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Friday, 27 September 19
LOWDOWN ON INCOTERMS 2020 OVERHAUL - BALTIC EXCHANGE
 KNOWLEDGE TO ELEVATE
This ninth revision of Incoterms is changed in style and substance. The revisions improve certain aspects of Incoterms 2010 and address issues which were not prevalent in 2010. The introduction to Incoterms 2020 includes a detailed explanation of how to choose the most appropriate Incoterms rule for a sale contract.
Incoterms are a collection of internationally recognised standardised trade terms published by the ICC and widely used in domestic and international sales. Incoterms cover various practical elements of a sale contract such as the primary obligations of the seller and the buyer; the responsibilities of each; time of delivery and the transfer of risk. They also deal with insurance, export and import clearance and the division of other costs pertaining to the delivery of goods.
The ICC’s revision of Incoterms aims to respond to changes in the market so that they continue to be relevant and useful to global trade. With this particular revision, the ICC aims to take account of:
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The growth of the global economy and greater access to markets worldwide
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Increasing attention to security in the transportation of goods
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The need for flexibility when considering insurance coverage, depending on type of goods and transport
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Calls from banks for an on-board bill of lading in some financed sales under the Free Carrier (FCA) rule
For existing contracts, Incoterms 2010 will continue to apply even if performance of the contract will take place in 2020 unless the contract says otherwise. For contracts entered into between September 2019 and January 2020, it is prudent for the parties to state which set of Incoterms is to apply, especially if performance will take place after 1 January 2020.
After 1 January 2020, courts and arbitrators can be expected to assume that any reference to Incoterms in new contracts is intended to be a reference to Incoterms 2020, unless there is evidence to the contrary.
The relevance of Incoterms 2020 depends on the contract terms used. For example, GAFTA, FOSFA and sugar (SAL and RSA) contracts do not incorporate Incoterms. Any parties trading only on those contract terms without amending them to incorporate Incoterms will obviously be unaffected by the changes in Incoterms 2020. Standard petroleum product contracts refer to Incoterms, as do many ethanol, coal and metals contracts. Parties dealing with such contracts will need to:
• Check their standard contract forms
• Consider the changes introduced by Incoterms 2020 and whether they wish their contracts to incorporate Incoterms 2020 or an earlier version of Incoterms (or none)
• Make any necessary consequential changes in the standard forms for new contracts (for example, changing ‘DAT’ (Delivered at Terminal) to ‘DPU’ (Delivered at Place Unloaded))
• Inform counterparties and trading/execution departments of the changes to Incoterms and any revisions to contract documentation
Main changes
1. Bills of lading with an on-board notation in FCA deliveries
2. Different levels of insurance cover between Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP)
3. Acknowledging the use by parties of their own transportation in FCA, Delivered At Place (DAP), DPU and Delivered Duty Paid (DDP) deliveries
4. The inclusion of security-related requirements within carriage obligations and costs
5. Detailed Explanatory Notes for Users
6. The arrangement of provisions relating to costs
7. Change of ‘DAT’ to ‘DPU’
The detail
The table below sets out the substantive changes in more detail:
1. Bills of lading with an on-board notation in FCA deliveries
Amendments to Incoterms 2020
In FCA deliveries, parties (or their financing banks) often require a bill of lading with on-board notation but, given that delivery on FCA terms is completed before goods are loaded onto the vessel, the seller may not always be able to obtain an on-board bill of lading from the carrier.
Under the new Incoterms, the buyer and the seller may agree that the buyer will instruct its carrier to issue an on-board bill of lading to the seller after the goods have been loaded. The seller will then be obliged to tender the bill of lading to the buyer.
The ICC emphasises that, where the above option is exercised, the seller does not take on an obligation to the buyer in respect of the terms of the contract of carriage.
2. Different levels of insurance cover in CIF and CIP
Amendments to Incoterms 2020
Incoterms 2020 provide for different minimum insurance cover for CIF and CIP deliveries.
Previously, both CIF and CIP required minimum insurance cover at the level of Clause (C) of the Institute Cargo Clauses.
In the new revision, for CIF deliveries, the default position remains the same (that is, Clause (C) of the Institute Cargo Clauses). Parties may agree higher levels of cover if they wish.
However, for CIP deliveries, the seller is now obliged to obtain insurance cover at the level of Clause (A) of the Institute Cargo Clauses (that is, “all risks”).
Minimum insurance cover for CIP deliveries has therefore been increased for the benefit of the buyer. Parties are free to agree to have lower levels of insurance cover if they wish.
