Entering into a bulk fuel supply agreement can be complex. Understanding the industry jargon ensures you get a fair deal and avoid hidden surprises.
1. Platts / Window Price
Fuel prices often float based on international benchmarks. Contracts may reference "Platts" pricing plus a premium. Understanding this mechanism helps you verify if your price adjustments are fair.
2. Minimum Order Quantity (MOQ)
Suppliers have logistics costs. The MOQ defines the smallest amount they will deliver without a surcharge. Ensure this matches your tank capacity and usage rate.
3. Payment Terms (Credit vs. Cash)
Payment terms define when cash leaves your account. "Net 30" means you have 30 days to pay. These terms often affect the price per liter—cash upfront usually secures a discount.
4. Force Majeure
What happens if there's a nationwide shortage or a natural disaster? This clause protects both parties from liability for events beyond their control. Ensure it's balanced and doesn't leave you stranded without recourse.