FECO EXPORTING LTD

Our Role as a Commodity Trader

FECO EXPORTING provides a safe and effective trading platform for all our clients. We are not the owners or producers of the goods we trade; we are commodity traders. We buy large quantities of goods under contract from a supplier and then sell those same goods to our end buyers.

We act as both buyer and seller in our own name, and our operations are governed by a strict set of rules and laws designed to protect all parties. If you are a principal interested in buying or selling large quantities of goods, we encourage you to review the information on our website to understand our trading procedures.

Our Adherence to International Trading Standards

The obligations of all parties in a transaction with FECO EXPORTING are governed by Incoterms® 2020 rules. These rules clearly define the responsibilities of each party, including the delivery method and the allocation of costs and risks.

International Chamber of Commerce (ICC) Rules

FECO EXPORTING strictly adheres to the long-standing universal rules set by the International Chamber of Commerce (ICC) in Paris, France:

Incoterms® 2020: The current rules for the delivery of goods.
Uniform Customs and Practice for Documentary Credits (UCP 600): The rules that govern the issuance and use of an Irrevocable Documentary Letter of Credit (IDLC). An IDLC is a conditional payment instrument that is only valid if it is endorsed as adhering to UCP rules.
Uniform Rules for Collections (URC 522): These rules govern the collection process between banks. They are applied after a supplier seeks to collect on a UCP-endorsed financial instrument, ensuring a smooth and transparent remittance process from the supplier’s bank to the buyer’s bank.

By applying these ICC rules in all our commodity transactions, FECO EXPORTING ensures that all dealings are safe, transparent, and secure for all parties involved.

Understanding Delivery and Payment

In international trade, the term "delivery" refers to the presentation of original, clean documents, not the physical handover of goods. Payment is activated only when these documents are presented cleanly, meaning they fully comply with the terms of the Documentary Letter of Credit (DLC).

This principle holds true even under Delivered at Place (DAP) Incoterms, where the goods are delivered to a specific location, like the buyer's factory. The supplier still needs to present a complete set of clean documents to the bank to initiate payment.

For Incoterms like Free On Board (FOB), Cost and Freight (CFR), or Cost, Insurance, and Freight (CIF), risk transfers to the buyer once the goods pass the ship's rail at the port of loading. At this point, the buyer legally owns the goods.

Any claim that payment should occur after the goods arrive at the destination port is a serious misunderstanding of international trade practices. No reasonable supplier would agree to such terms. This is because allowing the buyer to receive the goods before payment is collected puts the supplier at extreme risk of not being paid at all. The supplier's only claim to the goods is the set of documents, and once those are handed over without a guarantee of payment, they lose control. If the buyer takes possession of the goods and converts them into another product before paying, the supplier may have no recourse for payment.

Understanding Title and Possession

In our transactions, the title to the goods is a transferable document, but it is not a negotiable instrument. FECO EXPORTING, as a commodity trader, does not take physical possession of the goods itself. The title document represents legal ownership, and while holding the title is often associated with having possession of the goods, they are distinct concepts.

The end buyer requires the title document to legally obtain physical possession of the goods. This is why the transfer of title is a critical step, as it formally transfers legal ownership from the seller to the buyer, enabling the buyer to claim the goods.

Payment by Irrevocable Documentary Letter of Credit (IDLC)

All payments for goods ordered from FECO EXPORTING, or for goods we purchase from a supplier, are initiated through the issuance of a UCP 600-endorsed Irrevocable Documentary Letter of Credit (IDLC).

For revolving transactions, the payment is specified as "non-cumulative revolving," covering the entire contract value until its expiration date.

We do not accept any other payment methods due to our commitment to utmost security. A bank-backed, UCP-endorsed IDLC provides a high level of security. While a Documentary Letter of Credit (DLC) offers a strong level of security, it only becomes a truly valuable instrument once all presented documents are found to be "clean" during the "at sight" verification process.

Understanding the First Delivery Date

The concept of the first delivery date often confuses many. Both the supplier and the buyer must be clear about whether they can meet this date from the very beginning.

Supplier's Responsibility: A supplier needs to confirm if they can meet the first delivery date when they receive an "Offer to Procure" (OTP) from a Professional Commodity Trader (PCT) or when they submit their own offer. For example, if it takes 5 days to finalize a contract, the buyer has 21 days to return it, and the first delivery is scheduled 30 days after that, the supplier would have over 50 days to prepare for the delivery on a Free On Board (FOB) transaction.
Buyer's Responsibility: Similarly, the end buyer needs to start arranging for a ship as soon as the offer is made. The ship should be ready to berth at the loading port at least a week before the first delivery date. If a buyer knows they can't secure a vessel in time, they must inform the seller before signing the contract to negotiate a new delivery date. This is why long validity periods of 90 days or more are often sought when sourcing goods.

During normal times, a common practice is to set the first delivery date for a buyer at 30 days after the signed contract is returned. During a pandemic or war, this may be extended to 45 days due to potential shipping delays and carrier shortages.

The buyer should check the availability of a vessel at the time the contract is presented. They must then book the ship and have it on standby at the port, ready for its turn, well before the actual delivery date.

Quotation

A quotation can be provided to a potential buyer or requested from a supplier. Confirming a quotation simply means the price and terms are accepted. Once a quote is confirmed, a formal offer can be issued.

The Offer Process

An offer can be made by a supplier to an end buyer or an intermediate buyer like FECO EXPORTING. This offer is typically governed by the supplier's own terms and conditions.

More commonly, the term "offer" refers to a formal document issued by FECO EXPORTING to a potential end buyer for the goods they wish to purchase. Unless otherwise stated, this offer becomes a legally binding agreement once the end buyer accepts it.

The buyer must accept the offer in its entirety without making any changes. FECO EXPORTING will only consider selling the secured goods once the offer has been formally accepted. A signed and accepted offer is a mandatory prerequisite before any contract can be finalized.

Contract

A contract is a legally binding written or spoken agreement between two or more parties. By entering into a contract, all parties agree to be bound by its terms and conditions. Our contracts are standardized to adhere to UCP (Uniform Customs and Practice for Documentary Credits) and Incoterms rules. This ensures clarity and consistency, offering no challenges or concerns to FECO EXPORTING or our end buyers.

Our Transaction Period

Completing a transaction, from initiation to the commencement of the ocean voyage, typically requires a minimum of 60 days. FECO EXPORTING operates on a futures basis, not on spot transactions. We proactively anticipate and secure the goods our clients will need three to four months in advance of placing an official order.

Bill of Lading and Transaction Security

When FECO EXPORTING handles freight, we do not use a Charter Party Bill of Lading (BOL). At the time of document presentation for payment, we provide the more secure and more expensive Shipowner's Endorsed Bill of Lading.

This practice, which is required under UCP 600 rules, demonstrates our commitment to providing added security to the entire transaction. By using a UCP 600-endorsed Documentary Letter of Credit (DLC), we ensure that our procedures meet the highest standards of safety and reliability, protecting all parties involved.

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