Question 1

Palm Oil Plantations is an established exporter of crude palm oil (CPO) and palm oil-related

products, with its own palm oil plantations in Country A. For the last 50 years, it has built up

a large customer base with a diversified portfolio of customers, primarily from four major

countries - B, C, D and E. It has an experienced in-house logistics team, supported by its own

fleet of vehicles capable of transporting its products with ease to the nearest port and strong

global connections with logistics and insurance providers.

Palm Oil Plantations' shipments for CPO tend to be in liquid bulk, whereas palm oil-related

products can be shipped via containers.

Its plantations and factories in Country A are located inland, about 2 hours by road to the

nearest port. Within Country A, the political, economic and legal environment is relatively

stable, albeit complex. Tonnage is relatively available, with domestic and foreign carrier lines

that are suited to carry the products to the four major countries mentioned above. The insurance

risks can be covered by both domestic and international cargo insurance companies.

Nonetheless, Country A has not been a signatory to some of the key international conventions

relating to carriage of goods.

The factories of the buyers from Countries B, C, D and E are located at inland points some 300

km from the respective ports of discharge. The following conditions have been noted in the

different countries:

Country B: It is a modernised country, with the government having invested

significantly into developing an educated and skilled workforce, automation and

digitisation technologies as well as efficient port and transportation infrastructure. Its

currency is stable, with unemployment figures below 1%. Most of the global insurance

companies and freight forwarders have a presence in this country. The country relies

extensively on imports and hence, businesses in this country is very familiar with import

formalities and global logistics requirements

Country C: The political and legal environment is relatively unstable, coupled with

challenging economic conditions. It is experiencing an overall GDP deficit. There are

also volatile fluctuations in home currency. As a result, buyers from this country can

be unreliable in terms of payment. It experiences some of the difficulties experienced

in Countries D and E. Despite a challenging political and legal environment, it has been

a signatory to and ratifier of many of the key international conventions relating to

international trade and carriage of goods.

Country D: Despite the government's efforts to modernise the port infrastructure,

there is still port congestion where the waiting time of ships varies from 3 to 14 days

with inefficiencies and reported safety incidents within the port terminal. Delayed

discharge of cargo and demurrage are frequently encountered. In addition, the customs

clearance and duties regime can be challenging. There are well-established insurance,

logistics and customs brokerage industries within this country.

Country E: Its government had invested heavily into building up the country's overall

transport infrastructure, resulting in a fairly efficient inland transportation

infrastructure. Its port is well organised and efficient, with increasing use of automated

handling within the port terminal. However, its customs and tax regime can be

complex. It is known for frequent strikes and other labour disturbances within the

country. In addition, the sea route from Country A to this country experiences stormy

weather and tumultuous weather at certain times of the year.

(a) Determine one (1) Incoterm which is reasonable for both Palm Oil Plantations and

the buyer from each country for the (i) crude palm oil and (ii) semi-processed palm oil

products.

In your analysis, you should discuss both the seller's and the buyer's obligations for

your recommended Incoterms, potential risks and mitigation measures and supporting

reasons for your recommendations.

(60 marks)

(b) Appraise five (5) key differences between the Hague-Visby Rules and the Hamburg

Rules in terms of the impact (if any) on the carrier, the seller and/or the buyers. Your

analysis should take into account the facts provided in the scenario above, such as the

conditions of the country and the types of cargo being shipped. Where appropriate,

you should cite the relevant provisions of the rules to support your answer.

(40 marks)