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problem1)

You are a producer of natural spring water that is bottled at the source of the eye’ in the mountainous area near Clanwilliam in the Western Cape. Due to the exceptional quality of the water, very low in bacterial content, your product generated considerable interest from the chief purchaser of a large distribution group in Singapore when he recently visited South Africa as a delegate of a trade mission from that city-state.

This distribution group, Smart Enterprises Pty Ltd., has now requested you to submit a CIP Singapore quotation in US dollars for TWO full container loads of ‘Cederberg’spring water. One 6m/20ft GP container can load 10800 square PET plastic bottles of 1 litre, which are packed as units of 6 bottles in corrugated cardboard boxes.

The ex-factory export price for 1 litre bottled ‘Cederberg’ is R2,54 including the cost of packing. The product is subject to a quality inspection at a cost of R465 for the whole consignment. Payment is to be made on the basis of documents against acceptance (D/A) 60 days from date of shipment and Credit Guarantee will provide credit insurance cover for the invoice value at a premium of 1,5%. A commission of 5% of the FCA value will be due to your agent, while financing is available at 14,5% per annum. Charges for delivery of the empty containers and collect ion of the full containers including transport to the Cape Town terminal have been quoted at R2360 per container. The terminal handling charge and the export cargo dues are R859 and R903 per container respectively.

Freight quoted is USD 1350 + 26,7% BAF and your freight forwarder will charge a documentation fee of R650, an agency fee of 4,75% of disbursements and a CTO (container terminal order) fee of R220 per container. Other charges to be incurred comprise a bill of lading issue fee of USD 12, a carrier release fee of R250 and sundries at R85. The marine insurance premium for this particular shipment under your company’s open policy will be 1,25% of (CIP + 10%).

Exchange rates:

Selling: USD 1,00 = ZAR 7,8750

Buying: USD 1,00 = ZAR 7,5450

Task

By using the information provided above, prepare a detailed CIP Singapore costing for this shipment of bottled spring water by presenting separately:

• The calculation of the agency fee of 4,75% of disbursements. Disbursements are delivery/collection of containers, terminal handling charge (THC), export cargo dues, bill of lading issue fee, carrier release fee, CTO fee and total freight charges.

• A complete costing sheet showing the 3 sets of percentages used at the bottom.

• The CIP Singapore price in US dollars for one bottle of ‘Cederberg’. The costing sheet should only reflect final figures rounded to the nearest rand, that is, 50 cents or more upwards and less than 50 cents downwards.

Apply the same principle to percentages and round to the nearest TWO decimal points where applicable.

problem2) Since last year, Famous Fruit Corporation (Pty) Ltd. has been concentrating on developing markets in the Far East. Following a visit by the marketing director to that area of the world, an order for 4800 cartons (3 full 6m/20ft container loads) of apples with a total CPT value of USD 24 000 was received from Agrifru Trading, a distributor in Bangladesh.

The transaction included a documentary credit by way of payment and shortly after receipt of the order Famous Fruit was advised by its bankers of an irrevocable letter of credit sight in its favour, issued by The City Bank Ltd. in Dhaka, Bangladesh.

Task

By using the L/C given below, list the type and the required number of all the documents stipulated and state the specific details that must be shown on each document.

Your answer should also include typical documentary requirements where applicable. Recommended approach: start with the 1st document mentioned and go through the L/C to pick out anything related to that particular document. Follow this same systematic procedure for all documents listed in the L/C.

THE CITY BANK LIMITED
58, Dilkusha Commercial Area Dhaka, Bangladesh. Telex: 632151 CBLFE BJ
August 05, 2012

IRREVOCABLE DOCUMENTARY CREDIT No. 63150148/08-C

TO:                                                                                     FROM:

Famous Fruit Corporation (Pty) Ltd.                           Agrifru Trading
P O Box 536                                                                   32/1, Ahsanullah Road, Badamtoli
ELGIN 7180                                                                     Dhaka-1100
South Africa                                                                    Bangladesh

1.0 We hereby establish our Irrevocable Letter of Credit in favour of yourselves available by your drafts at SIGHT drawn on THE CITY BANK LIMITED for US$24 000.00 (say...U.S.Dollar Twenty Four Thousand only CPTChittagong).

2.0 Drafts are to be accompanied by:

(a) Signed commercial Invoices in octuplicate certifying merchandise is in accordance with Indent No. AR/ZA/08/025 dated 22-07-2012 of AR Trade, 21 Madan Saha Lane, Dhaka, Bangladesh.

(b) Full set of clean “Shipped on Board” ocean Bills of Lading made out to the order of The City Bank Limited, showing notify party openers plus full name and address and marked Freight prepaid.

3.0 The documents must evidence a consignment of 4,800 Cartons (4 FCL) GOLDEN DELICIOUS, STAR KING & TOP RED APPLES, Weight: 10 Kgs Nett per Carton, @ US$5/-per Carton CPT Chittagong, H.S. Code No.0808.10 to be shipped from any South African Port to Chittagong not later than October 3, 2012.

4.0 Transhipments allowed.

5.0 Partial shipments allowed.

6.0 This credit is valid for negotiation in South Africa until October 31, 2012.

7.0 Other terms and conditions:

(i) Packing list in six copies to show nett & gross weight.

(ii) Phytosanitary certificate issued by a recognised Authority.

(iii) Commercial invoice to quote Import Licence/Authorisation No. CBL 71070 and I.R.C. No. BA-56154

8.0

(a) Particulars of all drafts negotiated must be endorsed by the negotiating bank on this original letter of advice.

(b) Drafts must be marked:

Drawn under The City Bank Limited, Credit No. 63150148/08-C.

9.0

(a) At the time of the negotiation of the drafts, the relative documents are to be handed to the negotiating banker who must forward one complete set with covering advice to The City Bank Limited, 58,Dilkusha Commercial Area, Dhaka, Bangladesh by courier and the remainder of the documents to us by following courier.

(b) All Foreign Bank’s charges outside Bangladesh are on beneficiaries account. This Credit is subject to Uniform Customs and Practice for Documentary Credits (2007 Revision) International Chamber of Commerce Publication No.600.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M93050

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