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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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Friday, 22 November 19
FORTY PERCENT OF ADARO'S COAL SALES VOLUME IN 9M19 GOES TO THE SOUTHEAST ASIA REGION
PT Adaro Energy Tbk released its consolidated financial statements yesterday, for the nine month period, ending September 30, 2019.
...
Friday, 22 November 19
UNCERTAINTY IN THERMAL COAL MARKET PERSISTED IN 3Q19 - ADARO
Uncertainty in thermal coal market persisted in 3Q19, mainly due to the actions, or inactions, of China in setting policies for global coal market. ...
Friday, 22 November 19
CIL TO DEVELOP 55 NEW COAL MINES IN NEXT 5 YEARS: COAL MINISTER
State-owned CIL will develop 55 new coal mines and expand 193 existing ones in the next five years, Parliament was informed. The company is also un ...
Thursday, 21 November 19
4TH DEEP OFFSHORE WEST AFRICA CONGRESS 2020
4th Deep Offshore West Africa Congress 2020
17 Janaury 2020
Accra, Ghana
Press Release: Following the great succ ...
Thursday, 21 November 19
INDONESIA PLANS TO KEEP $70/T COAL PRICE CAP FOR PLN, DMO - REUTERS
Indonesia’s energy minister Arifin Tasrif said his ministry plans to maintain a price cap on coal being sold to state electricity utility, PT ...
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- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Planning Commission, India
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Grasim Industreis Ltd - India
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