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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, 10 July 19
KOREA SOUTH-EAST POWER INVITES BIDS FOR HCV AND LCV COAL FOR AUGUST 2019 LOADING
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ULTRAMAX: A 52,000-TONNER OPEN CJK FIXED FOR A TRIP VIA INDONESIA WITH RE-DELIVERY CHINA AT $6,100 - BALTIC BRIEFING
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- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- PTC India Limited - India
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
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