If you’re exporting—or planning to—international trade terminology can be overwhelming. From shipping responsibilities to payment methods and free trade agreements, understanding the language of global trade helps you make informed decisions, reduce risk and stay compliant. 

This guide explains common international trade terms Canadian exporters need to know, with clear definitions and practical context to help you navigate global markets with confidence.

Understanding Incoterms 2020 

Incoterms—short for international commercial terms—are standardized rules that define the responsibilities of buyers and sellers during the shipment of goods. Published by the International Chamber of Commerce (ICC), Incoterms are 11 three-letter trade terms used to prevent misunderstandings related to costs, risk, and delivery obligations. 

Incoterms are commonly grouped as follows: 

• Ex Works (EXW): The buyer assumes responsibility for shipping costs and risk from the seller’s premises. 
• Group F rules: The buyer assumes most of the responsibility for shipping costs and risks in transit. 
• Group C rules: The seller pays main carriage costs, but risk transfers to the buyer once goods are handed to the carrier. 
• Group D rules: The seller assumes responsibility for both shipping costs and risks until delivery at destination. 
  
  For deeper guidance, explore EDC’s resource on understanding Incoterms to prevent export challenges.

Shipping and logistics terms clarify who’s responsible for transporting goods, managing documentation and covering insurance and freight costs. 

What does a freight forwarder do?

A freight forwarder is a company or individual who co-ordinates the movement of goods on behalf of exporters. Their services may include documentation, customs clearance, negotiating freight rates, insurance, warehousing, transportation and shipment tracking. Exporters often work with international freight forwarders that specialize in specific markets or industries. 

You can find more information and tips on how to find a freight forwarder using EDC’s InList (a curated list of vetted freight forwarders) or the Canadian International Freight Forwarding Association (CIFFA) directory.

What’s a customs broker?

Customs brokers are government-licensed professionals who ensure imported and exported goods comply with customs regulations. They prepare documentation, classify goods, calculate duties and provide guidance on tariffs, valuation and country of origin rules. In Canada, the Canadian Society of Customs Brokers (CSCB) connects businesses with licensed brokers, or you can also access the Canada Border Services Agency’s (CBSA) official list of licensed customs brokers. 

What’s an HS code?

A harmonized system (HS) code is a globally recognized numerical classification used to identify traded goods. HS codes are essential for:

• Completing customs declarations 
• Determining tariffs and duties 
• Ensuring regulatory compliance 

Exporters can look up tariff rates using the Canada Tariff Finder.

Common freight volume terms: 

• TL/FTL: Trailer load or full trailer load 
• LTL: Less than a trailer load 
• FCL: Full container load 
• LCL: Less than a container load 
  

What’s cargo insurance?

Cargo insurance protects goods during transit against risks of theft, damage, or loss. Coverage is typically defined by Institute Cargo Clauses: 

• Clause A: Broad, all-risk coverage 
• Clause B: Midlevel coverage for specific risks 
• Clause C: Limited coverage for major losses only
  

What’s carrier liability?

Carrier liability refers to a carrier’s legal responsibility for loss or damage during transit. Liability limits vary by transportation mode and country and may not fully cover shipment value—making cargo insurance an important risk management tool. 

What’s a commercial invoice?

A commercial invoice is a bill of sale between exporter and importer. It’s required for customs clearance and includes key shipment and valuation details. 

What’s a bill of lading?

A bill of lading is a legal document issued by a carrier that acts as a receipt, a document of title, and a contract of carriage. 

What’s a certificate of origin?

A certificate of origin confirms where goods were produced or manufactured and is used to determine tariff treatment under trade agreements. Requirements vary by agreement and Canada has different templates, depending on the applicable free trade agreements (FTAs). 

What’s an export declaration?

An export declaration reports the value, quantity and destination of exported goods. In Canada, exporters must submit declarations electronically using the Canadian Export Reporting System (CERS). 

What’s a tariff?

A tariff is a tax imposed on imported or exported goods. Understanding tariffs helps exporters price competitively and comply with customs requirements. 

What are preferential tariffs?

Preferential tariffs reduce or eliminate duties on goods traded under a free trade agreement, provided the goods meet rules of origin requirements. 

What are non‑tariff barriers?

Non‑tariff barriers include quotas, embargoes, sanctions, labelling requirements and regulatory standards that restrict trade beyond tariffs. 

What’s an FTA?

A free trade agreement (FTA) sets rules that reduce trade barriers, improve market access and protect intellectual property. Canada has FTAs with 50+ countries including: 

• CUSMA (Canada–United States–Mexico Agreement) 
• CETA (Canada–European Union Comprehensive Economic and Trade Agreement) 
• CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) 

Understanding rules of origin is essential to qualify for preferential tariff treatment under these agreements.

Common export payment methods: 

• Cash in advance: Buyer pays before shipment 
• Letters of credit: Bank-backed payment guarantee 
• Documentary collections: Banks exchange documents without guaranteeing payment 
  
• Open account: Payment occurs after delivery 
• Consignment: Exporter retains ownership until goods are sold 

Each method involves trade-offs between risk, cost and competitiveness.