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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, 22 July 19
SUPRAMAX: THE ASIAN ARENA SAW INCREASED ACTIVITY AND STRONGER NUMBERS BEING CONCLUDED; INDONESIAN ROUNDS REMAINED FIRM - BALTIC BRIEFING
Capesize
Another week of gains as the Atlantic basin continues to be pressurised on tonnage and Brazilian cargoes keep up a steady flow. The Ca ...
Thursday, 18 July 19
WORLD TRADE IN HARD COAL ROSE BY 4.7% IN 2018 - GERMANY COAL IMPORTERS ASSOCIATION
World Trade in Hard Coal Rose by 4.7% in 2018
Hard Coal Can Prevent Stress in the Electric Power System in Germany
• Sharp decl ...
Wednesday, 17 July 19
MARKET INSIGHT - INTERMODAL
The Strait of Hormuz is one of the most important waterways in the world, connecting crude producers in the Middle East with key markets in the res ...
Tuesday, 16 July 19
KING COAL RULES IN JAPAN AS POWER UTILITIES IN THRALL TO LOW-COST FUEL - REUTERS
Japanese utilities will rely on the return of coal-fired power plants from maintenance to meet peak electricity demand this summer, highlighting th ...
Tuesday, 16 July 19
SUPRAMAX: THE ASIAN ARENA WAS SPLIT, WITH A BUILD-UP OF TONNAGE AND LACK OF ENQUIRY IN THE NORTH - BALTIC BRIEFING
Capesize
It was a Brazilian affair with a strong splash of bunkers characterising the Capesize market over the past week. Largely traded in Eur ...
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Showing 1361 to 1365 news of total 6871 |
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- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
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