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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, 31 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
It was a fairly busy week in the dry S&P market. Despite the ease of Capesize rates which impacted Panamaxes as well, interest from potential b ...
Sunday, 28 July 19
ULTRAMAX - INDONESIAN COAL CARGOES SAW A 63,000DWT SHIP FIXING DELIVERY FOR A SOUTH CHINA TRIP VIA INDONESIA, REDELIVERY CHINA, AT $11,700 - BALTIC BRIEFING
Capesize
The market was a white knuckled ride this past week as a large downside movement shed value quickly leaving many in bewilderment. The ...
Wednesday, 24 July 19
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.27 PCT - XINHUA
China Taiyuan coal transaction price index stood at 138.78 points Monday, down 0.27 percent week on week.
The index, released by Chi ...
Wednesday, 24 July 19
SHIPPING MARKET INSIGHT - INTERMODAL
Tonnes of ink has been spent analysing the rebound of the dry bulk market the last weeks with the most representative example being the rising perf ...
Wednesday, 24 July 19
COAL'S DEMISE QUICKENS IN EUROPE AS MARKET SHIFT IDLES PLANTS - BLOOMBERG
Commodity markets are stripping away the case for coal in Europe, moving quicker than government efforts to close the most polluting power plants.
...
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- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
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