest form of protection
Also Known As: Institute Cargo Clauses (C)
Use Case: Low-value goods, durable products
WPA - With Particular Average (بیمه دبلیوپیای)
Definition: Extended coverage including FPA plus partial loss from natural calamities and perils of the sea.
Coverage: Intermediate level
Also Known As: Institute Cargo Clauses (B)
Use Case: Semi-durable goods like metals, chemicals, wood products
All Risks (تمام خطرات)
Definition: Most comprehensive cargo insurance covering all risks of physical loss or damage from external causes.
Also Known As: Institute Cargo Clauses (A)
Excludes: War, strikes, riots, seizure (unless separately endorsed)
Required By: CIF Incoterm (minimum 110% of invoice value)
Institute Cargo Clauses (ICC)
Definition: Standard marine insurance terms published by the Institute of London Underwriters.
Types:
- ICC (A): All Risks - Most comprehensive
- ICC (B): With Particular Average - Intermediate
- ICC (C): Free from Particular Average - Basic
General Average (خسارت عمومی)
Definition: Voluntary sacrifice of cargo to save the vessel; loss is shared by all cargo owners proportionally.
Example: Throwing cargo overboard during a storm to save the ship
Particular Average (خسارت خصوصی)
Definition: Partial loss to cargo from covered perils, borne by the affected cargo owner alone.
Iran-Specific Trade Systems
NIMA (سامانه نیما)
Full Name: Integrated Currency Management System
Definition: Online foreign exchange platform operated by Central Bank of Iran for currency transactions.
Status (2026): Discontinued - replaced by 70% currency exemption for exporters
Historical Use: Matched exporters with importers for FX transactions
NTSW - National Trade Single Window (سامانه جامع تجارت)
Full Name: Panjere Vahed Tejarat
Definition: Integrated online portal for all trade-related government services.
Website: ntsw.ir
Key Features:
- Import/Export order registration (ثبت سفارش)
- Customs declarations (اظهارنامه)
- License applications
- Payment of duties
- Digital document submission
- Shipment tracking
- Communication with customs
Replaces: Old SABTARESH system
Benefit: Single window approach reduces paperwork and processing time
EPL - Electronic Patch Line (خط وصل الکترونیکی)
Definition: Electronic data interchange system connecting importers/exporters with customs.
Purpose: Real-time tracking and automated processing
Commercial Card (کارت بازرگانی)
Definition: Essential license for import/export activities in Iran.
Requirements (1404/2026):
- Company registration certificate
- Tax ID (شناسه ملی)
- Economic code (کد اقتصادی)
- Chamber of Commerce membership
- 50 million IRR fee
Duration: 1-3 years, renewable
Issuer: Iran Chamber of Commerce (ICCIMA)
Customs Tariff Book (کتاب تعرفه گمرکی)
Definition: Official publication listing HS codes and corresponding duty rates for Iran.
Publisher: IRICA (Iran Customs Administration)
Updates: Annual with periodic amendments
Economic Code (کد اقتصادی)
Definition: Unique 12-digit identifier for businesses in Iran.
Purpose: Tax identification, customs clearance, banking
Format: 12 numerical digits
Issuer: Tax Affairs Organization
Additional Banking Terms
SWIFT (سوئیفت)
Full Name: Society for Worldwide Interbank Financial Telecommunication
Definition: Secure messaging network for international banking transactions.
Iran Status: Some banks are SWIFT-enabled; sanctions affect access
Alternative: INSTEX (limited), bilateral currency swaps
Aval (آوال)
Definition: Unconditional, irrevocable guarantee on a bill of exchange or promissory note.
Guarantor: Usually a bank
Effect: Guarantor becomes liable if the drawer fails to pay
Forfaiting (فورفیتینگ)
Definition: Sale of medium/long-term receivables (such as bills of exchange) at a discount without recourse.
Use: Exporters sell future payment rights to a forfaiter
Benefit: Immediate cash, eliminates payment risk
Documentary Collection (وصولی اسنادی)
Definition: Banks act as intermediaries to handle documents and receive payment, but without bank guarantee.
Types:
- D/P: Documents against Payment
- D/A: Documents against Acceptance
Risk Level: Lower than open account, higher than LC
Cost: Cheaper than Letter of Credit
URC 522: Uniform Rules for Collections published by ICC
Usance (یوزانس)
Definition: Deferred payment period in a letter of credit or bill of exchange.
Common Terms: 30, 60, 90, 120, 180 days sight
Example: "Usance LC 90 days" = Payment 90 days after documents presented
Revolving LC (اعتبار اسنادی گردان)
Definition: Letter of credit that automatically renews after each shipment.
Use Case: Regular, ongoing trade with same buyer
Benefit: Reduces bank fees and paperwork for multiple shipments
Transferable LC (اعتبار اسنادی قابل انتقال)
Definition: LC that can be transferred from original beneficiary to another party.
Use Case: Middlemen/trading companies
Back-to-Back LC (اعتبار اسنادی اتکایی)
Definition: Two separate LCs used when middleman can't get transferable LC.
Structure: Master LC backs a second LC to the actual supplier
Logistics Abbreviations
3PL - Third Party Logistics
Definition: Outsourcing logistics to an external provider for warehousing, fulfillment, and shipping.
4PL - Fourth Party Logistics
Definition: Comprehensive supply chain management including 3PL coordination, technology, and strategic planning.
NVOCC - Non-Vessel Operating Common Carrier
Definition: Freight forwarder that issues its own bills of lading but doesn't own ships.
