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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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Wednesday, 20 November 19
FOREIGN DIRECT INVESTMENTS IN COMMERCIAL COAL MINING IN INDIA? - DIPESH DIPU
In August 2019, Government of India announced its approval for Foreign Direct Investment (FDI) for coal mining, processing and sale. Not that FDI i ...
Wednesday, 20 November 19
AUSTRALIA'S NEW HOPE POSTS 66% SURGE IN Q1 SALEABLE COAL OUTPUT - REUTERS
Australian coal producer New Hope Corp Ltd reported on Tuesday a 66% jump in saleable coal production in the first quarter, as output ramped up at ...
Wednesday, 20 November 19
THE IMO AND THE PRICE OF GAS OR THE IMPACT OF THE INTERNATIONAL MARITIME ORGANISATION'S SULPHUR 2020 LIMIT FOR MARINE FUEL OIL ON THE PRICE OF GAS - KING & SPALDING
The main bunker fuel for ships is High Sulphur Fuel Oil (HSFO, with sulphur up to 3.5% m/m (mass by mass)). This will all change on 1 January 2020 ...
Wednesday, 20 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
While the market expects the next OPEC meeting, there are still no clear signs indicating that the organization will keep supporting oil prices, wh ...
Monday, 18 November 19
CHINA RECORDS STABLE COAL PRODUCTION IN JAN-OCT: XINHUA
China’s raw coal output registered stable growth in the first 10 months, while its imports remained robust, official data showed.
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- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Australian Coal Association
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
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