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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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Tuesday, 07 May 19
UNDOUBTEDLY A VERY TROUBLED YEAR FOR THE DRY BULK MARKET, SAYS ALLIED SHIPPING
Undoubtedly a very troubled year for the dry bulk market says Allied Shipping in its latest weekly report.
Thomas Chasapis, Re ...
Saturday, 04 May 19
HOW THE 'FAIR VALUE' OF COAL ASSETS IS AFFECTED BY COMMODITY CYCLES - CRU
As with any commodity, valuing coal assets can be tricky due to the cyclical nature of the market. In this insight, CRU discusses how commodity cyc ...
Friday, 03 May 19
SUPRAMAX: WITH WIDESPREAD HOLIDAYS DURING THE WEEK, THE MARKET LACKED IMPETUS - BALTIC BRIEFING
Capesize
The market last week was a tale of two halves, with substantial volatility. Beginning the week on a positive note the C5 West Australi ...
Friday, 03 May 19
COAL INDIA APRIL OUTPUT RISES 1% TO 45.29 MILLION TONNE - PTI
Coal India Ltd (CIL) Wednesday said its coal production in April 2019 rose by 1 per cent to 45.29 million tonne as compared with 44.86 million tonn ...
Sunday, 28 April 19
SUPRAMAX: A 54,000DWT VESSEL OPEN GRESIK FIXED VIA AUSTRALIA, REDELIVERY CHINA, IN THE MID $12,000S - BALTIC BRIEFING
Capesize
Following the holidays, activity increased in both the Pacific and Atlantic Basins. The 5TC average rallied, closing at $8,596, up $1, ...
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Showing 1406 to 1410 news of total 6871 |
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- Indika Energy - Indonesia
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
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