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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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Friday, 18 October 19
SINGAPORE'S APEX TO LAUNCH LOW-SULFUR FUEL OIL CONTRACT AHEAD OF NEW SHIPPING RULES - REUTERS
Singapore-based Asia Pacific Exchange (APEX) will launch a low-sulfur fuel oil (LSFO) futures contract on Friday aimed at helping shipping and ener ...
Thursday, 17 October 19
INDIA READIES POLICY TO ATTRACT FOREIGN INVESTMENT IN COAL MINING - REUTERS
India expects to have formulated a policy within the next two weeks to attract foreign investment to its coal mining industry, the country’s ...
Wednesday, 16 October 19
INDIA CALLS FOR A RESET OF CLIMATE DEBATE ON COAL AS A FUEL - LIVEMINT
India on Tuesday called for a reset on climate debate on coal as a fuel, in the backdrop of India becoming one of the top renewable energy producer ...
Wednesday, 16 October 19
LESSONS LEARNT FROM CREW INJURED IN HEAVY WEATHER - UK P&I CLUB COMMENTS
KNOWLEDGE TO ELEVATE
Stuart Edmonston, Loss Prevention at UK P&I Club, discusses an incident in which crew were injured whilst on deck in ...
Wednesday, 16 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
In perhaps the most interesting market conditions of the past years, the tanker and the dry bulk industry have created a positive sentiment with re ...
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Showing 1311 to 1315 news of total 6871 |
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- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Planning Commission, India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
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