Carriage Paid To (CPT) is an international trade term, commonly known as an Incoterm, that outlines the seller’s responsibilities for delivering goods to a carrier or another party specified by the buyer. CPT indicates that the seller fulfills their obligation when the goods are delivered to the carrier and ready for transport, but they do not bear the risk of loss or damage to the goods once they are in the carrier’s possession.
Key points related to Carriage Paid To (CPT) in supply chain and international trade:
- Delivery Point: Under CPT terms, the seller’s responsibility is fulfilled when the goods are delivered to the carrier or another party named by the buyer at a specified place, which could be a transportation hub, port, or another agreed-upon location.
- Transportation Responsibility: The seller is responsible for arranging and paying for the main carriage (transportation) of the goods to the agreed-upon destination. This could involve multiple modes of transport, such as land, sea, air, or a combination.
- Risk Transfer: The risk of loss or damage to the goods shifts from the seller to the buyer upon delivery of the goods to the carrier. This means that any potential damage or loss during transportation is the buyer’s responsibility.
- Cost Allocation: The seller covers the costs of transporting the goods to the agreed-upon destination, but the buyer is responsible for all subsequent costs, including customs duties, taxes, insurance, and additional charges upon arrival.
- Applicability: CPT terms are suitable for both domestic and international shipments, and they are often used when the buyer wants the seller to arrange transportation to a specific location.
- Documentation: The seller is responsible for providing the necessary export documentation and other documents required for transportation and customs clearance.
- Risk and Control: While the buyer assumes the risk once the goods are handed over to the carrier, the buyer also gains control over transportation logistics and carrier selection.
- Clear Communication: Precise communication between the parties is crucial when using CPT terms to ensure a shared understanding of the delivery point and responsibilities.
CPT is one of the Incoterms that help define the terms of delivery, risk, and responsibility between buyers and sellers in international trade. Careful consideration of the chosen Incoterm, such as CPT, is essential to ensure that both parties understand their obligations and allocate costs and risks appropriately.
Seller’s Responsibility Under CPT
- Packaging and marking
- Delivery of goods to the carrier in the country of origin
- International freight
- Handling import customs clearance
- Preparing commercial invoice
- Clearing goods for export
- Transportation of goods in the country of origin
- Paying goods-related charges and customs duties
- Bearing the risk of damage or loss until delivery
Buyer’s Responsibility Under CPT
- Payment of goods
- Clearing goods for import
- Transportation of goods in the destination country
- All costs after delivery, including transit and unloading costs
- Bearing the risk of damage or loss after handing over the goods to the carrier
Cargo Insurance in CPT
The point of delivery is critical because it is at this point that the goods are handed over to the carrier and the risk is passed to the buyer. The buyer will have no influence over where this is done if it hasn’t been stated earlier. However, if the transaction involves more than one carrier, the risk transfer can be done at a later or even earlier stage by stating it in the contract of sale. It is also strongly advised that both parties specify the destination in the contract, as this is the point at which the seller must arrange the carriage and the point at which the seller is responsible for carriage charges.
