We at AMT guarantees the quality and best of prices of commodities such as LPG, Diesel Fuel, Jet Fuel A1, Aviation Kerosene, Bitumen, Steel, Rice, Sugar, etc on the world market. AMT possess’ numerous Supplier Mandates hence many at times acting as supplier for various range of commodities.
And the prices / rates of commodities offered by AMT are first to none and very extremely competitive. At AMT, we value the establishment of customer satisfaction and great business relationship with all our clients.
- BANK RELATED DOCUMENTS:
a) BG:
Bank Guarantee: A Bank Guarantee is a financial instrument issued by a bank confirming that full payment will be made by the issuing bank when conditions stipulated in the (SPA Procedure) Sale and Purchase Agreement procedure are met. The holder can borrow against it or secure a higher line of credit based on the value of the instrument.
b) BCL:
Bank Comfort Letter: A Bank Comfort Letter is unlike a Bank Guarantee. It rather states the financial position of the account holder, (the Buyer). It cannot be cashed or borrowed against, nor can it be used to increase the holder’s credit line. BCL is not a valid financial instrument.
c) DLC:
Documentary Letter of Credit: A Documentary Letter of Credit is a financial instrument issued by a bank and payable at full face value upon successful production of the required documentation as contained in the body of the document (DLC). When the required documents are tendered and verified by the issuing bank, payment will be transmitted to the recipient’s bank by swift within the number of hours or days as specified in the contract procedure.
d) RDLC:
Revolving Documentary letter of Credit: RDLC is the same thing as DLC but revolves around the life of the contract.
e) Pre-Advice:
Bank Pre-Advice: A Pre-Advice is a document sent by a bank advising the recipient’s bank about her intention to open a financial instrument. For example, bank “A” will send a notice to bank “B” about her readiness to open a DLC in favour of the seller who is a customer of the bank, Bank B. Bank B will respond confirming her readiness to receive such financial instrument on behalf of her customer.
f) Soft Probe:
A soft probe is a means by which a bank conduct a brief credit worthiness of a customer and also confirm if that customer’s account is in good standing. It could be summarized as a “light credit check”.
g) SWIFT:
SWIFT is the coded means by which banks transfer funds and documents through wire process.
What Is SWIFT? SWIFT is the Society for Worldwide Inter bank Financial Telecommunications. This organization operates a closed network which operates between banks and financial institutions for the purposes of exchanging messages relating to financial information. SWIFT was founded in Brussels, Belgium, in 1973 at a time when it was fast becoming apparent that globalization was a major market force, but banks in various countries were having trouble keeping up with the emerging demand for quickly and efficiently sending money and communicating financial information across borders.
When it was first founded, the SWIFT network operated in just fifteen countries and had less than 300 banks and financial institutions associated with its network. Nowadays SWIFT operates in 208 countries and there are well over 8,000 banking institutions who make use of the SWIFT messaging network.
SWIFT Codes SWIFT codes are simply a means of differentiating between different kinds of SWIFT messages. The SWIFT messaging network operates using a series of standardized message types. In order to send a SWIFT message, the banking officer simply fills in the appropriate information in the appropriate fields, and sends the message. In order to identify the different types of SWIFT message, there are numbers assigned to each of them. The ‘MT’ prefix stands for ‘Message Type’, and the three digit number that follows it represents a specific message type.
1.1. SWIFT CODE MT 760
The MT-760 is a type of SWIFT message that is sometimes requested in trading because it functions much like a Bank Guarantee. Essentially, a MT-760 is a SWIFT message which guarantees that a bank will make payment in favor of a client of another bank. When a MT-760 is issued, the issuing bank puts a hold on its client’s funds, thereby ensuring that the funds are in place to make payment to the recipient of the MT-760.
1.2. SWIFT CODE MT 799
The MT-799 is a free format SWIFT message type in which a banking institution confirms that funds are in place to cover a potential trade. This can, on occasion, be used as an irrevocable undertaking, depending on the language used in the MT-799, but is not a promise to pay or any form of bank guarantee in its standard format. The function of the MT-799 is simply to assure the seller that the buyer does have the necessary funds to complete the trade. The MT-799 is usually issued before a contract is signed and before a letter of credit or bank guarantee is issued. After the MT-799 has been received by the seller’s bank, it is then normally the responsibility of the seller’s bank to send a POP (proof of product) to the buyer’s bank, at which point the trade continues towards commencement.
