Incoterms Training classroom

Incoterms® 2020 Rules


In just under two years from now we will be introduced to the latest version of INCOTERMS®, INCOTERMS® 2020.

This is most certainly, in my opinion, a set of INCOTERMS® rules that presents us with ‘2020 vision’ insofar as definitive responsibilities, costs and the passing of risks are concerned, pun most definitely intended.

The aim of the ICC to destroy ambiguity and provide a better focused set of rules has been successfully achieved. The ICC INCOTERMS® drafting committee has certainly left no stone unturned with their drafting of the latest revision.

I cannot help but wonder how much clearer INCOTERMS® 2030 could possibly be? Well, we will have yet another decade of perfect sight in which to speculate over the possible changes that would invariably come about.

Whilst the INCOTERMS® 2020 rules have not yet been finalised, a few proposed changes have been made available for review, comments, suggestions and contributions. Companies around the world, will soon find themselves caught up in the rush of updating their staff on the changes that come with the latest revision of INCOTERMS® – and these companies will begin placing much emphasis on how these changes will affect their respective business operations, either from a freight forwarding perspective, or as a direct exporter/importer of internationally traded goods.

When one examines the newly abbreviated INCOTERMS®, several questions quickly arise; did the ICC run out of abbreviation naming options? Is it a case of mere semantics, or is there in fact significant merit to the changes that are currently being drafted?

The drafting of the INCOTERMS® 2020 is historic in its own right. What previously comprised a predominantly European member-based drafting committee has now been opened up to include consultation and input from China and Australia representatives. The drafting constituency still however remains largely European.

A session will also be held in Latin America and Asia to better diversify the new rules. One of the more notable changes will be the removal of EXW and DDP from the previous versions. This revision then begs the following questions: how is it that that a popular INCOTERM® such as EXW now ceases to exist and why has this change been considered? EXW is considered to be a more domestic term from the Unions Customs Code perspective which came into effect in 2016. This would now mean that seller would have to arrange export customs clearance and this is provided for under FCA. FCA (Free Carrier) is a very flexible trade term, which is preferred instead of EXW (Ex Works) and FOB (Free on Board) INCOTERMS® in most situations. For example, frequently exporters and importers use EXW where the exporter handles and pays for the export custom duties. But according to INCOTERMS® 2010 rules, the importer must arrange the export customs operations under EXW, where such clearance is applicable. In these situations foreign trade parties prefer the use of FCA instead of EXW. FCA is likely to replace EXW as the starting point of the international trade transaction – and there will be a greater need for the freight forwarder to become more involved in assisting exporters and importers in arranging the forwarding and logistics from the place of manufacture in the country of origin/departure.

Whilst EXW is considered to be a more domestic term, freight forwarders will still be extensively utilised to expedite and arrange domestic logistics formalities as mentioned above.

Free Carrier (FCA) is one of the more commonly used INCOTERMS® in international trade transactions and is suitable for all modes of transport and not necessarily exclusive to ocean freight as is the case with FOB. It is also a term that presents the most flexibility and allows for the buyer to arrange the main carriage. FCA is the rule of choice for containerised goods where the buyer arranges for the main carriage. The modification made with INCOTERMS® 2010 is primarily when the goods are shipped via any mode of transport other than ocean freight, INCOTERMS® FOB and CIF should not be used, in other words, FOB and CIF are class two INCOTERMS® i.e. to be used exclusively for ocean freight transactions.

But their counterparts FCA and CIP are not being applied by the vast majority of exporting and importing companies, nor by agents involved in international trade (freight forwarders, logistics operators, banks, etc.). This because FOB and CIF are two very old INCOTERMS® and the International Chamber of Commerce has not made an effort to transmit this change adequately, which is very important, since approximately 90% of the world trade is transported via ocean freight.

In the INCOTERMS® 2020 version, it is possible that FOB and CIF will be retained for ocean freight shipments, as was the case with INCOTERMS® 2000 and earlier versions.

