Import & Trade Glossary for European Importers

Total landed cost #

The complete cost of getting a product from its origin to your warehouse door, including the purchase price, all freight charges, import duties, import VAT, customs broker fees, insurance, port charges, and any compliance costs such as CBAM certificates. Landed cost is the figure that determines whether an import is actually profitable and can differ substantially from the supplier invoice price alone.

For EU importers working across multiple origins and commodity types, calculating true landed cost before committing to an order is the single most important financial control. Use the Orca Suite landed cost estimator or see our deeper guide: True landed cost for EU importers.

Customs value (CIF) #

The value of goods as declared to customs, used as the basis for calculating import duty. In the EU the standard method is the transaction value, essentially the price paid for the goods, adjusted to include cost, insurance, and freight (CIF) to the EU border. A higher customs value increases the duty payable, so understanding exactly what is included in the CIF figure matters for accurate landed cost modelling.

Common adjustments include adding freight and insurance where they are not already in the price, and deducting costs incurred after the EU entry point. Getting the customs value right is a legal obligation and a direct lever on total duty spend.

Import duty / tariff #

A tax levied by customs authorities on goods imported from abroad, expressed as a percentage of the customs value (ad valorem) or as a fixed amount per unit of weight or quantity (specific duty). EU duty rates are set in the EU Common Customs Tariff and vary by commodity code, country of origin, and any applicable trade agreement or preferential arrangement.

Duty is one of the largest variable components of landed cost and can shift significantly when origin or commodity classification changes, making it a primary driver of sourcing decisions. Rules, rates, and reliefs evolve with trade policy and should be verified against the current tariff schedule.

Import VAT #

Value-added tax charged at the point of import, calculated on the customs value plus import duty plus other charges such as freight and insurance to destination. In the EU, import VAT is levied at the domestic VAT rate for the relevant product category, typically 20-25% depending on the member state and product type.

For VAT-registered businesses import VAT is generally reclaimable, but it creates a cash-flow obligation that must be funded until reclaim. For non-VAT-registered importers, or for importers operating under postponed VAT accounting, the treatment differs - always confirm the applicable method with your VAT adviser.

Customs valuation #

The process of determining the customs value of imported goods in accordance with the WTO Customs Valuation Agreement, as implemented in the EU Union Customs Code. The primary method is transaction value; where that cannot be used, five alternative methods - identical goods value, similar goods value, deductive method, computed method, and fall-back - are applied in sequence.

Correct valuation is a legal obligation and has a direct impact on the duty and import VAT owed. Errors in valuation - whether under- or over-declaration - carry legal risk, and customs authorities conduct post-clearance audits that can go back several years.

HS code / commodity code #

A numerical code from the World Customs Organization's Harmonized System (HS) used internationally to classify traded goods. In the EU the system is extended into the Combined Nomenclature (CN), an 8-digit code that determines the applicable duty rate, trade restrictions, licences, and compliance obligations including CBAM scope.

Misclassification - assigning the wrong code - is one of the most common and costly customs errors: it can result in underpayment or overpayment of duty, incorrect application of trade measures, and potential penalties. Binding Tariff Information (BTI) decisions from customs authorities provide legal certainty on classification for a given product.

CBAM (Carbon Border Adjustment Mechanism) #

An EU climate policy tool introduced under Regulation (EU) 2023/956 that applies a carbon cost to imports of certain goods - iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen - based on the verified greenhouse gas emissions embedded in their production. Importers must be authorised CBAM declarants and surrender CBAM certificates each year equal to the embedded emissions in their covered imports; the certificate price tracks the EU Emissions Trading System (EU ETS) carbon price.

CBAM is not a tariff - it is a certificate obligation calculated from emissions intensity, not from the value of goods. It entered its financially binding definitive phase on 1 January 2026 and is now a material cost line for any importer of covered goods. For a full walkthrough of obligations, see CBAM for European importers: a practical guide.

Incoterms #

A set of internationally standardised trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers for the delivery of goods, specifically who bears cost and risk at each stage of the journey. The current edition is Incoterms 2020. Key terms for importers:

EXW (Ex Works) - buyer collects from the seller's premises and bears all costs and risk from that point. Maximum responsibility for the buyer. FOB (Free on Board) - seller delivers to the named port of shipment and loads onto the vessel; buyer pays ocean freight and all onward costs. CIF (Cost, Insurance and Freight) - seller pays freight and insurance to the destination port; buyer handles import clearance and inland delivery. DDP (Delivered Duty Paid) - seller bears all costs including import duty and delivers to the named destination; maximum responsibility for the seller.