3. Acknowledging transportation by own transport in FCA, DAP, DPU and DDP deliveries
Amendments to Incoterms 2020
Incoterms 2010 were drafted on the assumption that, when goods are carried from the seller to the buyer, they would be carried by a third-party carrier engaged by the seller or the buyer. That did not account for situations, particularly in FCA, DAP, DPU and DDP deliveries, where a third-party carrier was not, in fact, required or contracted because the seller or the buyer would use its own transportation.
The new rules now cater for such situations by expressly providing for the arrangement of carriage as well as referring to the making of a contract of carriage.
4. Inclusion of security-related requirements within carriage obligations and costs
Amendments to Incoterms 2020
Incoterms 2020 aims to establish stronger security-related requirements than its predecessors. Now that security-related concerns are more prevalent in trade, this revision expressly provides for security-related obligations at A4 and A7 of each rule. As mentioned above, costs for these obligations will feature under A9/B9 of each rule.
5. Explanatory Notes for Users
Amendments to Incoterms 2020
The Guidance Notes that previously featured at the start of the individual Incoterms have now been amended to ‘Explanatory Notes for Users’. The Explanatory Notes set out the fundamentals of each of the relevant Incoterms, specifically:
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When it should be used
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When risk transfers
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How costs are allocated
The Explanatory Notes aim to help users choose the most appropriate Incoterms and provide guidance for interpretation if disputes arise.
6. Arrangement of provisions relating to costs
Amendments to Incoterms 2020
Costs have been rearranged in the 2020 revision. All costs relating to the various aspects of the sale are now listed at A9/B9 under each of the Incoterms, as well as under the relevant article within the Incoterms to which they apply.
The intention behind this change is to provide users with a complete list of costs in one place, so that the seller and the buyer are more aware of the costs for which each will be responsible under particular Incoterms.
7. Change from ‘DAT’ to ‘DPU’
Amendments to Incoterms 2020
There is a change to the order of the individual Incoterms in the new revision, so that DAP now appears before DAT to reflect the fact that delivery on DAP terms occurs before delivery on DAT terms.
The term ‘DAT’ has been changed to ‘DPU’, reflecting the fact that the destination for a DAT/DPU delivery could be at any place and not just a terminal. Of course, the place of delivery, if not a terminal, must be appropriate for the unloading of the goods.
As John W.H. Denton, General Secretary of the ICC, said when Incoterms 2020 were released: “Incoterms 2020 rules make business work for everyone by facilitating trillions of dollars in global trade annually. Because they help importers and exporters around the world to understand their responsibilities and avoid costly misunderstandings, the rules form the language of international sales transactions, and help build confidence in our valuable global trading system.”
The importance of Incoterms to trade is beyond doubt, even if many contracts do not incorporate them. To avoid uncertainty and disputes, trading companies should ensure they know the new Incoterms rules and make any amendments to their contracts and general terms and conditions that are necessary. It is important to ensure that the most appropriate Incoterms are selected for each contract and that they are fully understood before they are incorporated. These points are especially important now, as the changes take root.
Source: Baltic Exchange
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Saturday, 30 November 19
IMO2020 GLOBAL SULPHUR CUT: GERMAN SHIPPING TO USE NEW TYPE OF FUEL VDR SURVEY
IMO2020 Global sulphur cut: German shipping to use new type of fuel VDR survey: Technical issues and costs are the biggest challenges - VDR
&nb ...
Saturday, 30 November 19
PANAMAX: LEVELS IMPROVED IN THE PACIFIC MARKET TOO WITH $11,000 BEING CONCLUDED ON AN 81,000DWT SHIP FOR AN INDONESIA TO CHINA COAL TRIP - BALTIC BRIEFING
Capesize
The market has been well supported over the past week, led primarily by the Atlantic Basin. After bottoming last week, sentiment was s ...
Friday, 29 November 19
FITCHRATINGS MAINTAINS NEGATIVE 2020 OUTLOOK ON SHIPPING, AS TIGHTER SUPPLY HELPS, BUT SOFTER DEMAND DRAGS
Fitch’s Sector Outlook: Negative
We maintain a negative sector outlook for global shipping because of the forecast slowdown of ...
Friday, 29 November 19
INDONESIA PRODUCES 390 MLN TONNES OF COAL IN JAN-SEPT: MINISTER - REUTERS
Indonesia’s production of coal for the January-September period was 390 million tonnes, Energy and Mineral Resources Minister Arifin Tasrif s ...
Wednesday, 27 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
As the end of the fourth quarter is approaching, one could say that the wet market has maintained the strong pace observed during the third qu ...
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- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
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