Let us look at what has happened over the last ten years that has invariably given rise to the changes that are currently being drafted. The most recent change in international trade is the implementation of the European Customs Code which also identified EXW and DDP as being more “domestic terms” in each instance where the seller and buyer is thus concerned.

The Union Customs Code takes into account the changes around Customs Compliance modernisation and will therefore be a significant contributor to the removal of EXW and DDP and the introduction of INCOTERMS® FCA being possibly unfolded into two more distinct terms, one for inland delivery in the country of export and the other for maritime delivery.

In the years between 2014 and now there has been an increased surge in piracy attacks which has now encouraged the ICC to have specific delivery points accompanied with distinctive responsibilities to the buyer e.g. DTP (Delivered Terminal Paid). This would avoid goods remaining at the terminal, unattended, for longer periods of time due to disputes surrounding the responsibility for duty payments.

In recent years, SOLAS has made it mandatory for all containers to be weighed and certified prior to being loaded; the addition of Verified Gross Mass as a responsibility of the seller will definitely be discussed as an inclusion in one or more of the “class two” or sea freight only INCOTERMS®. Increased cyber-attacks on shipping companies and growing security threats during the last decade have greatly influenced the development of the international trade transaction and there has never been a more crucial time to implement a unified relationship between INCOTERMS® and the international sale contract. This has been yet another reason to include for example the INCOTERM® CNI which would then bridge the gap that currently exists between FCA and CFR/CIF.

It is a well-known fact that a revision of INCOTERMS® could possibly effect the computation of a country’s customs value. What does this then mean for South African Customs Value Calculations? In South Africa, we have retained the FOB contract as our basis of valuation when computing customs values. If for some reason or the other FOB is not retained, it is likely that FCA (marine) will become the basis of valuation. EXW is a popular choice for inexperienced exporters or conversely a popular choice for experienced importers. In alignment with the prescriptions of the Customs Act, when moving from EXW, a customs clearing agent adds dutiable charges to bring the total FOB before converting to South African rand and rounding off to the Customs value in the prescribed manner.

With the removal of EXW and DDP, dutiable charges such as packing the goods, inland transport to the first carrier or main carrier will now become redundant. It would appear that FCA will now become the new INCOTERM® to work from.

The new INCOTERMS® rules open up a more practical application for freight forwarders, buyers and sellers. They also alleviate the confusion and focus or lack thereof that existed with INCOTERMS® 2010. The new rules also align with the evolution of global customs compliance requirements.

The need to fully understand, interpret and apply INCOTERMS® is of paramount importance to all individuals involved in international trade since the use of an incorrect INCOTERM® could have dire consequences.

It must be noted that delivery of goods from the seller to the buyer can occur at any point of the international trade transaction and this is heavily dependent on the mutually agreed upon INCOTERM®.

There is much speculation over how the many changes will affect the international trade landscape. The sustainability of the freight forwarding business is an area of particular interest and the new rules support the ideals of the modern freight forwarder, incorporating all aspects of 4PL supply chain.

The new INCOTERMS® are expected to be released toward the end of 2019, coinciding with the centenary year of the International Chamber of Commerce, and will enter into force on January 1, 2020. I do believe that the INCOTERMS® 2020 rules are not merely a case of semantics but rather a well-thought-out and carefully considered amendment to the current rules.

There will be less effort required in understanding the seller’s or buyer’s responsibilities when taking a first glance at an INCOTERM® on a commercial invoice. There wouldn’t necessarily be less confusion or fewer blurred lines per se insofar as the new INCOTERMS® are concerned but there is certainly going to be more clarity and concise focus on the respective seller’s and buyer’s responsibilities, costs and the transfer of risk from seller to buyer as well inclusions around the changes that have taken place over the last decade.

Read the original Article below

Armyworms are wreaking havoc in southern Africa. Why it’s a big deal

Armyworms are wreaking havoc in southern Africa. Why it’s a big deal

Kenneth Wilson, Lancaster University

A combination of native African armyworms and Fall armyworms from the Americas are ravaging staple crops across southern Africa. If uncontrolled, they have the potential to cause major food shortages. The Conversation Africa’s energy and environment editor Ozayr Patel asked Kenneth Wilson to explain the threat and what can be done about it.

