Incoterms 2020 updates
A new version of the Incoterms will take effect on January 1, 2020, and will include a number of changes. The terms of delivery issued by the International Chamber of Commerce regulate essential buyer and seller obligations in international trade, such as transfer of goods to the buyer, transport costs, liability for loss of and damage to goods, and insurance costs.
With the adaptation of the Incoterms 2020 to current global trading practices, the new version is very up-to-date and practice oriented. The aim of the revision was to make the Incoterms clauses more user-friendly. For example, their presentation has been revised to make it easier for users to select the appropriate clause. In addition, the order of the clauses has been changed, and revised user instructions have been added to each clause.
In terms of contents, significant changes have been made to the Intercoms 2010, in particular the following:
- Different coverage levels in CIF and CIP: As in the past, the seller is still obliged in the Incoterms 2020 to take out transport insurance at their own expense in clauses CIF (Cost Insurance Freight) and CIP (Carriage Insurance Paid). In contrast to the Incoterms 2010, however, the two clauses now provide for different minimum coverages. The minimum coverage to be observed when the CIF clause has been agreed remains unchanged. The transport insurance to be taken out by the seller must continue to at least correspond to the coverage in accordance with the (C) clauses of the Institute Cargo Clauses or similar clauses (insurance of named risks). If the CIP clause is agreed, the seller must now provide insurance coverage in accordance with the (A) clauses of the Institute Cargo Clauses (all-risk coverage). Both the CIF clause and the CIP clause allow the parties to the contract to agree on insurance coverage that differs from this.
- Inclusion of security-related requirements: Security-related requirements for the transport of goods have now been included in Rules A 4 and A 7 of each Incoterms 2020 clause. As with other the Incoterms clauses, it should be noted that the Incoterms clauses only directly apply to the parties to the sales contract and are not the subject of the contract of carriage.
- The Incoterms 2020 contain regulations for transporting with one’s own means of transport in FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
- For goods sold under the FCA (Free Carrier) clause and intended for sea transport (such as goods in containers), FCA is stipulating a new option in the future. The buyer and seller may agree that the buyer shall instruct its freight carrier to issue an on-board bill of lading to the seller after the goods have been loaded. At the same time, the seller is obliged to hand over this on-board bill of lading to the buyer. This is typically done through participating banks.
- Renaming of DAT to DPU (Delivered at Place Unloaded). According to the Incoterms 2010 DAT clause, the seller delivered the goods as soon as they were unloaded from the means of transport at a “terminal.” However, according to the Incoterms 2010 application notes, the term “terminal” was not to be understood from a technical point of view but meant any unloading location. This fact was taken into account in the Incoterms 2020 by renaming the previous DAT clause to DPU (Delivered at Place Unloaded) for the sake of clarity. That means that in the future, any (agreed) place can be the place of destination.
- The Incoterms apply between the parties of a (national or international) sales contract and address – but are not limited to – special rights and obligations within this contractual relationship. On the basis of a uniform definition guaranteed in this way, subsequent problems of interpretation or discrepancies between the parties to the sales contract are to be avoided. It should be noted that the Incoterms, due to their character as GT&C-like provisions, do not constitute statutory provisions and thus only become legally binding if they have been effectively agreed between the parties to the sales contract by means of a corresponding reference (for the Incoterms 2020, this is also possible before 1/1/2020). Irrespective of this, in individual cases conflicting statutory provisions still take precedence over an Incoterm clause.
The Incoterms were revised by 500 experts from more than 40 countries.The clauses are recognized worldwide and are in use in more than 30 different languages.
Hard Brexit: Important measures beforehand
Even though there are some movements in the negotiations between EU and UK, still the “No deal” Brexit at the October 31st, 2019 cannot be excluded.
The consequences of a withdrawal without a deal on 31st October, especially for the movement of goods to and from the UK, are well known. First and foremost, longer waiting times would be expected due to border controls and customs clearance of all goods in accordance with WTO rules.
DACHSER will take appropriate measures to ensure that all goods arriving/leaving the UK after 23.00 GMT (00.00 CET) on 31st October are cleared and taxed accordingly.
With this letter we would like to summarize again the most important points and measures to keep the effects and delays in delivery for our customers as low as possible.
In case of Hard Brexit, the following information and documents must be available for customs clearance before the goods are collected:
- Consignment note
- Commercial invoice / pro forma invoice
- Packing list / delivery note
- Export accompanying document (can be issued by us if necessary)
- Preference documents and other product-specific documents, only if possible and required
Please make sure that these documents contain the following information: Sender with EORI number, recipient with contact details, importer if different to recipient with contact details, sequential invoice number, Incoterms, number and type of packages, description of goods, country of origin, Taric code, value of goods, currency, gross/net weight.
