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