1.3. SWIFT CODE MT 700
MT 700 is a swift message type that is used by issuing banks when opening a letter of credit, this swift message is sent by the issuing bank to the advising bank, it is used to indicate the terms and conditions of a documentary credit which has been originated by the Sender (issuing bank), according to latest UCP rules, UCP 600, unless otherwise specified, a documentary credit advised to the beneficiary or another advising bank based on a SWIFT message constitutes an operative credit instrument which means that MT 700 swift message is an operative letter of credit. No written message need to follow, the advising bank must advise a documentary credit, including all its details, in a way that is clear and unambiguous to the beneficiary.
1.4. SWIFT CODE MT 103
SWIFT MT-103’s is the most commonly used form of SWIFT communications, and one which many people will have utilized without even knowing it. For most bank customers, they are known not as MT-103’s at all, but rather as wire transfers, telegraphic transfers, or SWIFT transfers. A SWIFT MT-103 is used by the bank when its customers wish to make payment to customers of another bank in another country.
BUYER’S DOCUMENTS:
a) LOI:
Letter Of Intent: A letter of intent is the initial request sent by the buyer (either directly or through his/her, agent, facilitator or mandate) to the seller, expressing their intention to purchase a product from the seller, the supplier or the broker. The letter usually will describe the product, the quantity, method of payment, method of shipping and their banking details. The LOI must be in the buyer’s letterhead and must be signed and sealed. In some instances a buyers mandate can sign and seal an LOI on behalf of the buyer. A trusted agent can do so, only if, an approval has been given by the buyer.
b) IPO:
Irrevocable Payment Order: An Irrevocable Payment order is a document issued by the buyer to his bank to effect payment irrevocably to all agents, facilitators, consultants, mandates and any party whose banking (information) coordinates were provided in the banking coordinate page(s) of the contract (SPA) and in (MFPA) master fee protection
agreement. When the paying bank receives the payment order, they will effect payment irrevocably in accordance with the specific instructions in the IPO and MFPA. (Master Fee Protection Agreement).
c) ICPO:
Irrevocable Corporate Purchase Order: After the buyer has received an offer from the seller called, FCO (Full Corporate Offer), the seller may request for an ICPO to confirm that the buyer has accepted his initial offer.
The buyer sends a signed and sealed (ICPO) to the seller. This exchange of documents is usually done through and between the buyer and seller’s facilitators or agents/mandates. The buyer must usually sign and seal the ICPO.
d) POF:
Proof Of Fund: Proof of fund is a document that is issued by a bank, confirming the financial capability of their (customer) client to complete the transaction. It could be a letter written, signed and sealed by bank officials in the bank’s official stationary (letter head). It can also be in the form of a quarterly bank statement signed and sealed by authorized bank officials, with his phone, fax numbers and e-mail addresses for verification of the authenticity of the document. Proof of fund documents are usually subject to verification for authenticity from the issuing bank. Proof of fund is not a financial instrument and cannot borrowed against. It is not cash-able.
SELLER’S DOCUMENTS:
a) POP:
Proof Of product: The proof of product is a document issued by the seller to the buyer to prove that he /she has the product being sold. The proof of Product is subject to verification by the buyer. The buyer may not continue with the transaction if he /she is unable to establish that the seller has a tangible product to sell. This may be done either by a physical inspection of the product in a vessel by accredited inspection firms or through a verification authority.
b) FCO:
This document is issued by the seller as an acknowledgement of the buyer’s LOI and confirmation and acceptance of the specifics in the procedure. After receipt of the FCO, the buyer issues an ICPO if such document is demanded by the seller.
Some Sellers, directly uses the SPA after the ICPO the order is SCO, ICPO, SPA.
c) SPA:
Sales / Purchase Agreement (Contract): SPA stands for Sale and Purchase Agreement and it is the same document we refer to as contract. The buyer and the seller or their mandates must sign and seal the contract before it becomes binding. If contract is not signed and sealed by both parties, (buyer and Seller), such contract is not effective.
INSURANCE DOCUMENTS:
a) PB:
Performance Bond (operative and non operative: A Performance bond is an insurance document guaranteeing that the issuer will pay a stipulated amount of money (%) to the other party if he/she breaches (Failed to perform) the contract. This amount will compensate for the losses suffered by the other party. The defaulting party’s bond cover all the losses incurred by the beneficiary. It is usually 2% of the total value of the purchase in the SPA. A bond will become operative if the conditions to activate it are met. Conclusively, a PB is not operative until it has been activated by a similar document or a clause that will make it operative.
SHIPPING TERMS:
a) CIF:
Cost Insurance and Freight: Cost Insurance and Freight method is the safest shipping method for the buyer. The seller pays the shipping, the Insurance and cost of the product. The Seller will be paid by the Buyer, upon the safe delivery and inspection of the product, plus production of all required documents as specified in the body of the DLC. The discount for this kind of delivery is very small compared to TTT and FOB transactions.