Please pay attention to a high data quality of the information - the documents must fit definitely to the respective physical transmission.
If the documents are made available to us in electronic form, they should correspond to a resolution of 300dpi if possible.
In addition, we need the contact person for customs including the contact details of your consignee/importer (e-mail address) so that we can contact them in order to obtain the necessary customs power of attorney. We need these in order to be able to carry out the necessary customs clearance. Without the power of attorney we can not do the customs clearance.
Please do also note, that we also will need more detailed shipment information like number and type of packages, description of goods, value of the goods, if you have got shipments to Ireland via UK territory, as we will have to issue a transit procedure through UK. For the beginning we also recommend that you add a T2L to those shipments as we are not yet sure, if Ireland customs will accept T2 as a proof for goods in free circulation of EU after transit via UK.
Within our eLogistics application the possible incoterms will be changed due to the customs. At the beginning only FCA/EXW or DAP are possible in eLogisitcs in order to ensure the process. Also the EDI information regarding the incoterms have to be adapted, the responsible person from your branch will contact you in order to align the necessary changes.
We ask for your understanding and cooperation so that DACHSER can make your flow of goods as efficient and trouble-free as possible in this exceptional case of hard Brexit.
The most important measures for preparation we have stated additionally in our Brexit checklist.
Please do not hesitate to contact your DACHSER branch if you have any further questions.
The new DACHSER magazine is here!
DACHSER’s European overland transport network has expanded over the years. The secret has always been putting the right pieces of the puzzle in the right places to complete the overall picture.
Singapore: Launch pad into Asia
Singapore is one of the busiest and most important logistics hubs in the world. Its advantageous location and long tradition of economic and political stability make the city-state the ideal starting point for international companies to develop business in the prospering markets of Asia Pacific.
Brexit – what does it mean for Air & Sea Logistics?
We face the possible event that the United Kingdom will leave the European Union by the end of October 2019.
This will affect shipments from and to the UK and delays are to be expected. Reasons are amongst others that a higher percentage of shipments has to be processed by customs authorities and that European shippers might switch to Air Freight to avoid border controls.
We expect delays particularly for shipments that do not move into the UK directly or out of the UK directly but via continental Europe. For example if Sea Freight shipments are unloaded in Rotterdam and then forwarded to the UK via truck and ferry:
- Fiscal representation in continental Europe will no longer be possible for goods to the UK. Instead, a transit procedure must be opened.
- The expected problems in Calais/Dover will cause delays in the delivery of goods to the UK.
- Incoterms for subsequent deliveries from the EU to the UK may also have to be converted if necessary, as costs for customs clearance have to be included.
Therefore we strongly suggest to ship directly to the UK whenever possible, at least for some time following the Brexit until things clear up.
In addition to that, you can also find a “Brexit checklist” here.
Plan ahead for the Golden Week holidays in China
China celebrates its National Day on October 1, followed by a week-long holiday. During the Golden Week from October 1 to 7, many businesses will be closed; factories and production sites will stop their operations. Some of them may resume work later than the official holidays.
Therefore, the pre-holiday period is busy for logistics and transportation, as factories tend to speed up their production before the holiday starts. In terms of air and sea freight transportation, space will be getting tight; trucking services will also be in a great demand.
It is important to plan ahead in order to keep your supply chain uninterrupted.
- Impact on sea freight
Most of the sea freight carriers have blank sailings not only during the Golden Week period but also before and after the holidays to adjust their services in accordance with the weak market demand.
Some carriers implement westbound blank sailings as early as week 39. In general, there are blank sailings in week 40 and 41; sailing schedule gradually resumes normal in week 43. It is suggested to place your booking as soon as possible to avoid additional cost and to secure space. Please be aware of the booking cut off time.
You are welcome to get in touch with your DACHSER representative for updates on particular routes and discuss your planning.
- Impact on air freight
During the holiday period, air freight operations in local branches will be either closed or operating with very limited manpower.
For air import, only pre-booked shipment will be handled, please arrange the arrival date as early as September 25 in order to have enough time for customs clearance.
For air export, air freight space will be very tight and shipping equipment will be in great demand during the pre-holiday period. Please confirm with your local DACHSER representative for a precise cut off time.
- DACHSER Branches in China
DACHSER branches in China will be closed from October 1 to 7, and resume work on October 8.
