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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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Sunday, 23 June 19
SUPRAMAX: A 56,000-DWT WAS FIXED FROM INDONESIA TO VIETNAM AT $10,000 - BALTIC BRIEFING
Capesize
The story over the past week has been largely Atlantic dominated as the basin’s uniquely volatile characteristics came into play ...
Saturday, 22 June 19
OPEC'S BATTLE FOR CONTROL OF THE OIL MARKET - WOOD MACKENZIE
Oil supply is confounding expectations. We have just raised our forecasts for non-OPEC production, the latest in a series of incremental increases. ...
Friday, 21 June 19
INDONESIA'S BAYAN RESOURCES SIGNED A COAL SUPPLY AGREEMENT WITH THE BANGLADESH BCPCL TO SUPPLY 23 MILLION TONS OF COAL FOR 10 YEARS
On Monday, 17th June 2019, PT. Bayan Resources signed a Coal supply Agreement with the Bangladesh- China Power Company (Pvt.) Limited. BCPCL is a j ...
Thursday, 20 June 19
BUMI RESOURCES EXPECTS TO SELL 42 MILLION TONS OF COAL IN FIRST HALF - JAKARTA POST
PT Bumi Resources (BUMI), Indonesia's largest thermal coal miner, expects to close the first half of this year with coal sales of 42 million to ...
Tuesday, 18 June 19
TANKER SHIPPING: WHILE WE WAIT FOR 2020 TO KICK IN, IT'S ALL ABOUT POLITICS - BIMCO
Demand drivers and freight rates
Iran, Libya and Venezuela face export limitations because of sanctions and internal political troubles. At the s ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Minerals Council of Australia
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
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