Trafigura Question - Physical Trading Contracts
Have been looking into different types of contracts with regards to shipping commodities but I am a bit confused so wanted some clarity.
- As I understand it, a contract of affreightment (COA) simply refers to a contract between a shipowner and charterer covering multiple voyages over a specific amount of time. Time Charters, Voyage Charters, Contracts of Carriage are types of COAs or subgroups within the broader time. I cannot find a generally consistent definition for a Contract of Carriage online so any insight would be great.
- A Bill of Lading (B/L) is a document detailing the quantity, quality, and destination of the cargo. It functions as a document for title transfer (features Incoterms), a receipt for shipped goods, and a contract between the shipper and carrier for that specific voyage. Presumably then, every voyage transporting goods around the world must have an associated B/L.
I have been trying to establish the relationship and definitions for these terms so any help on telling if this is in the right direction / a definition for a contract of carriage would be great.
Based on the most helpful WSO content, here's what you need to know about physical trading contracts and related terms:
Contract of Affreightment (COA)
Bill of Lading (B/L)
Contract of Carriage
Incoterms
Common Incoterms in Physical Trading
By understanding these definitions and relationships, you can better navigate the complexities of physical trading contracts.
Sources: Physical Oil Trading Basics (Part 1 of 2), Physical Commodity Trading, Q&A : I'm a dry bulk physical freight trader / chartering manager, Physical Oil Trading Basics (Part 1 of 2), Q&A: I'm an Agricultural Commodities Trader
A BL does not feature incoterms. It is indeed a receipt for the goods and has two other functions. It is proof that a contract for the carriage exists, hence the ship master's signature, and it is a title for the goods, as the one holding the BL is entitled to receive the goods. This is the "Consignee" on the BL.
For the COA you are right, it is just a contract where the disponent owner of the vessel "rents" his cargo-hauling capabilities to the one that needs it to transport their product.
So in which contract do the Incoterms feature? Thanks for all the insight!
It's in your purchase/sale contract that you mention the incoterms
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