What are armyworms, where do they come from and how do they travel?

Armyworms are the caterpillar stage of moths belonging mainly to the genus Spodoptera. They are called armyworms because when they have ravaged a crop they march along the ground like a vast army of worms in search of more food. There are at least eight countries in southern Africa that have been hit by outbreaks of armyworms.

This sequence of outbreaks began in mid-December 2016 in Zambia and has spread rapidly ever since. It is now as far south as South Africa. Because armyworms feed on many of the staple food crops they have the potential to create food shortages in the region.

The recent outbreaks in southern Africa appear to be a combination of the native African armyworm (Spodoptera exempta) and a new invasive species called the Fall armyworm (Spodoptera frugiperda). This new species is endemic to tropical and subtropical regions of Central and South America, where it causes considerable damage to maize and other crops.

The top photo shows a mature maize field before pests arrive. The bottom photo shows a similar field following an armyworm attack.
Top: Ken Wilson; Bottom: FAO Lesotho

The Fall armyworm was first formally identified as being on the continent as recently as January 2016 in West Africa, including Nigeria and its neighbours.

It is unclear how it reached Africa from the Americas but it’s likely it arrived on imported plants. It’s also possible that it migrated across the Atlantic on favourable winds over multiple generations.

It is not yet known whether the recent outbreaks in southern Africa are derived from the earlier West African ones. But Fall armyworms are known to be strong migrants in the Americas. Every year Fall armyworms fly from Mexico and the southern states of the US to Canada.

What makes them so devastating?

Both African and Fall armyworms do most damage to the staple cereal crops such as maize, wheat, sorghum, millet and rice. They also eat pasture grasses which has an impact on livestock production.

The African armyworm – they can be 3cm long – can reach densities as intense as 1000 caterpillars per square metre, quickly razing crops to the ground. On maize, the number of caterpillars per plant is, of course, much lower but it can cause just as much of an impact. The insects strip the leaves of even mature maize plants bare.

Right: African armyworm Left: Fall armyworm.
Ken Wilson

Unlike their African cousins, the Fall armyworm also feeds on a range of non-cereal crops. Nearly 100 different host plant species have been recorded. These include cotton, soybeans, groundnut, peanut, potato, sweet potato, spinach, tomato, sweet peppers, cabbage and tobacco.

Damage to maize is likely to have the biggest impact on farmers in southern Africa because it’s the main staple food crop in the region.

The impact of the Fall armyworm is likely to be devastating because it eats the leaves of the plant as well as its reproductive parts. This damages or destroys the maize cob itself.

Where have the most devastating attacks occurred? What was the result?

In 2012-2013 the African armyworm cut Zambia’s maize production by 11%. The latest outbreaks could lead to losses of up to 40% as an estimated 124,000 hectares of maize has been attacked.

In neighbouring Zimbabwe, seven out of eight maize-producing provinces have had armyworm outbreaks, and in Malawi at least 9,000 hectares have been attacked. Figures are not yet available for the other five southern African countries currently affected.

What are the potential economic consequences if the problem is not arrested?

It is too early to say what the impact will be on food production in the region. Chemical pesticides have been mobilised in most countries, though their efficacy has been questioned. In Brazil, where armyworms can breed all year round, controlling them costs an estimated US$600 million a year. The cost of control in southern Africa hasn’t been determined yet.

But it’s likely to be substantial given that many litres of imported chemicals have already been bought by countries desperate to protect their crops. This means that even if control proves to be effective it will have been costly.

The economic consequences could be severe if the Fall armyworm persists and spreads throughout the sub-Saharan Africa region.

What is the best way to stop them damaging crops?

Chemical pesticides can be effective against both armyworm species. But resistance to many chemicals is an issue for the Fall armyworm throughout its native range. It’s not known whether there is pesticide resistance in the Fall armyworms blighting southern Africa.