Services: Consolidation of LCL shipments into FCL
CFS - Container Freight Station (ایستگاه حمل کانتینری)
Definition: Facility for stuffing and unstuffing LCL (Less than Container Load) cargo.
Location: Usually at or near ports
Fee: CFS charge for LCL handling
CY - Container Yard (محوطه کانتینری)
Definition: Designated area for storing and handling full containers.
Types:
- Origin CY: Where loaded containers are received
- Destination CY: Where containers await pickup
ETD/ETA (تاریخ حرکت/ورود پیشبینی شده)
ETD: Estimated Time of Departure ETA: Estimated Time of Arrival
POL/POD (بندر بارگیری/تخلیه)
POL: Port of Loading POD: Port of Discharge
CBM - Cubic Meter (مترمکعب)
Definition: Unit of measurement for cargo volume.
Calculation: Length × Width × Height (in meters)
Use: Calculating LCL freight charges
WT/MSMT - Weight or Measurement
Definition: Freight charged based on whichever is greater - actual weight or volumetric weight.
Formula: 1 CBM = 1000 kg (sea) or 167 kg (air)
Trade Agreement Terms
FTA - Free Trade Agreement (توافق تجارت آزاد)
Definition: Treaty between countries eliminating or reducing tariffs on trade.
Iran's Major FTAs:
- EAEU Preferential Trade Agreement (2024)
- ECO Trade Agreement (partial)
- Bilateral agreements with Syria, Iraq, etc.
PTA - Preferential Trade Agreement (توافق تجارت ترجیحی)
Definition: Agreement providing reduced (not zero) tariffs between countries.
Example: Iran-EAEU PTA provides 10-25% tariff reductions
MFN - Most Favored Nation (ملت کامله الوداد)
Definition: WTO principle requiring equal treatment for all trading partners.
Effect: Lowest tariff given to one WTO member must apply to all members
Rules of Origin (قواعد مبدا)
Definition: Criteria determining where a product was made for preferential tariff purposes.
Components:
- Wholly obtained goods
- Substantial transformation
- Value-added threshold
Tariff Quota (سهمیه تعرفهای)
Definition: Quantity of goods allowed to enter at a lower tariff rate.
Over-Quota Rate: Higher tariff applies after quota is exhausted
Digital Trade Terms
E-AWB - Electronic Air Waybill (بارنامه هوایی الکترونیکی)
Definition: Digital version of air waybill, eliminating paper documentation.
Adoption: Growing globally, supported by IATA
Telex Release (ترخیص تلکسی)
Definition: Electronic message authorizing cargo release without presenting original bill of lading.
Use: Faster than sending physical documents
Requirement: Consignee must be stated (not "to order")
EDI - Electronic Data Interchange (تبادل داده الکترونیکی)
Definition: Computer-to-computer exchange of business documents in standard format.
Use: Customs declarations, shipping instructions, invoices
AMS - Automated Manifest System
Definition: US Customs electronic cargo manifest requirement for security screening.
Deadline: 24 hours before loading for sea, 4 hours before departure for air
ISF - Importer Security Filing (اظهارنامه امنیتی واردکننده)
Definition: US requirement for importers to provide cargo data 24 hours before loading.
Also Known As: "10+2" filing
Conclusion & Quick Reference Card
Top 20 Terms Every Iranian Trader Must Know:
| Term | Meaning | Persian | |------|---------|---------| | FOB | Free on Board | آزاد روی کشتی | | CIF | Cost, Insurance, Freight | هزینه، بیمه، کرایه | | L/C | Letter of Credit | اعتبار اسنادی | | B/L | Bill of Lading | بارنامه | | HS Code | Product Classification | کد تعرفه | | T/T | Telegraphic Transfer | حواله تلگرافی | | FCL | Full Container Load | کانتینر کامل | | LCL | Less than Container | کمتر از کانتینر | | COO | Certificate of Origin | گواهی مبدا | | NTSW | Trade Single Window | سامانه جامع تجارت | | ETA/ETD | Arrival/Departure Time | زمان ورود/حرکت | | Customs Duty | Import Tax | حقوق گمرکی | | Usance | Deferred Payment | یوزانس | | All Risks | Full Insurance | تمام خطرات | | Demurrage | Delay Penalty | جریمه تاخیر | | Proforma | Price Quote | پیش فاکتور | | Freight Forwarder | Shipping Agent | حملکننده | | Drawback | Duty Refund | استرداد | | Transit | Pass Through | ترانزیت | | Economic Code | Tax ID | کد اقتصادی |
Next Steps:
- Review this guide regularly
- Ask experienced traders when encountering new terms
- Read actual trade documents to see terms in context
- Take TPO's trade terminology course
- Join Chamber of Commerce training programs
- Practice with IranFacto's trade simulation tools
Resources & Further Reading
Online Resources:
- EDC Trade Terminology Guide
- ICC Incoterms 2020
- World Customs Organization - HS Codes
- سامانه جامع تجارت (NTSW)
- گمرک ایران (IRICA)
Books:
- "International Trade: Theory and Policy" - Krugman & Obstfeld
- "A to Z of International Trade" - Frank Reynolds
- "The Handbook of International Trade and Finance" - Anders Grath
This comprehensive guide covers 150+ essential trade terminology terms. For the latest trade terminology and regulations, always consult official sources including IRICA, ICCIMA, TPO, and experienced trade professionals.
Last Updated: February 2026 | Part of IranFacto Free Learning Platform
Sources: EDC Canada, ICC, WCO, Trade.gov, IRICA, ICCIMA, Iranian trade sources