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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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Friday, 11 October 19
KOREA SOUTH-EAST POWER TO IMPORT LCV COAL IN NOVEMBER
COALspot.com: South Korea’s Korea South-East Power Co., Ltd. (KOEN) has issued an international tender for 75,000 Metric Tons low calorific v ...
Thursday, 10 October 19
THERMAL COAL IMPORT LIKELY TO CROSS 200 MT IN 2019-20 - TIME OF INDIA
The country's overall thermal coal import is likely to cross the 200-million tonnes (MT) mark in the current financial year, according to Icra. ...
Wednesday, 09 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we have already stated in previous insights, we had expected that the recovery on rates and activity across all segments in the offshore market ...
Thursday, 03 October 19
OIL PRICE ASSUMPTIONS UNCHANGED, NBP GAS PRICE LOWERED - FITCH RATINGS PRIMARY - FITCH RATINGS
Our oil price assumptions are unchanged, despite the recent price volatility following the attacks on Saudi Arabia's oil infrastructure, Fitch ...
Thursday, 03 October 19
SHIPPING MARKET INSIGHT
Edible oil products across the board are showing healthy amount of export activity, however, rates in most cases are struggling to move accordingly ...
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- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- MS Steel International - UAE
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Bhushan Steel Limited - India
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
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