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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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Saturday, 15 June 19
SUPRAMAX: A 58,000-TONNER, OPEN QINGDAO, WAS BOOKED TO REDELIVER IN EAST COAST INDIA AT $6,500 - BALTIC BRIEFING
Capesize
The market closed on a quiet Friday last week after a few hectic days of mid-week trading. Trade routes from Brazil to the Far East we ...
Friday, 14 June 19
PANAMAX: OUTLOOK IS MIXED - FERNLEYS
Capesize
Sentiment changed to a more nervous tone as pacific cargo volumes failed to deliver as expected, however latest activity indicates res ...
Friday, 14 June 19
ELECTRONIC (PAPERLESS) TRADING - SKULD
KNOWLEDGE TO ELEVATE
Electronic Shipping Solutions: Bolero International Ltd, E-Title Authority Pte Ltd, Global Share S.A. (edoxOnline platfor ...
Wednesday, 12 June 19
KOSPO INVITES BIDS FOR 140,000 MT OF 4,600 NCV COAL FOR SEP. 2019 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 140,000 MT of minimum 4,600 kcal/kg NCV coal ...
Wednesday, 12 June 19
IMO 2020 - COUNTDOWN TO 1 JANUARY 2020 -HOW WILL THE CHANGES AFFECT REFINING AND SHIPPING? - WOOD MACKENZIE
We know that the IMO’s regulations represent the biggest step change the shipping industry has ever seen and the implications will be felt th ...
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- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- MS Steel International - UAE
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
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