The variable efficacy may be due to genetic resistance, or it might be as a result of the way in which the spray is applied. The Fall armyworms are often inaccessible to insecticides because of their tendency to hide in the whorls and reproductive parts of the host plant.

Research is needed to work out which chemical is the best to control the strain of Fall armyworm in southern Africa.

But there are alternative approaches.

In parts of their native range in the Americas, genetically-modified Bt maize is grown to combat the Fall armyworm. This may also be an option for South Africa and some other countries where GM crops are already grown. But many parts of Africa do not allow or welcome GM varieties. And Fall armyworm has also evolved resistance to some Bt toxins, with some evidence for cross resistance.

There are non-chemical, biological pesticides that could also be effective. These are pesticides derived from natural diseases of insects, such as viruses, fungi and bacteria. I have been involved in the development of a highly effective biopesticide against African armyworm in Tanzania. But this still needs to go through the commercialisation and registration process, which is both costly and time consuming.

A similar biopesticide has also been developed against the Fall armyworm, but again this is not yet registered for use in Africa.

Biopesticides tend to be effective against a much narrower range of species than chemicals, which is good for the environment. But it means that they can only be used for a limited number of pests, often making them more expensive than chemicals.

There are also some other indigenous approaches that could be effective. This includes the use of local plant extracts like Tephrosia vogelli and neem, to produce botanical pesticides, and the addition of sand to maize whorls where armyworms are feeding.

Only time will tell what the full impact of this armyworm invasion will have.

The Conversation

Kenneth Wilson, Professor at the Lancaster Environment Centre, Lancaster University

This article was originally published on The Conversation. Read the original article.

Bond and Rebate Stores Training Course

Amendment of Customs & Excise Rules: New Rule 20.24 on fermented beverages

Amendment of Customs & Excise Rules: New Rule 20.24 to regulate the movement of fermented beverages
This amendment affects manufacturers of fermented beverages classified in Tariff Heading 22.06. Members should note that comment must be submitted by 1 June 2016.
By the insertion after Rule 20.23 of the following heading and rule:
Removal of bulk other fermented beverages
20.24 (a) A licensee of a customs and excise warehouse or special customs and
excise warehouse in which other fermented beverages of tariff heading 22.06 are manufactured, may only remove, or permit the removal of, other fermented beverages in bulk –
(i) to the licensee of another such warehouse;
(ii) to the licensee of a VMP warehouse contemplated in the rules numbered 19A3 for the primary production of spirits;
(iii) to the licensee of a special customs and excise storage warehouse licensed for the storage of other fermented beverages for export; or
(iv) for direct export from that warehouse.
(b) For the purposes of paragraph (a), “other fermented beverages in bulk”
means other fermented beverages not in packaging for sale by retail.

Solas VGM

Understanding the IMO SOLAS VGM Act – Will your container be weighed in the port, by the port? by Andy Connellsolas vgm

Not likely at all.

The shipper must present equipment for loading with the VGM pre-determined well before arrival at the entry gate to the export terminal.

Do not expect that the weight you have given will be cross-checked by the port. It will not be.

This is not their scope of terminal work and is far too debilitating to contemplate beyond random sampling.

It is also not the scope of the work for your carrier either.

It is up to the new link in the supply chain- your country’s Maritime Safety Authority to ensure YOU, the shipper, have correctly stated your VGM of all equipment tendered for shipment.

Should the Maritime Safety Authority deem it necessary to have container mass verified they will instruct the shipper/agent to divert to a weighbridge before port arrival, to check that the VGM specified on the pre-advice is indeed inside acceptable parameters.

This will be more to monitor the accredited agencies that endorse the Verified Gross Mass on behalf of the maritime safety authority.

Defaulters can expect heavy sanction if they are caught flagrantly neglecting their duties.

The accredited 3PL that endorses your VGM will in turn hit the shipper hard and may even force the shipper to pass a weighbridge if their deducted VGM of Method 2 is not consistently reliable.


It’s long past high time shippers were brought into line on this incredible important aspect of supply chain logistics.

