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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, 06 March 19
SHIPPING MARKET INSIGHT - INERMODAL
In a downward moving market, softer SnP activity is usually a given, as the gap between Sellers’ and Buyers’ ideas widens, especially w ...
Saturday, 02 March 19
A 60,500-TONNER WAS BOOKED DELIVERY SINGAPORE, VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $11,250 - BALTIC BRIEFING
Capesize
Vale’s ongoing absence from the Brazil spot market continued to have a negative impact on sentiment, with rates falling in all a ...
Thursday, 28 February 19
COAL'S PERFECT STORM HITS $70 BILLION AUSTRALIAN PROJECTS - BLOOMBERG
It’s been a tough few weeks for our coal industry.
First there was a court ruling blocking a new mine on climate change ground ...
Wednesday, 27 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
With the IMO 2020 approaching, it becomes challenging for the market to accurately explore the run-up to the deadline given that marine fuel-oil of ...
Tuesday, 26 February 19
CHINA RESTRICTS SEABORNE COAL IMPORTS - WOOD MACKENZIE
In response to news on China's Dalian port restricting seaborne coal imports, Wood Mackenzie's experts provide the following commentary.
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Showing 1456 to 1460 news of total 6871 |
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- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- The University of Queensland
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
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