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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, 20 September 19
INDIA TO INVITE BIDS FOR COMMERCIAL COAL MINING IN DECEMBER - MINISTER FOR COAL
India aims to begin the process of holding the first round of commercial coal mining auctions December end, Minister for Coal, Mines and Parliament ...
Friday, 20 September 19
INDIA: ECONOMIC SLOWDOWN IMPACTS COAL IMPORT CARGO IN H1 FY20 - PTI
Economic slowdown has impacted coal import cargo in the first half of this fiscal, as overall cargo growth at major ports registered a marginal gro ...
Wednesday, 18 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
During the first week of September, I had the privilege of attending the Donsö Shipping Meet 2019, in Donsö, a small island of around 1,& ...
Tuesday, 17 September 19
PANAMA SHIP REGISTRY MODERNIZES SHIP REGISTRATION
The Panama Ship Registry has announced it will integrate in a single platform “Electronic Ship Registration System (ESRS)” the present ...
Tuesday, 17 September 19
THE DRY BULK FREIGHT MARKET IS ALREADY ON A DOWNWARD CORRECTION - ALLIED
Here we are again, just a breath before the final quarter of the year. Under typical circumstances and on the basis of what we have seen during the ...
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- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- MS Steel International - UAE
- Economic Council, Georgia
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
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