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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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Tuesday, 07 May 19
UNDOUBTEDLY A VERY TROUBLED YEAR FOR THE DRY BULK MARKET, SAYS ALLIED SHIPPING
Undoubtedly a very troubled year for the dry bulk market says Allied Shipping in its latest weekly report.
Thomas Chasapis, Re ...
Saturday, 04 May 19
HOW THE 'FAIR VALUE' OF COAL ASSETS IS AFFECTED BY COMMODITY CYCLES - CRU
As with any commodity, valuing coal assets can be tricky due to the cyclical nature of the market. In this insight, CRU discusses how commodity cyc ...
Friday, 03 May 19
SUPRAMAX: WITH WIDESPREAD HOLIDAYS DURING THE WEEK, THE MARKET LACKED IMPETUS - BALTIC BRIEFING
Capesize
The market last week was a tale of two halves, with substantial volatility. Beginning the week on a positive note the C5 West Australi ...
Friday, 03 May 19
COAL INDIA APRIL OUTPUT RISES 1% TO 45.29 MILLION TONNE - PTI
Coal India Ltd (CIL) Wednesday said its coal production in April 2019 rose by 1 per cent to 45.29 million tonne as compared with 44.86 million tonn ...
Sunday, 28 April 19
SUPRAMAX: A 54,000DWT VESSEL OPEN GRESIK FIXED VIA AUSTRALIA, REDELIVERY CHINA, IN THE MID $12,000S - BALTIC BRIEFING
Capesize
Following the holidays, activity increased in both the Pacific and Atlantic Basins. The 5TC average rallied, closing at $8,596, up $1, ...
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Showing 1406 to 1410 news of total 6871 |
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- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Planning Commission, India
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Economic Council, Georgia
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- PTC India Limited - India
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- The University of Queensland
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
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