Have you ever consider what range is reasonable ?
After the vessel communicate to you roughly how much they needed for the voyage, its seldom a fix numbers but a range. During the enquiry its completely okay. For example if you asking for 380cst/500-700MT its very seldom for supplier to reject unless its on a super cargo tight situation.
However its also common to see enquiry range from 200-600MT or my favorite 0-100MT ( real enquiry and encountered few times. Lets take a look why supplier don’t accept crazy range
- Cargo allocation : To deliver a 200MT or 600MT enquiry supplier might use different barges. Too big range make the opeartion difficult to fit in the barge schedule
- Price risk, supplier normally will have paper team to hedge the open position of the selling stock. However on a 300-1000MT order now the supplier cant hedge effectively and expose to price risk.
- Credit Risk : sometimes your supplier might have only certain credit limit for you, and the upper limit might touch the ceiling. For example he might be able to do up to 550MT, but since now enquiry is 200-600MT he cant offer because in case you confirm 600MT now he exceed the credit limit.
So what is a reasonable range ? well different supplier have their own standard of reasonable , normally within 50% should be fine for most supplier, unless you are dealing with small enquiry then 100-200MT is not a huge deal which wont elicate the above 3 problems.
Hope its helpful for you, until next time !
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