Quantities
Feco Exporting exclusively handles large contracts. We are able to consider transactions with suppliers who have significant stock and can service at least three or more revolving shipments per year. We work with suppliers who are looking to secure a new end buyer for these large quantities.
Delivery
Feco Exporting strictly abides by ICC Incoterms® 2020 delivery rules, or the most current version. Initially, we will accept goods under FAS, FCA, CPT, or FOB Incoterms, regardless of the product, including refined fuels and crude oil. If we require a CIP or CIF price basis, we will request this from the supplier once the initial transaction has been accepted. If CIP or CIF is not available, Feco Exporting will arrange its own shipping charter.
We can also arrange DAP delivery for select products, at our discretion, but only under the condition that payment is made via a confirmed financial instrument and a Unified Society of Commodity Traders (USCT) agent is located in the country of import.
A Memorandum of Understanding (MOU) with Feco Exporting is not legally binding. A legally binding status is only established after an offer is signed. The same rules apply when Feco Exporting deals with a supplier and with an end buyer. Once Feco Exporting signs an offer with a supplier, a legally binding status is in effect. This mirror effect of legal obligation also applies to our end buyers.
FECO EXPORTING uses the following standard procedures to finalize a deal with an end buyer or a supplier. These procedures may be adapted on a case-by-case basis, but all variations will remain within these general guidelines.
1. Initial Offer and Review:
An offer (MOU, AOS, or similar) is submitted to FECO EXPORTING.
FECO EXPORTING will not contact the supplier until we are ready to purchase the goods.
We do not consider offers with a validity period of less than three months.
2. Commencing the Deal:
Once we are ready to proceed, we will issue an Offer to Procure (OTP) to the supplier.
The OTP marks the official commencement of a deal.
A legally binding status is in effect once the OTP is accepted.
The transaction must be completed within 60 days or less.
3. Contract and Delivery:
Upon acceptance of the OTP, the supplier provides a contract.
The contract is valid for an initial first delivery within 44 days or as otherwise stated.
A PDF copy of the signed contract sent via email allows the deal to proceed, while a hard copy is sent via courier for our records.
4. Financial Instruments:
Within seven days of the contract being signed, the payment instrument is lodged.
Within seven days thereafter, a Performance Guarantee (PG) is advised to FECO EXPORTING.
At this point, the first delivery date is set at 30 days.
5. Final Steps:
Documents are presented cleanly from the supplier's bank to FECO EXPORTING's bank (or our USCT member bank).
Payment is collected in accordance with the latest URC (Uniform Rules for Collections) rules.
The ship departs from the loading port and arrives at its destination.
The goods are subject to a 90-day defect or rejection clause.
The next shipment is made ready for delivery 30 days after the first delivery.
Our Supply Trading Philosophy
FECO EXPORTING operates with the strictest and safest trading processes. We believe these procedures should be acceptable to all suppliers, as we will not consider any that are legally precarious or unsound. Our standard procedures apply at all times. A supplier unable to accept an ICC UCP-endorsed Documentary Letter of Credit (DLC) as payment cannot conduct business with FECO EXPORTING.
A supplier, for us, is an entity that owns the export-ready goods they offer to FECO EXPORTING on a monthly basis. We will also work with duly appointed agents who represent a named, disclosed supplier. In such cases, the agent obtains their commission directly from their represented principal if FECO EXPORTING purchases the offered goods.
Our business arrangements are private and not subject to formal public scrutiny. These arrangements are governed by binding contracts and the physical delivery of goods purchased and sold.
We do not engage in small Full Container Load (FCL) transactions. Our focus is on securing the largest revolving contracts for Non-Bulk Cargo (NBC) lots. This means one buyer and one whole shipment. We effectively leverage the internet to conduct our business safely, a domain in which we are highly proficient.
We do not deal in speculative prices. Instead, we operate on physical market prices for commodities that are physically secured, typically based on a predetermined fixed price rather than a free-floating exchange-created price. We buy goods today for physical delivery in the future to a pre-qualified buyer. Our "future" delivery date is typically limited to between 60 to 90 days from the signing of purchase contracts.