Incoterms directly determine who controls freight, who pays which charges, and therefore how total landed cost is constructed. An importer buying FOB versus CIF retains freight control but also bears freight risk; both affect landed cost modelling differently.

Broker / customs broker #

A licensed professional or firm that prepares and submits customs declarations on behalf of importers, ensuring that goods clear the border in compliance with all applicable regulations. In the EU, customs agents may hold either direct representation (acting in the importer's name, with liability resting on the importer) or indirect representation (acting in their own name, with joint liability between agent and importer).

A good customs broker adds value beyond filing, advising on commodity classification, valuation methods, origin rules, and duty relief schemes such as inward processing or returned goods relief. However, the importer retains legal responsibility for the accuracy of the customs declaration regardless of who prepares it.

Bill of lading #

A legal document issued by a carrier to a shipper that serves three functions simultaneously: a receipt for the goods shipped, a contract of carriage between shipper and carrier, and a document of title to the goods. In containerised ocean freight, the original bill of lading (OBL) must typically be presented to the carrier to release the goods at destination; failure to have the OBL in hand on time is a common cause of demurrage accumulation.

Electronic bills of lading (eBLs) are increasingly accepted across trade lanes and reduce the delays inherent in couriering paper originals. The bill of lading also records the Incoterms terms, which determine who is responsible for customs clearance and onward costs.

Free time (laytime) #

The number of days included in a shipping line's contract or tariff during which a container may sit at the terminal (for demurrage purposes) or remain with the consignee after gate-out (for detention purposes) without incurring any charge. Free-time allowances vary by carrier, trade lane, port, and commercial agreement.

Free time for demurrage and free time for detention are separate clocks that run independently. Understanding both allowances, and monitoring them in real time, is the starting point for managing total D&D exposure. Negotiating extended free time into carrier contracts is one of the most cost-effective levers for regular importers.

Demurrage #

A charge levied by a shipping line on an importer or shipper when a container remains at the port or terminal beyond the agreed free time for pickup. Demurrage is calculated per container per day - rates typically escalate in tiers after the initial free period expires - and accumulates quickly, particularly at congested ports.

It is one of the most avoidable but commonly incurred cost overruns in containerised trade, typically caused by delayed customs clearance, missing documentation, or slow inland logistics coordination. Demurrage charges appear in the landed cost of the affected shipment and are often disputed after the fact rather than prevented proactively.

Detention #

A charge levied by a shipping line when a container has been removed from the port but is not returned to the carrier's designated depot within the agreed free time. Detention begins after the container leaves the terminal gate and runs until it is returned empty. Unlike demurrage, which tracks time the box spends in the port, detention tracks time the box spends with the consignee: at a warehouse, a factory, or in inland transit.

Both charges together form the detention and demurrage (D&D) cost, and both stem from separate contractual clock-starts that importers must monitor independently.

Detention & demurrage (D&D) #

The combined cost category covering both demurrage (charges for containers held at port beyond free time) and detention (charges for containers held by the consignee beyond free time after gate-out). D&D is a significant and frequently underestimated line in the total cost of importing, particularly for importers without real-time visibility into container positions and free-time clocks.

Proactive D&D management requires tracking each container's terminal arrival date, free-time expiry, gate-out, and empty-return dates in one place. Reactive management - reconciling invoices after charges accrue - typically results in paying amounts that could have been avoided with one to two days' earlier action. For a detailed breakdown of how D&D works and how to dispute charges, see Detention and demurrage explained.

Control tower #

A centralised visibility and coordination layer that aggregates data from multiple supply chain systems - carriers, customs, ports, ERP, finance - to give operations teams a single view of all in-transit shipments, compliance statuses, cost accruals, and exception alerts. A supply chain control tower does not replace execution systems; it sits above them to surface the information needed for fast decisions.

For importers managing multiple trade lanes, product lines, and cost categories simultaneously, a control tower is the difference between managing reactively (responding to invoices and delays) and operating proactively (anticipating problems before they crystallise into costs). D&D free-time clocks, CBAM certificate positions, and duty accruals are all natural data feeds for a trade control tower.