AR For 2016 TPAC REVENUE
What you need to know about the Export-Import Assurance
EIA platform provides logistics for international exporters in to China. (Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations.) EIA functions as an agent for the exporter in moving cargo to an overseas destination. EIA is familiar with the import rules and regulations of China, and the export regulations of the U.S. government, the methods of shipping, and the documents related to foreign trade.
EIA assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, EIA can reserve the necessary space on a vessel, aircraft, train, or truck. The cost for their services is a legitimate export cost that should be included in the price charged to the customer.
Once the order is ready for shipment, EIA should review all documents to ensure that everything is in order. This is of particular importance with letter of credit payment terms. They may also prepare the bill of lading and any special required documentation. After shipment, they can route the documents to the seller, the buyer, or to a paying bank. EIA can also make arrangements with customs brokers overseas to ensure that the goods comply with customs export documentation regulations. A customs broker is an individual or company that is licensed to transact customs business on behalf of others. Customs business is limited to those activities involving transactions related to the entry and admissibility of merchandise; its classification and valuation; the payment of duties, taxes, or other charges assessed or collected; or the refund, rebate, or drawback thereof.
Fees & Payments
EIA charges for transferring documents to another transportation company at destination. This fee is a part of the ocean freight charges, being paid by the importer at the port of discharge in the International Commercial Term (Incoterm) FOB (free on board), and by the exporter at the origin in the Incoterms CFR (cost and freight) and CIF (cost, insurance and freight).
Contracts
The physical commodity market is an over-the-counter ( OTC) market, where two parties agree on a contract to deliver and buy a commodity. These contracts are in many cases unique because they are set up in such a manner that they meet the specific needs of both parties. A contract is however not written from scratch for every single transaction. Usually a standard contract from a leading company is used as a basis for an individual contract. Thus a contract is relatively standard, with the exception of certain aspects. A number of aspects are determined for each contract.
Quantity
First of all, the quantity of the commodity must be determined, to be able to settle the other aspects of a contract. The quantity can be expressed in various measurement units. It can be expressed in a metric unit, an Anglo-Saxon unit or in a traditional measurement unit such as a barrel or bag. Contracts usually have a clause which arranges for a third independent party to verify the quantity of a delivery.
Quality
Quality is an important aspect of a contract. A number of requirements will be determined which must be met by the supplier. Depending on the commodity, the degree of importance of the quality may vary. When a contract uses optional qualities, a difference in quality can be compensated by the use of premiums or discounts. These aspects must be specified in the contract.
Price
The price of the commodity is an obvious essential part of a contract. The other sections of the contract all generate input for determining the price. A price can be settled in many different ways, ranging from a fixed price to a market related price.
Delivery
The delivery of a commodity is an essential part of a contract, because delivery can form a significant expenditure. Therefore it is important this aspect is covered in the contract, so both parties know which aspect of delivery will generate costs for them. There are different methods for determining which party and to which degree is responsible for the transportation of the commodity. These responsibilities are standardized in a number of international transport terms, called Incoterms. By using incoterms, the risk of misunderstandings regarding transport responsibilities can be almost eliminated. Apart from the shipping method and responsibilities, the delivery location will be mentioned in a commodity contract. For many commodities, there are designated locations upon which the exchange of the physical commodities takes place. These standardized locations will be used in many of the commodity contracts. There is however also the possibility of agreeing on a different location upon which the delivery will take place. This will depend on the negotiations between two parties.
Managing Commodity Trade¶
Commodity trade is a highly complex process involving different aspects which all need to be managed properly in order to meet international requirements and more importantly increase profits. EIA offers an innovative and easy-to-use solution for managing all aspects of commodity trade, from contracts to invoicing, creating deliveries and managing risks. The flexibility and endless possibilities of EIA has an unique chance to take full advantage of the opportunities presented by the commodity markets
Commodity Trade Agreements – PROCESSING
EIA Commodity Crude Oil Deal Structure Notes
Crude oil is the basis for many types of fuel. It is used in the production of gasoline, diesel and jet fuel. Next to its usage as a fuel, crude oil is also used as a basis for motor oils, fertilizers, asphalt and many other uses.
RE: China Tank Farm – Bonny Light Crude Oil
Transaction Code:
GSO_BLCO_CH
Seller’s Code:
GSO_CH2012
Buyer’s Code:
GSO_BLCO_100493AM
EIA has secured a C.I.F. trade position for 6 MBRL (Six Million Barrels) per vessel. This commodity trade agreement for Nigerian Bonny Light Crude Oil was made and entered into execution on TBD for the following commodities:
Commodity:
Nigerian Bonny Light Crude Oil (BLCO)
Quantity:
72 MBRL (Annually Hedged)
Period:
3 Year w/possible 2 Year Extension
Location:
China
Payment:
P Clean & Clear USD via Ledger to Ledger or Bank to Bank Transfer
P The price payable for each BLCO lifted shall (MINUS U.S. 10% DOLLARS BELOW BRENT) quotation as quoted in Platts Market Wire on bill of lading date.
P The selling price derived from the pricing formula initially set out in a contract shall apply subject to the provisions hereof.
P Price Defined: Minus USD 10% Below Brent Price
P Importer Pays U.S. $0.25 Per Barrel
P Payment By Bank Guarantee / Wire Transfer: Unless otherwise agreed by seller, the buyer shall pay for all crude oil lifted and liquidated damages provided in the General Conditions, by letter of credit/wire transfer substantially worded being agreed by both parties
P Financial Instrument Type shall be Letter of Credit or BG/Wire Transfer as per International standard. At a value equal to 818,553 Metric Tons of BLCO lifter plus the value of the commissions.
Commodity Trade Agreements – SIGNED AGREEMENT
EIA Commodity Sugar Deal Structure Notes
Sugar is a sweet-flavored ingredient, used in many types of food and drinks around the world. Sugar can be found in almost every plant, but it can only be extracted, in an economically efficient manner, from sugarcane and sugar beet. This sweetener has become a preferred ingredient in almost every food product.
RE: Brazil Sugar Cane -- Icumsa 45
Transaction Code:
GSO_BI455_CH
Seller’s Code:
GSO_CH2012
Buyer’s Code:
GSO_BLCO_100493AM
EIA has secured first C.I.F. trade position for 300,000MT (first 90 days); second C.I.F. trade position for 900,000 MT (12 months contingent upon the performance of first trade position). This commodity trade agreement for Brazilian Icumsa 45 Sugar is made and entered into an execution on September 16th 2016 for the following commodities:
Commodity:
Sugar
Quantity:
300,000MT
Period:
90 Days
Location:
China
Financial
Financial Instrument Type:
IRDLC
Financial Validation Bank:
HSBC
Financial Revenue Gross:
$79.5M
Financial Monthly Drawdown
$26.5M (Figure Based on 3 Months of Shipments
Financial Revenue Per Shipment:
TO BE PUBLISHED IN NWE
Shipping Schedule
First Lift:
TO BE PUBLISHED IN NWE
Delivery:
27 Days on Open Sea