Shippers have always focused upon nett weight of cargo because of import customs duty which is imposed upon the nett mass of the product.

And haven’t they had to get that right! And they have.


But carriers allowed the shipper to become blasé about the gross mass for so long over such a long period that shippers never bothered to really determine the real gross mass.


What mattered most for the carrier was securing cargo for shipment to pay for the slot on a less than FULL vessel! True story.

It is only when slots started to fill that they discovered the monumental impact these bad habits that had crept in to the supply chain had on maritime safety.


This sorry state of affairs comes to an abrupt end on July 1 2016 and stop crying about it.

It should have been a good habit since 1977.

And by August 2016, this will be old hat and by December 2016, it will just be part of the supply chain as it is anyway and we will not remember the bad old days when we just sucked the gross mass out of vague calculations done in the air

Vat on Fruit imports

SARS VAT Rule on Imported Vegetables and Fruit

Vat on Fruit imports

Below you will find a breakdown of the new SARS VAT. ruling on imports of Vegetables and Fruit

The draft BGR VAT sets out the VAT rate applicable to the supply and importation of vegetables and fruit and withdraws BGR VAT No 18 dated 27 March 2013, ‘The Zero-Rating of Various Types of Dates.’ Just to clarify the ‘BGR’ means a binding general ruling issued under section 89 of the Tax Administration Act, 2011.

The ruling defines ‘zero-rated supplies’ as the supply of vegetables and fruit that have not been cooked or treated in any manner except for the purpose of preserving such vegetables and fruit in their natural state. Fresh and frozen vegetables and fruit supplied in the following manner are regarded as not having been ‘treated’ as envisaged in the said Item numbers, and therefore qualify for zero rating: cut (including vegetables and fruit cut into specific shapes), diced, sliced, shredded, crushed, minced, pureed, peeled, de-pitted, and compressed. The aforementioned zero-rating applies regardless of whether the vegetables and fruit are sold individually.

Frozen vegetables and fruit that have been blanched in hot water are regarded as having been ‘treated’ for the purpose of preserving the vegetables and fruit in their natural state, and therefore the supply of such frozen vegetables and fruit qualifies for the zero rating. The supply of a mix or a combination of vegetables and fruit by a store or similar establishment, whether or not at the delicatessen section of the establishment, may be zero-rated.

Vegetables and fruit supplied in the following manner are specifically excluded (a) Cut, diced, sliced or peeled vegetables or fruit to which any other substance has been added whether or not separately packed in the same container (other than for purposes of preserving the vegetables or fruit in their natural state), (b) Fresh or frozen vegetables and fruit that have been treated with an additive for the purpose of adding colour or flavour (for example, glucose, sugar or salt), (c) Dehydrated, dried, canned or bottled vegetables or fruit, and (d) Vegetables or fruit smoothies or juices, and any similar products

Import chicken AGOA

Importing Chicken from the USA under the AGOA Agreement

Import chicken AGOA


Posted on 16/03/2016


Take note the procedure for importing chicken from the USA effective 1 April 2016. The SARS Customs communication is reproduced in its entirety below.

Kindly take note that with effect from 1 April 2016, importers who import goods under rebate item 460. must be in possession of a permit issued by ITAC.
You are advised that the SARS Customs import declaration processing system has been enhanced to validate the existence as well as the control of the quantities imported against the permits issued by ITAC.
The effect of the enhancement provides for the capturing of the permit details in the ‘additional information field’ on line level of the applicable import declarations. The additional Information code must be reflected in “Box 44” of the SAD500 customs declaration form.
The declaration of the permit must be applied as follows:
Insertion of the code “PGR” (Permit for various 4th Schedule General Rebates) and the relevant permit number issued by ITAC as indicated in the example below.

Container weight verification

The IMO SOLAS VGM Act – How will it roll out? A South African perspective by Andy Connell

Container weight verification

The IMO SOLAS VGM Act – How will it roll out? A South African perspective
Well here is my perspective.
It can be implemented today even, why wait for the 1st July 2016 or the next maritime disaster?

