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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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Tuesday, 26 November 19
PREPARATIONS INTENSIFY AS 1 JANUARY 2020 GLOBAL CUT IN SULPHUR IN SHIP'S FUEL OIL LOOMS: IMO
“IMO 2020” requirements for ships to cut sulphur oxide emissions enter into effect in just over one month’s time. This will signi ...
Monday, 25 November 19
COAL SUPPLY BY CIL TO POWER SECTOR DROPS OVER 8 PC TO 253 MT IN APRIL-OCTOBER - PTI
Supply of coal by state-owned CIL to the power sector registered a decline of 8.5 per cent to 253 million tonnes in the April-October period of thi ...
Monday, 25 November 19
A 53,000DWT SHIP FIXED AT $9,500 DELIVERY SINGAPORE TRIP, VIA INDONESIA, REDELIVERY VIETNAM - BALTIC BRIEFING
Capesize
After a week of value being eroded on the Capesize market, Friday brought improved sentiment across most of the routes. The 5TC averag ...
Monday, 25 November 19
KOWEPO INVITED 6.79 MILLION TONS OF (SUB)BITUMINOUS STEAM COAL BIDS
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for 6,798,000 tons of coal for 5 years ...
Friday, 22 November 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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Showing 1271 to 1275 news of total 6871 |
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- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- The University of Queensland
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- London Commodity Brokers - England
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
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