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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, 24 April 19
PANAMAX: IN THE EAST, THE MARKET MOVED SIDE-WAYS, WITH FEWER COAL CARGOES FROM INDONESIA PUTTING PRESSURE ON RATES - INTERMODAL
Sentiment in the Dry Bulk market slowly but steadily kept improving last week as Capesize rates remained in recovery mode and Panamax earnings also ...
Wednesday, 24 April 19
SHIPPING MARKET INSIGHT - IS THIS A BANKERS' MARKET? - INTERMODAL
Over the last 10 years, many of the traditional and top lending banks have made the decision to either downsize their portfolios or even exit shipp ...
Monday, 22 April 19
COAL INDIA TO ASK POWER PLANTS TO CUT COAL IMPORTS - DNA
Co to encourage import substitution with domestic supplies at power plants
Surge in coal imports has now forced Coal India Ltd (CIL) ...
Thursday, 18 April 19
BIMCO SEES HARD TIMES AHEAD FOR CAPESIZES
China’s increased use of scrap metal for its production of crude steel is fundamentally critical to the dry bulk shipping industry. Mostly Ca ...
Wednesday, 17 April 19
ONCE AGAIN WE FACED WITH THE SITUATION OF THE DRY BALTIC INDEX BEING BELOW 1,000 POINTS - INTERMODAL
Once again we are faced with the situation of the Dry Baltic Index being below 1,000 points. In a market where the feeling of insecurity is almost ...
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Showing 1411 to 1415 news of total 6871 |
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- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- The University of Queensland
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
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