Who’s Afraid of Legal-Related Trade Issues? 5+1 Reasons You Are


Ivanna Dorichenko, former consultant at Clyde & Co, gave a practical and insightful presentation during the Global Commodity Risk Management Forum 2016. She explained the legal angle pertaining to trade risks and challenges. Here are some highlights of her talk:




1 - Quality
Short and standard-form contracts, brokers’ confirmations, and other certificates. Documents play an important role in international commodity trade, and non-conformance to documentation specifications might result in sale of documents, rather than sale of goods, blurred lines on shipment and arrival terms, and non-liability by local authorities to reject goods.


2 - Weather

Permitted. Seasonal issues like draughts, rains and floods can just happen. There might be late harvesting campaigns for particular commodities, as well as ice delays in sea ports. 


3 - Logistics
What if there is a lack or shortage of cargo transportation vehicles? What if there is an excessive accumulation of cargoes on the roads preventing delivery of the goods to ports for transhipment ?


4 - Trade Restrictions
Export might be banned, restricted, or made subject to a license. Sellers might not be able to obtain the licence, and, therefore, not be able to export at all. Furthermore, the period of application is often uncertain –even if defined–, and there might be serious disruptions in the delivery chain.


5 - Political Unrest & Sanctions
There might be unavailability of certain contractual destinations to ship to, and/or restrictions on trade with particular countries/counterparty. Delivery delays and demurrage are also possible, as well as a deterioration of quality if goods are perishable. Substantial delays of payments and importers’ banking issues are common problems, and compliance is time consuming.


As a result of the above…


6 - Price Volatility & Exchange Rate Fluctuations
May happen. Periods during which the volatility is high, (when the price fluctuation is high over a relatively short period of time) might be further challenging for the parties involved in the trade process.


ComRisk 2016 - Ivanna Dorichenko, former consultant at Clyde & Co












Join this year’s ComRisk 2017 Forum in order to be in the know of how to prevent –where possible– those and more types of risks, and to manage them accordingly should they appear.
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