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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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Saturday, 15 June 19
SUPRAMAX: A 58,000-TONNER, OPEN QINGDAO, WAS BOOKED TO REDELIVER IN EAST COAST INDIA AT $6,500 - BALTIC BRIEFING
Capesize
The market closed on a quiet Friday last week after a few hectic days of mid-week trading. Trade routes from Brazil to the Far East we ...
Friday, 14 June 19
PANAMAX: OUTLOOK IS MIXED - FERNLEYS
Capesize
Sentiment changed to a more nervous tone as pacific cargo volumes failed to deliver as expected, however latest activity indicates res ...
Friday, 14 June 19
ELECTRONIC (PAPERLESS) TRADING - SKULD
KNOWLEDGE TO ELEVATE
Electronic Shipping Solutions: Bolero International Ltd, E-Title Authority Pte Ltd, Global Share S.A. (edoxOnline platfor ...
Wednesday, 12 June 19
KOSPO INVITES BIDS FOR 140,000 MT OF 4,600 NCV COAL FOR SEP. 2019 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 140,000 MT of minimum 4,600 kcal/kg NCV coal ...
Wednesday, 12 June 19
IMO 2020 - COUNTDOWN TO 1 JANUARY 2020 -HOW WILL THE CHANGES AFFECT REFINING AND SHIPPING? - WOOD MACKENZIE
We know that the IMO’s regulations represent the biggest step change the shipping industry has ever seen and the implications will be felt th ...
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- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- VISA Power Limited - India
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