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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, 13 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
If there is one word that can describe the current shipping environment then that this word is most probably “volatility.” The sentimen ...
Saturday, 09 February 19
SUPRAMAX: A 63,000-TONNER WAS REPORTED FIXED DELIVERY FOR AN EAST KALIMANTAN TRIP, REDELIVERY WEST COAST INDIA, AT $9,250 - THE BALTIC BRIEFING
Cape
The Vale disaster weighed heavily on the market for big ships, with uncertainty about shipments/future exports leading to a sharp drop in ...
Friday, 08 February 19
LOWER-QUALITY INDONESIA EXPORTS ROSE 39 MT IN 2018 YOY PRIMARILY IN RESPONSE TO INCREASED DEMAND FROM CHINA AND INDIA - PEABODY
"Underlying seaborne met and thermal coal conditions remain quite positive and the pace of U.S. coal-fueled power plant retirements is expecte ...
Thursday, 07 February 19
QATAR CAN GAIN FROM DECLINING COAL - THE PENINSULA
With North America and Europe closing down their old coal and nuclear plants, major gas exporters like Qatar can and should gain market share. With ...
Wednesday, 06 February 19
FEBRUARY 2019 INDONESIA'S COAL REFERENCE PRICE FELL 8.83 PERCENT YOY
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
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Showing 1471 to 1475 news of total 6871 |
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- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Australian Coal Association
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- White Energy Company Limited
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
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