If you have urgent shipment or wish to discuss any questions, please feel free to contact us.
Office closures during the mid-autumn festival
Some countries in the Asia Pacific region celebrate the autumn harvest on the 15th day of August according to the lunar calendar. In 2019, the festival falls on September 13. However, public holidays differ in the region, please refer to the overview below:
- Hong Kong: 14 September, the day after the Mid-autumn festival
- China: 13-15 September, Mid-autumn festival
- Taiwan: 13 September, Mid-autumn festival
- Korea: 12-14 September, Chuseok festival
During the public holidays, DACHSER branches in the related countries will be closed. If you have an urgent shipment, please contact your DACHSER representative as soon as possible. We will try our best to offer the most suitable alternatives for you.
The International Chamber of Commerce (ICC) will soon release the new Incoterms 2020, providing certainty and clarity to businesses trading across borders. The new Incoterms will be effective as of January 1st, 2020.
Every 10 years, the International Chamber of Commerce evaluates and revises the International Commercial Terms, better known as Incoterms, as a means of creating greater uniformity and effectiveness across the shipping industry. The latest version, Incoterms 2010, will stay in effect until January 2020.
What does "Incoterms" stand for?
It is an acronym standing for international commercial terms. Incoterms is a trademark of the International Chamber of Commerce, registered in several countries.
The Incoterms rules feature abbreviations for terms, like FOB (“Free on Board”), DAP (“Delivered at Place”), EXW (“Ex Works”), CIP (“Carriage and Insurance Paid To”), which all have very precise meanings for the sale of goods around the world. These terms hold universal meaning for buyers and sellers around the world.
The main Incoterms changes that are being considered are:
- The removal of FAS (Free Alongside Ship) as it is being used infrequently;
- Separating FCA (Free Carrier) into two separate Incoterms: one for road delivery and one for maritime delivery;
- The committee is also considering bringing back the terms FOB (Free on Board) and CIF (Cost, Insurance, Freight), instead of the FCA and CIP (Cost and Insurance Paid to) used for non-container shipments.
- There is also a debate about the creation of a new Incoterms called CNI (Cost and Insurance) to bridge the gap between FCA and CFR/CIF (Cost and Freight/Cost, Insurance, Freight). Currently, FCA includes the cost of international insurance on account of the seller-exporter, while CFR/CIF does not include the cost of freight.
- Lastly, to alleviate questions surrounding the party responsible for paying Customs fees, the ICC will evaluate the creation of 2 Incoterms to replace DDP (Delivered Duty Paid).
Other issues and updates being evaluated during this round include:
- Transportation security
- Regulations on transportation insurance
- Relationship between the Incoterms and the International Sale Contract
We will provide another update once the official Incoterms 2020 rules have been announced by the ICC. Please contact us if you have any questions.
IMO 2020 and its impact on sea freight transportation
The International Maritime Organization (IMO) is taking initiatives to promote sustainability and reduce harmful sulphur gases emissions. While the new regulation to reduced maximum sulphur content (currently 3.5%) to 0.5% will be fully enforced on January 1, 2020, it is expected that the adjustment on bunker surcharge will come into effect already at the last quarter of 2019.
- Impact on shippers
With the new regulations to be fully enforced on January 1, 2020, carriers are getting prepared during the course of the year with some options available:
- Switch to low-sulphur fuel
- Use Exhaust Gas Cleaning Systems which commonly known as a “scrubber” to clean up the sulphur oxide emitted from the vessel’s engine.
- Change the fleet to Liquefied Natural Gas Ships that are powered by Liquefied Natural Gas (LNG). LNG is considered as a cleaner fuel with less emission of greenhouse gases including sulphur oxide.
To ensure a smooth transition, carriers have to implement the above changes before January 1, 2020. Due to the investment in clean energy and cleaning systems, there will be an adjustment to the bunker surcharge formula which is expected to be effective from the last quarter of 2019.
- What is IMO 2020?
IMO is proactively taking steps to reduce marine pollution and minimize the vessels’ impact on global warming. Currently, most of the cargo ships use heavy fuel oil which is derived from crude oil and contains sulphur oxide. The gases can cause acid rain and trigger respiratory diseases. Therefore, the tolerant of sulphur oxide emissions has been tightened progressively throughout the past decade.
Also known as “IMO 2020 fuel sulphur regulation”, IMO 2020 is an initiative from the IMO which aims to reduce sulphur oxide emissions from ships.
By the deadline of January 1, 2020, all carriers will have to comply with the new regulation, which imposes a 0.5% global sulphur cap on fuel content and replaces the current limit of 3.5%.
