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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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Monday, 08 April 19
SULPHUR 2020 - COUNTDOWN TO THE SWITCHOVER - LLOYD'S REGISTER
Sulphur 2020 (MARPOL Annex VI Reg. 14.1.3) is still dominating headlines and as we draw closer to the 1 January 2020 deadline it’s clear that ...
Monday, 08 April 19
INDONESIAN COAL PRICE REFERENCE PRICE PLUMMETS TO LOW NOT SEEN SINCE AUGUST 2017
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Sunday, 07 April 19
SHIP PASSAGE PLANS - NO ROOM FOR ERROR! - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The English High Court’s judgment in Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM Libra) is an impo ...
Sunday, 07 April 19
IMO 2020: READY OR NOT? - WOOD MACKENZIE
New Year’s Day 2020 is firmly marked in the calendar as the refining and shipping industries prepare for change.
The International Marit ...
Saturday, 06 April 19
AUSTRALIA COAL POSTS BIGGEST WEEKLY DROP IN A DECADE AMID WEAK DEMAND - REUTERS
Australian thermal coal prices this week registered their biggest weekly fall since the financial market turmoil of a decade ago as demand plunged ...
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Showing 1431 to 1435 news of total 6871 |
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- White Energy Company Limited
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- PowerSource Philippines DevCo
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
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