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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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Thursday, 10 January 19
BUNKER DELIVERY NOTE AMENDMENTS ENTER INTO FORCE AS SULPHUR 2020 REQUIREMENT LOOMS - IMO
KNOWLEDGE TO ELEVATE
Amendments to the bunker delivery note relating to the supply of marine fuel oil to ships which have fitted alternative m ...
Thursday, 10 January 19
WORLD TRADE IN THERMAL COAL IS ESTIMATED TO HAVE GROWN BY 1.0 PER CENT IN 2018 - DEPARTMENT OF INDUSTRY, AUSTRALIA
World Trade
World trade in thermal coal is estimated to have grown by 1.0 per cent to 1.1 billion tonnes in 2018 but it is expected to decline ...
Thursday, 10 January 19
PAKISTAN'S COAL IMPORTS TO SURGE TO 30 MILLION TONS PER ANNUM BY 2020 - CEO, PIB
Pakistan’s coal imports are estimated to surge to 30 million tons/annum from existing 20 million tons/annum by the year 2020, given the plann ...
Wednesday, 09 January 19
PANAMAX: THE PACIFIC SAW RELATIVELY GOOD DEMAND PARTICULARLY FROM INDONESIA AND NOPAC - BALTIC BRIEFING
Capesize
It was an active start to the New Year, with trading from West Australia maintaining momentum during the holiday period. Rates for Chi ...
Wednesday, 09 January 19
SHIPPING MARKET INSIGHT - INERMODAL
Paraphrasing the words of a Chief economist in a latest report of the World Bank Group, the current state of the shipping market very much resemble ...
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- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Minerals Council of Australia
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
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