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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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Monday, 08 April 19
SULPHUR 2020 - COUNTDOWN TO THE SWITCHOVER - LLOYD'S REGISTER
Sulphur 2020 (MARPOL Annex VI Reg. 14.1.3) is still dominating headlines and as we draw closer to the 1 January 2020 deadline it’s clear that ...
Monday, 08 April 19
INDONESIAN COAL PRICE REFERENCE PRICE PLUMMETS TO LOW NOT SEEN SINCE AUGUST 2017
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Sunday, 07 April 19
SHIP PASSAGE PLANS - NO ROOM FOR ERROR! - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The English High Court’s judgment in Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM Libra) is an impo ...
Sunday, 07 April 19
IMO 2020: READY OR NOT? - WOOD MACKENZIE
New Year’s Day 2020 is firmly marked in the calendar as the refining and shipping industries prepare for change.
The International Marit ...
Saturday, 06 April 19
AUSTRALIA COAL POSTS BIGGEST WEEKLY DROP IN A DECADE AMID WEAK DEMAND - REUTERS
Australian thermal coal prices this week registered their biggest weekly fall since the financial market turmoil of a decade ago as demand plunged ...
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Showing 1431 to 1435 news of total 6871 |
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- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Central Java Power - Indonesia
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