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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, 10 July 19
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Showing 1366 to 1370 news of total 6871 |
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- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Indian Energy Exchange, India
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
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