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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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- VISA Power Limited - India
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- White Energy Company Limited
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Planning Commission, India
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
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