Shrinkage

In foreign trade terminology, shrinkage refers to the reduction in weight, volume, or quantity of goods during transportation, storage, or processing due to physical, chemical, or natural factors. It is common in textiles, agricultural products, and minerals. Usage scenarios include: 1) In letters of credit or contracts, the more or less clause specifies an allowable shrinkage rate, which is the basis for determining the actual delivery quantity; 2) In insurance claims, shrinkage is one of the covered risks; 3) In processing trade, the shrinkage rate is used to calculate unit consumption. Note: Shrinkage is different from shortage, which means the actual delivery is less than the quantity stated in the bill of lading or invoice, possibly due to theft or leakage; shrinkage is a natural reduction caused by the inherent characteristics of the goods and usually has an industry-recognized ratio. Difference from 'loss': loss has a broader scope, including losses in production and warehousing; shrinkage specifically refers to reduction caused by moisture evaporation, volatilization, etc. Foreign trade practitioners should clearly specify in the contract the allowable shrinkage rate, measurement method, and responsibility allocation to avoid disputes.