Sourcing Terms Glossary
Practical definitions of AQL, CBM, DDP, EXW, FOB, HS codes, Incoterms, L/C, MOQ, OEM, ODM, and T/T for wholesale buyers importing products from China.
- AQL
- Acceptance Quality Limit. It is used with a sampling plan to set acceptance and rejection numbers for a lot.
- CBM
- Cubic meters: a volume unit. For LCL weight/measurement pricing, compare volume and weight only after conversion to the quoted revenue-ton basis; confirm the carrier’s conversion, rounding, and minimum charge.
- DDP
- Delivered Duty Paid (Incoterms 2020). The seller handles import clearance and duties at the named destination; check unloading and any agreed exclusions.
- EXW
- Ex Works (Incoterms 2020). Delivery is goods made available at the named place, not loaded onto the collecting vehicle. Loading and export clearance are the buyer’s responsibility under this rule.
- FOB
- Free On Board (Incoterms 2020), for sea or inland waterway transport. Delivery and risk transfer occur on board the buyer-nominated vessel at the named shipment port; the buyer arranges main carriage.
- HS code
- WCO product classification, with six-digit international codes. This glossary references HS 2022; confirm the destination tariff edition, classification, and duty for the entry date.
- Incoterms
- ICC delivery rules allocating tasks, cost, and risk. Record the rule, version, and named place; Incoterms 2020 do not set payment timing or transfer of ownership.
- L/C
- Letter of Credit. A bank payment undertaking subject to the credit’s documentary conditions; check the actual credit terms.
- MOQ
- Minimum order quantity a supplier agrees to accept. Negotiability and sample requirements are commercial terms, not part of the definition.
- ODM
- Original Design Manufacturer. The buyer starts from a supplier design and may add branding or agreed changes.
- OEM
- Original Equipment Manufacturer. The supplier builds to the buyer design or tooling.
- T/T
- Telegraphic transfer: a bank-transfer payment method. A deposit, balance, and release trigger need separate agreement; they are not defined by T/T.
Terms that affect the quote
MOQ describes the smallest run the supplier will accept, but it may change with material, color, decoration, or packaging. EXW, FOB, and DDP describe different delivery obligations. Write the named place and agreed version beside the rule; record payment conditions separately.
CBM and packed weight affect freight. The HS code and declared product details affect customs treatment. Use the landed-cost worksheet to record classification and freight scope; the calculator estimates costs from amounts you confirm.
Terms that affect release
AQL belongs to the inspection plan. It does not mean that every unit was checked or that the lot has no defects. T/T and L/C describe payment methods, but the order should also state when the balance becomes due and which documents or inspection result control that payment.
Read the quality control guide for AQL and sampling. The QC checklist records the method and acceptance evidence.
Example quotation record
Illustrative entry, not an actual order: FOB — Incoterms 2020 — Ningbo port, China — T/T balance after the buyer accepts the agreed inspection report and shipment documents. This payment trigger is a hypothetical contract clause, separate from FOB. Record the actual agreement in the RFQ template.
Sources and scope
Definitions checked against public references on 8 October 2026; verify the actual contract and carrier tariff.