The first quote a new importer receives can look like a bowl of alphabet soup that has been left out overnight. FOB. CIF. CBM. W/M. IDF. CoC. Each set of letters is quietly deciding who pays for what, and where your money goes if something goes wrong at sea.

This glossary translates the terms Kenyan importers meet most often into plain English, grouped so you can find them fast. Keep it open next to your next quote.

Delivery terms (Incoterms)

Incoterms are the international rules, published by the International Chamber of Commerce, that say who pays for what and where the risk passes from seller to buyer. Picture the goods as a baton in a relay race: the Incoterm says at which point it changes hands. The current version is Incoterms 2020. Always write the version and the place, for example “FOB Shenzhen, Incoterms 2020”.

• EXW (Ex Works): the seller makes the goods available at the factory. You pay and arrange everything from there, including export clearance in China.
• FOB (Free on Board): the seller delivers the goods on board the ship at the named port of loading. From that point, sea freight, insurance and risk are yours. This is the most common term for imports from China.
• CFR (Cost and Freight): like FOB, but the seller also pays the sea freight to the named port, for example “CFR Mombasa”. The risk still passes to you when the goods are on board in China.
• CIF (Cost, Insurance and Freight): like CFR, but the seller also buys minimum cover marine insurance. The risk still passes to you at the port of loading, not in Mombasa. “Mombasa” on the quote tells you where the freight is paid to, not where your risk begins.
• DAP and DDP: the seller delivers to a named place in Kenya. Under DDP the seller also pays Kenyan duties and taxes, which is rare and needs careful checking.

A note on insurance: Section 20 of Kenya’s Insurance Act requires imports to be insured with an insurer licensed in Kenya. That is one reason many Kenyan importers buy FOB or CFR and arrange marine cover locally. We cover this in our post on Section 20 and marine insurance.

Measuring and pricing cargo

Freight is sold by space or by weight, and the forwarder charges whichever your cargo uses more of. A carton of feathers and a carton of bolts are not the same customer.

• CBM (cubic metre): length x width x height in metres. A carton of 60 cm x 50 cm x 40 cm is 0.12 CBM. Sea freight for shared containers is priced per CBM.
• W/M (weight or measure): in LCL, 1 CBM is treated as equal to 1,000 KG and you pay on whichever is greater.
• Chargeable weight: in air freight, you pay on the actual weight or the volumetric weight (L x W x H in cm divided by 6,000), whichever is higher.
• LCL (Less than Container Load): your goods share a container with other shippers’ goods. Good for small and medium shipments.
• FCL (Full Container Load): you book the whole container for your goods alone. A 20 ft container has about 33 CBM of internal space and a 40 ft about 67 CBM. In practice you load about 25 to 28 CBM and 55 to 58 CBM, because cartons are not liquid.
• Consolidation: combining several shippers’ consignments into one container at origin, then separating them at destination. This is how LCL works.
• Bulk cargo: loose cargo carried in the ship’s hold, such as grain, clinker or fertiliser, rather than in containers.

For a worked example of per KG and per CBM pricing, see air or sea from China to Kenya.

The cast of characters

• Shipper or consignor: the party sending the goods, usually your supplier.
• Consignee: the party receiving the goods, named on the shipping documents. In Kenya the consignee declares the goods to customs and pays the duties, so the name and KRA PIN must be exactly right.
• Carrier: the shipping line, airline or trucking company that physically moves the goods.
• Freight forwarder: the travel agent for your cargo. It arranges the whole movement, booking carriers, consolidating cargo and coordinating documents.
• Customs agent (clearing agent): lodges declarations with KRA and clears goods. Many firms, ours included, are both forwarder and customs agent. See the difference between the two.

Documents

• Bill of lading (B/L): issued by the shipping line for sea cargo. A receipt, evidence of the contract of carriage and a document of title.
• Telex release and sea waybill: ways of releasing cargo without couriering the original bills of lading.
• Air waybill (AWB): the air cargo equivalent of a bill of lading, but not a document of title.
• Commercial invoice and packing list: the supplier’s statement of what was sold, at what price, and how it is packed.
• IDF (Import Declaration Form): lodged by your agent in KRA’s iCMS system before shipping. See the documents you need when importing.
• CoC (Certificate of Conformity): issued under the KEBS PVoC programme to show goods meet Kenyan standards. See our PVoC guide.

Taxes and charges

• HS code: the international product code that sets your duty rate. The wrong code means the wrong duty, and KRA will notice before you do.
• Customs value: the value KRA uses to calculate taxes, generally the CIF value of the goods.
• Import Declaration Fee (IDF): 2.5% of the customs value on most imports. Yes, the form and the fee share the same initials. No, they are not the same thing.
• Railway Development Levy (RDL): 2% of the customs value on most imports.

Example: goods with a customs value of KES 800,000 pay an IDF of KES 20,000 and an RDL of KES 16,000, before import duty, excise and VAT.

At the port

• CFS (Container Freight Station): a facility near the port where containers are held, unpacked and verified for clearance.
• ICD (Inland Container Depot): an inland dry port, such as the Nairobi ICD or the Naivasha ICD, where cargo railed from Mombasa can be cleared.
• Demurrage: the shipping line’s charge for a full container kept in the port beyond the free days.
• Detention: the line’s charge for keeping its container outside the port too long before returning it empty.
• Storage: KPA or CFS charges for cargo left beyond the free period. See demurrage, detention and storage explained.

Still unsure what a term on your quote means?

Ask us. We would much rather explain three letters than watch you pay for them. Call +254 722 375 423 or +254 741 444 444, WhatsApp @sidoman254 or @Sidoman_, or email info@sidoman.com, or ask for a quote.

The soup is easier to read once you know the letters. Bon appétit.