People frequently ask me why don’t buyers get rubber directly from the raw-material producers.
The answer begins with the identification of the decision-maker in each industry who purchases these stock-exchanged commodities.
He is often a person with experience and appropriate authority in his company and whose necessarily quick decisions in a market that fluctuates up to 120% in a year will have to have the confidence of top management.He will have to buy at what appears to be the right time. Most suppliers sell in dollars; therefore he should be able to anticipate any currency exchange variation and "lock-in" the rate and proceed in forward currency- exchange contracts which can add up to 1% of the base price.
Having secured the cost at the port of loading, he then needs to negotiate the cost of transport, which is highly variable, since as of late rates are subject to variations up to 70 % in a month, depending on available space in vessels.
Assuming that he has chosen the right producer who does not delay the loading (due to poor production scheduling or “back-off” because his current cost is much higher than the one he originally contracted for), he should be certain about where he is remitting payment, because in international practice these goods are paid either before the being loaded or after their arriving at destination.
Finally, after the load reaches its intended destination, he is involved with several customs proceedings and expense, he arranges for inland transportation, and what he really hopes for is that the quality of prepaid products meets the required specifications; otherwise the buyer will need to travel to the place of origin and engage in costly arbitration procedures with local arbitration centers which are authorized to settle disputes between a local and a foreign firm.
This complex scenario reveals why an experienced agent, such as ourselves, is needed to navigate this complex commercial terrain.
We are strong committed in our contracts with the customers, are experienced to avoid unpleasant situations by choosing reliable sources, are keeping safety stocks for any unforeseen circumstances, and are providing for a very low premium which is your protection against
- Producer Risk (performance, delivery and quality)
- Political & Economic Uncertainty
- Currency,Price & Interest Rate Fluctuations
- Shipping & Delivery Uncertainties
Alexis Lantzis
CEO