The seller or supplier loads the vessel, inspects the product onboard the vessel and deliver the product at a mutually agreed safe port. At the delivery port, the buyer will conduct his own inspection to ascertain the quantity and quality of the product and pay the seller or supplier based on the result of the inspection after the seller or supplier has submitted all relevant documentations as specified in the (SPA Procedure) contract.
This is the best and safe way to buy crude oil. We will discuss the commission aspect of a CIF transaction later. There is usually a 2% performance bond involved in this kind of transaction.
b) FOB:
Freight On Board: In FOB transactions, the buyer provides his vessel and a copy of his charter party agreement (CPA) to the seller or the supplier. His vessel sails to the loading destination (port) and his vessel load the cargo. He pays for his vessel charter and all insurance. This method is also good because the buyer pays after his vessel is loaded and inspected to ascertain (Q&Q) Quality and Quantity.
c) Dip & Pay:
Dip & Pay Are the fastest procedure: the Buyer must demonstrate that has tank available to inject the product and once presented the TSR, ATV and RTR, the Seller begins to inject the product into buyer tank and buyer confirm the fuel and Pays against SGS report
d) TTT
Tanker-to-Tanker Transfer: Tanker-to-Tanker Transfer (TTT) transaction is usually conducted in the International waters. The buyers and sellers’ vessels exchange communication document and commence communication. The seller’s vessel would send a marine document called (NOR) to the buyer’s vessel. NOR stands for Notice of Readiness. This means that the seller’s vessel contacts the buyer’s vessel as a confirmation that he is ready to sail and meet him at an agreed discharge
point. The Buyer’s vessel will respond with an “ETA” which stands for “Expected Time of Arrival”. This is the time he expect to arrive at the agreed meeting point for a TTT transaction. TTT is a very risky type of transaction. The ocean could be very cruel. Among the three forms of crude oil delivery to the buyer, CIF is the most recommended. The seller gets paid after the product is trans-shipped into the buyer’s vessel, Q & Q Conducted, and all relevant documents are presented to the buyer’s bank as specified in the contract. However, most sellers will require the buyer to open an irrevocable letter of credit in favor of the seller before trans-shipment takes place. This assures the seller that the buyer will not steal the product and run away.
CONTRACTS:
a) CIF:
Cost Insurance and Freight: Cost Insurance and freight method is the safest shipping method for the buyer. The seller pays the shipping cost, the Insurance and cost of the product. He gets paid by the buyer upon safe delivery and inspection of the product plus presentation of all required documents as specified in the contract. The discount for this kind of delivery is very small compared to TTT and FOB transactions. The seller or supplier loads the vessel, inspect the product on board the vessel and deliver the product at a mutually agreed safe port. At the delivery port, the buyer will conduct his own inspection to ascertain the quantity and quality of the product and will then pay the seller or supplier based on the result of the inspection report conducted by his inspectors, after the seller or supplier has submitted all relevant documentations as specified in the (SPA) contract. This is the best and safest way to buy crude oil. This contract is executed and completed at the buyers and sellers mutually agreed port of discharge.
b) FOB:
Freight On Board : In an FOB Contract, the buyer provides his vessel and a copy of his charter party agreement (CPA) to the seller or the supplier.
The buyer’s vessel would sail to an agreed loading destination (port) and his vessel loads the cargo. He pays for his vessel charter and all insurance. This method is very good because the buyer pays after his vessel is loaded and inspected to ascertain (Q&Q) Quality and Quantity.
The contract is usually executed and completed at the sellers loading port.
c) TTT:
Tanker-to-Tanker Transfer: Tanker-to-Tanker Transfer (TTT) transaction is usually conducted in the International waters. The buyers and sellers’ vessels exchange communication document and commence communication. The seller’s vessel would send a marine document called (NOR) to the buyer’s vessel. NOR stands for Notice of Readiness. This means that the seller’s vessel contacts the buyer’s vessel as a confirmation that he is ready to sail and meet him at an agreed discharge point. The Buyer’s vessel will respond with an “ETA” which stands for “Expected Time of Arrival”. This is the time he expect to arrive at the agreed meeting point for a TTT transaction. TTT is a very risky type of transaction. The ocean could be very cruel. Among the three forms of crude oil delivery to the buyer, CIF is the most recommended. The seller gets paid after the product is trans-shipped into the buyer’s vessel, Q & Q Conducted, and all relevant documents are presented to the buyer’s bank as specified in the contract. However, most sellers will require the buyer to open an irrevocable letter of credit in favor of the seller before trans- shipment takes place. This assures the seller that the buyer will not steal the product and run away.
This type of contract is usually executed and completed at a mutually agreed point by both vessel captains in international waters.