FECO EXPORTING will purchase goods from a supplier using specific formulations unless otherwise agreed upon. If an index or exchange (e.g., LME) is used to formulate prices, that index must be publicly accessible online. The following examples are provided for the supplier's consideration before assuring supply.
Important Note: The formula used when buying goods from a supplier may differ significantly from the formula used when selling goods to our end buyer, as these are independent trading aspects.
Suppliers also need to ensure that the first delivery date falls on or before the 15th day of a given month. FECO EXPORTING has found that this specific date avoids potential issues with payment and delivery, particularly when global industries slow down during the Christian festive season (Christmas and New Year celebrations). In all cases, offers and assurances made by the supplier to FECO EXPORTING will be carefully considered, provided certain aspects regarding payments and delivery align with FECO EXPORTING's trading premise.
FECO EXPORTING is committed to signing a contract and lodging its financial instrument for payment within 7 days for a delivery due 30 days after the contract signing date. This is crucial because the financing to purchase goods must be secured well before the contract with the supplier is signed. FECO EXPORTING cannot base goods pricing on an average taken the day before, on, or after loading, as we require a confirmed value to lodge a financial instrument long before loading commences.
To ensure no issues arise with the financial instrument once it's lodged, its value is set based on the assessed value of the goods on the day the contract is signed. The DLC for payment is lodged with this value. If the price of goods falls in value at the time of loading, the supplier will credit FECO EXPORTING. Conversely, if the price rise exceeds the 5.0% tolerance factor attached to the financial instrument, FECO EXPORTING will owe the supplier the difference at that time. To minimize bank charges and fees, amendments to the credit are only applied for if, after three months, accumulated credits and debits cannot be reconciled.
In all cases, FECO EXPORTING will first examine the supplier's requested terms. If FECO EXPORTING is unable to purchase under those terms, the offer made to FECO EXPORTING will be rejected. At this point, a counteroffer will be advised for the supplier's careful consideration. This process aims to establish a middle ground where some of the original requirements of both FECO EXPORTING and the supplier can be met, while others may not.
Understanding INCOTERMS® 2020 Delivery Rules
This is a general overview of the Incoterms® 2020 rules. The official Incoterms® 2020 publication can be purchased from the ICC website.
Incoterms® have been in use since 1936 and are a universally recognized set of delivery rules, acknowledged by legal jurisdictions worldwide, much like the ICC's UCP rules for Documentary Credits. FECO EXPORTING strictly applies Incoterms® in all of its contracts. The International Chamber of Commerce (ICC) in Paris, France, holds a consultative status with the UN Charter and is the administrator of Incoterms®.
It is extremely rare to find a contract that does not incorporate Incoterms® delivery rules. Numerous legal cases demonstrate how incorrect interpretations of these terms have led to significant financial losses.
While Incoterms® define the obligations of the "buyer" and "seller," this can be a source of confusion for many traders. In practice, the terms ultimately refer to the specific obligations of the supplier in possession of the goods and the end buyer taking possession of the goods. FECO EXPORTING, acting as both a buyer and seller of commodities, must also meticulously observe these rules. We hope the ICC will eventually revise the terminology to more accurately reflect the roles of the parties involved, as FECO EXPORTING and its USCT members have done for decades.
INCOTERMS® 2020 Delivery Rules and Obligations
This section provides an overview of the Incoterms® 2020 delivery rules and their specific obligations. The complete Incoterms® 2020 publication can be purchased from the ICC website. A Professional Commodity Trader (PCT), including Feco Exporting, typically utilizes a specific subset of the eleven main Incoterms.
General Incoterms Principles:
Least Obligation: The EXW (Ex Works) term places the least obligation on the seller.
Most Obligation: The DAP (Delivered at Place) and DDP (Delivered Duty Paid) terms place the most obligation on the seller.
Charter Party Bill of Lading (BOL): Under UCP 600 rules, Feco Exporting and other PCTs cannot use a Charter Party BOL. We must provide the more secure and expensive Shipowner's Endorsed BOL as an added security feature for the transaction.
Incoterms Used by Feco Exporting:
FECO EXPORTING primarily utilizes the following Incoterms:
1. FCA (Free Carrier)
Description: This is the correct term for Full Container Loads (FCL) where the seller's obligation is to deliver the goods to a designated carrier or another person nominated by the buyer at the seller's premises or another named place.
