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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, 13 November 19
INDONESIAN NOVEMBER COAL PRICE REFERENCE LOGS FIRST GAIN SINCE AUGUST
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Wednesday, 13 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
The improvements seen in the dry bulk market during the unexpectedly strong Q3 brought enthusiasm and optimism for a last quarter rally. Indeed as ...
Tuesday, 12 November 19
COAL IMPORTS AT MAJOR PORTS SLIP 18 PC TO 51 MT IN APRIL-OCTOBER - ECONOMIC TIMES
The Indian Ports Association (IPA), which maintains cargo data handled by these 12 ports, in its recent report, said "percentage variation fro ...
Monday, 11 November 19
EMINENT MARITIME ORGANIZATIONS AND INDIVIDUALS WERE HONORED
SHIPTEK 2019 Anchors in Greece for its 12th edition.
Eminent Maritime Organizations and Individuals were honored
Greec ...
Wednesday, 06 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
With less than two months before the end of the year, the shipping and refining industries have already taken measures and invested to accommodate ...
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- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
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