Buying from Asia comes with its own vocabulary, and a few of those words carry legal or financial weight. This import and sourcing glossary explains the terms US buyers meet most often, from importer of record and ISF to Incoterms and landed cost, in plain English, with links to our longer guides.
Quick look
- The importer of record is the party legally responsible for a US entry, including duties and the accuracy of the declaration.
- Classification (the HTS code) and country of origin together decide most of the duty you pay.
- Incoterms decide where cost and risk pass from seller to buyer. They do not decide ownership.
- Landed cost is the full cost of getting goods to your door, not just the price plus freight.
Import and Sourcing Glossary: Common Questions
Who should be the importer of record on my shipment?
The importer of record is the party that files the US entry and answers to CBP for it. That is usually the US buyer or owner of the goods. Whoever takes the role also takes responsibility for paying duties, keeping records and the accuracy of the classification, value and origin declared.
Is the HTS code the same as an HS code?
Partly. The first six digits are the international Harmonized System code, shared by most countries. The US adds digits to make a 10-digit HTS number. A code that is correct in one country can be wrong or outdated in another, so check it against the current US schedule.
Does FOB or CIF decide who owns the goods?
No. Incoterms set who pays which costs and where the risk of loss passes. Ownership is decided by your purchase contract. Many disputes start when buyers assume the Incoterm settles title.
What is the difference between a single entry bond and a continuous bond?
A single entry bond covers one shipment. A continuous bond covers all of an importer's entries for a year. Which one makes sense depends on how often you import and the duties involved.
Why is my landed cost higher than price plus freight?
Because freight is only one line. Duties, customs fees, brokerage, terminal and port charges, inland delivery and insurance all sit on top. Some of them only appear after the goods arrive, which is why they surprise first-time importers.
Can you source FDA-regulated products?
We don't take on FDA-regulated categories, because we can't judge whether a factory meets the standards US inspectors apply.
Roles and Registration
Importer of Record (IOR)
The party responsible for a US import entry: filing it, paying duties and fees, and making sure the classification, value and origin are right. The IOR is identified by an importer number, usually an IRS employer identification number. See Importer of Record Numbers Voided: CBP's Form 5106 Check.
Consignee
The party the goods are shipped to, as named on the shipping documents. The consignee is often the buyer, but it is not automatically the importer of record.
CBP Form 5106
The form used to create or update an importer's identification record with US Customs and Border Protection (CBP). Out-of-date details on file can hold up a shipment.
Customs Broker
A licensed company that prepares and files entries on behalf of the importer of record. The broker files the paperwork; legal responsibility for the entry stays with the importer of record.
Customs Entry and Bonds
Importer Security Filing (ISF)
Advance data on ocean shipments that the importer, or its agent, sends to CBP. Under 19 CFR 149.2, the core data elements are due no later than 24 hours before the cargo is loaded aboard the vessel at the foreign port. See ISF Filing and Bond Claims: What Your Customs Bond Misses.
Customs Bond
A guarantee by a surety company that the importer will pay duties, taxes and penalties owed to CBP. A bond is required for most formal entries.
Single Entry Bond and Continuous Bond
A single entry bond covers one shipment. A continuous bond covers all entries by the same importer for a one-year term. See Continuous Bond vs. Single Entry Bond: Which Do You Need?.
Liquidated Damages
The amount CBP can claim against a bond when its conditions are broken, for example late or missing filings. The claim goes to the party whose bond covers the obligation.
Classification, Origin and Duties
HTS Code
The Harmonized Tariff Schedule of the United States number that classifies a product and sets its duty rate. The first six digits follow the international HS system; the last four are US-specific.
Country of Origin
The country where goods were made or last substantially transformed. Origin decides which duties apply and how goods must be marked. See Country of Origin: Substantial Transformation and Transshipment.
Substantial Transformation
The test CBP uses to decide whether processing in a second country changes a product's origin. Simple assembly, repacking or relabeling usually does not.
Transshipment
Moving goods through a third country on the way to the US. When it is used to hide the true origin, it is a customs violation.
Antidumping and Countervailing Duties (AD/CVD)
Extra duties on specific products from specific countries, set by the US Department of Commerce. Whether a product is covered depends on the written scope of the order, not only the HTS code. See Antidumping Duty Scope: Why the HTS Code Isn't the Final Word.
Shipping and Incoterms
Incoterms
Standard trade terms published by the International Chamber of Commerce that split costs and risk between seller and buyer. The current version is Incoterms 2020.
FOB (Free On Board)
The seller delivers when the goods are loaded on the vessel at the port of shipment. From that point, the buyer pays the main freight and carries the risk. Used for sea and inland waterway transport.
CIF (Cost, Insurance and Freight)
The seller pays freight and minimum insurance to the destination port, but risk passes to the buyer once the goods are loaded at origin. See FOB vs CIF: Cost, Risk, and Title Under Incoterms 2020.
FCL and LCL
Full container load (FCL) means one shipper uses a whole container. Less than container load (LCL) means the shipment shares a container with other cargo and is charged by volume or weight. See Ocean Freight: FCL, LCL, and the Hidden Cost Traps.
Landed Cost
The total cost of a product delivered to your door: purchase price, freight, insurance, duties, fees, brokerage and local delivery. See The Real Landed Cost of a Shipment: What Sits Behind Freight.
Payment and Supplier Risk
Deposit and Balance
A common payment structure in Asia sourcing: part of the price is paid when the order is placed, and the rest before shipment. Tying the balance to an inspection keeps leverage with the buyer.
Letter of Credit (L/C)
A bank's undertaking to pay the seller when compliant documents are presented. The bank checks documents, not goods. See Cross-Border Payment Risk: Why an L/C Doesn't Guarantee Payment.
Supplier Due Diligence
Checks on a supplier before money moves: registration, ownership, production capacity and payment details. See How to Verify a Supplier Before You Wire a Deposit.
Payment Fraud
Schemes that redirect a buyer's payment, such as fake supplier websites, cloned email domains and last-minute bank account changes. See Supplier Payment Fraud: Fake Sites, Map Pins, and Domains.
Where Orientwings International Fits
Before we place an order, we check the supplier's background and risk. If we have a partnership with a supplier we propose, such as our authorized status with Soontrue, we tell you up front. Our team in China finds and visits suppliers, and our US company, Orientwings International Corp, signs and is paid in the US. Our work covers Supplier Due Diligence and Transaction Risk Management and Supplier Payment Handling on Our Purchases (Including Counterparty Background Screening). If a term here touches a shipment you are planning, tell us what you are sourcing.