If you have any questions regarding this topic, please feel free to reach out to your local DACHSER representative.
Hurricane Dorian update
As of September 3 (EDT at the US), Dorian is weakened to a category 2 hurricane. However, it brings significant and damaging impact to five states at the southeast coast of the US this week, from Florida's east coast to parts of Georgia, South Carolina, North Carolina and possibly southeast Virginia, with the peak impact is expected to arrive on September 6.
- Wilmington, North Carolina: Port will be closed September 4.
- Charleston, South Carolina: Port will be closed September 4 and September 5.
- Savannah, Georgia: Port will be closed on September 3 and September 4.
- Jacksonville, Florida: Terminals remain closed to all commercial traffic for the duration of Hurricane Dorian.
- Miami, Florida: Ports are closed to vessels and shore-side operations.
- Miami airport is currently operational and Fort Lauderdale Airport re-opened at noon on September 3.
Our DACHSER offices in Miami and Plantation, FL will remain closed on September 3 and will re-open on September 4.
DACHSER will continue to monitor the developments and will provide updates. Please contact your local representative if you have any questions.
Hurricane Dorian affects Florida sea ports
Dorian, currently a Category 5 hurricane on Sunday night local time, is approaching the southeastern coast of the United States from Florida to the Carolinas.
The storm is expected to affect all Florida seaports on the Atlantic side. Below the ports that are currently affected:
- South Florida Container Terminal – closed at noon, August 30, for vessel operations.
- POMTOC’s gate closed on August 30 to prepare the terminal for Hurricane Dorian.
- Port Condition ZULU in effect since 6pm, September 1 – sustained tropical storm force winds are expected to reach the port within the next 12 hours. Port Everglades will be closed to all operations unless specifically approved by the authority.
Jacksonville and Tampa:
- Port Condition WHISKEY in effect – still open to all commercial traffic and all transfer operations
Florida airports are monitoring the path of the hurricane closely, but have not announced any closures yet.
We will continue to monitor the hurricane and will provide updates. Please contact your local DACHSER representative if you have any questions.
Brexit checklist - what should you watch out for?
What should DACHSER customers pay attention to in the case of a hard Brexit?
Delays when it comes to border crossing would be a major challenge in the case of a hard Brexit - the other would be the new bureaucratic burden of goods traffic with Great Britain. First and foremost, longer waiting times through border controls and customs clearance of all goods should be expected under WTO rules. For companies that send shipments to and from the UK, we have summarized them in our Brexit checklist that can be downloaded below:
From Head of Sales to Managing Director
Jan-Michael Beyer was appointed as Managing Director Air & Sea Logistics Thailand in April, 2019. Prior to it he was Head of Sales Air & Sea Logistics Thailand, Vietnam, Singapore and Malaysia.
After three months into his new position, we spoke to him about his aspirations and his career development from being a member of the sales team in Germany to becoming the leader for a country organization in Asia.
Flights cancelled due to demonstration in Hong Kong International Airport
There is a massive demonstration taking place in Hong Kong International Airport on Monday, August 12.
The aviation authorities announced that all remaining flights out of Hong Kong after 4pm local time on Monday, August 12, are cancelled. More flights are cancelled on Tuesday morning.
Please expect minor shipment delays.
We are sorry for the inconvenience caused. If you have urgent shipment please get in touch with your DACHSER representatives.
Typhoon Lekima causes service disruptions in East Asia
Super typhoon Lekima has brought major impact to the northern part of Taiwan and the eastern coast of China since August 9, local time.
Lekima made landfall near Shanghai in the early morning on August 10. Over the weekend, the storm brought heavy downpours, strong winds, flooding and landslides to coastal areas of seven provinces in China from Fujian to Jiangsu, including Shanghai city.
While some of the affected areas are still suffering from heavy rains and flooding, land transportation is disrupted. At the same time, seaport operations are disrupted and hundreds of flights are postponed or cancelled. Please expect shipment delays due to the adverse weather conditions.
We are sorry for the inconvenience caused. If you have any questions, please contact your local DACHSER representatives.
DACHSER continues to provide highly efficient transport solutions to its valued customers in India.
The dedicated rake of containers carrying aluminum silos to be used in the petrochemical industry were imported from the Netherlands and are a part of a three month long project, expected to be completed by September 2019. Around 350 FEUs are estimated to be shipped over this period of time. The containers were shipped from the Netherlands to Mundra Port where it gets loaded onto the train to Ludhiana ICD and covered their last leg to the destination by truck.