Supplier's Obligations: The supplier covers all expenses to the Customs Freight Station (CFS) and secures the necessary customs and intermodal transport documents up to that point. The end buyer assumes all subsequent obligations and risks.
Security: To collect on a UCP DLC, supplier must also secure a "Received BOL" and include it in the presented documents.
2. CIP (Carriage and Insurance Paid To)
Description: This is the correct term for FCL shipments. The seller pays for carriage and insurance to the named destination.
Supplier's Obligations: Selling costs include freight and all expenses for unloading the goods at the port of destination.
Security: We must obtain a "shipped on board BOL" endorsed by the shipowner at the Port of Loading (POL). This is a critical security feature under UCP "at sight" presentation rules that we are expected to follow.
3. CPT (Carriage Paid To)
Description: Feco Exporting rarely uses this Incoterm, typically only for special air cargo transactions for high-value goods like precious metals.
Supplier's Obligations: Seller are responsible for all expenses up to the destination airport's customs terminal. From there, the goods are delivered to a designated location, such as a gold depository.
4. FAS (Free Alongside Ship)
Description: The seller delivers the goods alongside the vessel at the named port of shipment. The buyer assumes all risk of loss or damage to the goods from that point on.
Supplier's Obligations: Supplier deliver the goods to the loading port and place them alongside the ship, ready for loading. All subsequent expenses at the port, including lifting fees, are the responsibility of the end buyer.
5. CIF (Cost, Insurance and Freight)
Description: The seller is responsible for the cost of the goods, freight, and insurance to the named port of destination. The risk of loss or damage, however, transfers to the buyer once the goods are loaded on the vessel at the Port of Loading (POL).
Insurance: Incoterms® 2020 requires the supplier to provide Class "A" insurance coverage, a change from the previous Class "C" minimum. The end buyer has the option to request the lower Class "C" coverage, which the supplier must accept. We advise our clients to choose insurance that adequately covers their goods. Feco Exporting will offer Class "C" minimum insurance unless otherwise agreed upon.
Freight Component: The freight cost is marked as "prepaid" on the Bill of Lading to satisfy DLC collection requirements. The buyer, however, is responsible for paying the carrier directly upon the goods' arrival at the destination port. Feco Exporting does not collect the freight component from the buyer; instead, the value remains as a credit in the buyer's account to cover this expense. This allows Feco Exporting to get paid the full contract value and secure a vessel for the goods.
6. CFR (Cost and Freight)
Description: All expenses, including freight, are the responsibility of the seller up to the Port of Loading (POL). The buyer must secure their own insurance coverage before delivery takes place. The collection process is the same as for CIF, but without the insurance component provided by the seller.
7. FOB (Free on Board)
Description: This is one of the most popular delivery models for commodity shipments. The seller is responsible for all expenses up to the point where the goods are loaded onto the vessel and pass the ship's rail at the Port of Loading (POL). At this point, the risk transfers to the buyer.
Note: In refined fuels and crude oil deals, the "ship's rail" is defined as the ship's connecting manifold.
Why Choose FECO EXPORTING?
Contrary to common belief, it is challenging to secure highly sought-after, export-ready goods by directly contacting suppliers. Suppliers are often overwhelmed with requests from dubious individuals and must spend a lot of time vetting those who do not understand the rules and regulations of international trade.
FECO EXPORTING and its network of USCT members are well-established in the global marketplace. We can directly contact suppliers, even for difficult-to-secure products, and negotiate the lowest possible prices for large contracts on behalf of our clients. We do not waste time with suspicious inquiries.
Our services include drayage at all major ports, and our worldwide network of USCT members can act as agents to supervise deliveries. In this industry, mistakes and misunderstandings are common and can result in significant financial losses for both buyers and suppliers.
By using FECO EXPORTING, you are entrusting a global expert to handle months of negotiations and secure goods for you. This ensures you receive the best prices and service, with goods arriving as ordered, free from ambiguity or unexpected expenses. Our top priority is to protect our clients from financial loss. These are just a few of the excellent reasons to choose FECO EXPORTING for your trading needs.