METHOD 1 is so cost prohibitive it is not even on the table for discussion longer than it takes to compute its cost
impact. (It does remain the most absolute method though).

METHOD 2, by default is the least impact upon logistics and costs.
My crystal ball shows the cargo owner taking one of two routes open…………

The cargo owner makes a booking with their carrier of choice including his best guessed/known/recorded GM which
of course the carrier needs for stack planning (yes heavy equipment is stacked separate from light equipment in the
terminal), vessel planning and to stop taking bookings when the vessel max’s out on stability out volume.
Shipper A) Uses the tare mass of the equipment on the day plus the known gross mass of each pallet.
Cargo owners are already installing a robust accredited scale (weighing device) on the warehouse/production floor
at source of the ISO cargo pallet’s birth.
Thus as it is completed the pallet is weighed and the verified mass entered into the ERP in use as the VGM of that
On the allotted day of stuffing the tare mass is read off the csc plate on the left door of the equipment and then
entered into the ERP in use by that cargo owner.
Upon sealing the equipment and dispatching to the port export terminal, the cargo owner (or its representative
agent) will pre-advise NAVIS by sending this data by EDI to the port with the VGM included in the data transmission.
When the SI is submitted via INTTRA (or by EDI) some hours or days later, the new VGM replaces the mass used for
booking, if it differs.

Shipper B) Uses three masses to reach VGM:
 Tare mass of the equipment,
 default mass of the pallets in the equipment as stored in their database,
 and the deduced gross mass of the cargo.
Cargo owner has no accredited scale (weighing device) on the warehouse/production floor at source of the ISO cargo
pallet’s birth.
On the allotted day of stuffing the tare mass is read off the csc plate on the left door of the equipment and then
entered into the ERP in use by that cargo owner.
The VGM of each pallet is acquired by deduction (the GM of each carton and computing the VGM of cargo by carton
For many products this is finite and remains the same and is thus quite a simple process.
For fresh perishable cargo this varies with water content, sugar content, product calibre (sizing) in any particular
month and production area.
Upon sealing the equipment and dispatching to the port export terminal, the cargo owner (or its representative
agent) will pre-advise NAVIS by sending this data by EDI to the port with the VGM included in the data transmission.
When the SI is submitted via INTTRA (or by EDI) some hours or days later, the new VGM replaces the mass used for
booking, if it differs.

All that is still yet required now is for the Maritime Safety Authority to accredit 3rd parties who can demonstrate
provenance that weighing devices are calibrated correctly and that the individual product carton masses are
determined in a realistic manner which can defend the VGM criteria.
This should be in place by the mid-June unless minds are not as sharp as they can be.

In our context down in South Africa, this is made simple because Transnet is the only port landlord and terminal
This is relevant in that Transnet embraced the NAVIS ERP System as their system of choice.
NAVIS requires the entire booking forms of any vessel to be pre-loaded for better terminal operation planning and
execution, which in turn requires all equipment (containers) to be pre-advised before arrival at the entry gate to the
This means the driver of the truck or the rail car, enters the number of the reference and the optics scanners screen
the container and confirm the number, matching it with the pre-advised entries complimenting the bookings
planned. Access is granted with an instruction on where to go to have the equipment lifted off the chassis and placed in the
correct stack location. The shipping line is not burdened or involved in this process of supplying the VGM, nor is the port terminal. All of this happens BEFORE arrival at the port entry gate. You do not need to ask your shipping line what you must do or how to do it. You not need to ask the port terminal operator how to do it or what to do.
You just pre-advise as before but this time you amend the GM that was on the booking if it differs to the VGM of the
cargo presented for loading.
Andy Connell

Container weight verification

Guidelines for Container weight Verification

Attached is the marine notice  Number 11 of 2015 ,This marine notice advises the maritime industry of amendments to The International Convention for the
Safety of Life at Sea (SOLAS), as amended, chapter VI, part A, regulation 2 which requires that packed
containers’ gross mass is verified prior to stowage aboard ship.

Below is a link for download .



Container weight verification

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