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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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Monday, 21 October 19
SHIPPERS CHANGE COURSE AS FUEL RULES TARGET SULPHUR EMISSIONS - WOOD MACKENZIE
The International Maritime Organization (IMO), the industry’s regulator, will require all ships to reduce the level of sulphur in their engin ...
Monday, 21 October 19
COAL TO PLAY SIGNIFICANT ROLE IN SOUTH AFRICA POWER MIX - MINISTER, REUTERS REPORTED
South Africa’s plans for additional power generation over the next decade will involve a variety of energy sources, with coal still playing a ...
Monday, 21 October 19
ULTRAMAX: IN ASIA, TRIPS FROM THE SINGAPORE AREA WERE PAYING BETWEEN $14,000 AND $16,000, DEPENDING ON THE VESSEL SIZE AND DURATION - BALTIC BRIEFING
Capesize
The market traded in a relatively stable supported manner in the Pacific this week while the Atlantic experienced weakening turbulence ...
Friday, 18 October 19
WHY CRUDE TANKER RATES JUST FELL (HALFWAY) BACK TO EARTH - FREIGHT WAVES
Panic drove crude-tanker rates up, very briefly, to mind-bogglingly high assessed levels of around $300,000 per day. Now, the fear factor has been ...
Friday, 18 October 19
SHORT TERM STRENGTH FOR OZ COMMODITIES - BALTIC BRIEFING
Volatility in the global commodity markets is not expected to unduly rattle Australia’s commodity outlook through 2020, but the 2021 picture ...
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Showing 1306 to 1310 news of total 6871 |
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- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
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