Incoterm – Carriage Paid To (CPT)
Carriage Paid To (CPT) indicates that the total cost of the goods encompasses all expenses necessary to deliver them to the agreed-upon destination. The buyer’s responsibilities only include import requirements, local delivery, and unloading charges.
The transfer of liability occurs upon the delivery of goods to the initial carrier, typically at the origin port.
CPT is suitable for all modes of transportation and shares similarities with an FCA agreement. However, unlike FCA, CPT lacks a predefined delivery location. While not a frequently used Incoterm, CPT has specific scenarios where it is applicable.
CPT can be intricate since it necessitates the definition of two pivotal locations, which may not always be straightforward:
- Delivery Point: The point at which the seller hands the goods to their contracted carrier for transportation to the buyer. Here, the buyer assumes the risk.
- Destination: The location to which the seller is responsible for shipping the freight’s cost. Although cargo risk and responsibility shift to the buyer, the seller remains accountable for the shipment until it reaches the agreed destination.
Following the transfer of risk to the buyer, payment from the buyer to the seller is mandatory.
Choosing Carriage Paid To
- If the cargo only requires moving across land, CPT works effectively.
- If the shipment is a cross-border trade scenario where the seller coordinates multi-country shipments.
Understanding the Responsibilities
Seller’s Responsibilities: Under CPT, the seller’s primary responsibilities are listed as follows:
The seller must prepare the goods according to different origin's export packaging standards.
Carriage Loading Charges
When the goods depart from the seller's site, the seller is responsible for expenses encompassing any charges related to placing the cargo onto the initial carrier for its journey to the export location.
The seller is responsible for transporting goods to the agreed export location, including the fees involved in the process.
Duties, Taxes, and Custom Clearances
The seller is responsible for the export procedure, including the documentation preparation, expenses, and other examination processes.
The seller is responsible for the inland expenses from the seller's premises to the carriage, including costs like loading onto the truck.
The seller is responsible for covering all freight costs, specifically from the port of origin to the destination.
The seller is responsible for both origin and destination terminal charges.
Buyer’s Responsibilities: Once the seller have completed their obligations, buyer’s responsibilities are as follows:
Duties, Taxes, and Custom Clearances
The buyer is responsible for the import procedure, including the documentation preparation, expenses, and other examination processes.
The buyer must cover charges for unloading at the destination from the final carrier.
While not obligated, the buyer can choose to opt in insurance to protect the cargo from any unforeseen damages.
The buyer is accountable for the transportation charges from the point of the destination port to the final stop.
Pros and Cons for Buyers
Sellers provide the Bill of Lading or Airway Bill, streamlining the logistics process for buyers.
No Export Obligations
Buyers are not responsible for export requirements and associated fees, which is beneficial for unfamiliar export regulations.
Control with Agents
Suitable when buyers have agents for customs clearance, allowing control over DTHC and customs processes.
Payment Before Shipment Details
Buyers must pay before knowing when goods will ship, increasing risk.
Buyers may not know the carrier unless defined in the contract, complicating logistics.
Complication with Carrier Charges
CPT may not work well for shipments involving multiple carriers, increasing separation.
Complex Letter of Credit
Using CPT in Letter of Credit (LC) payments can lead to complexities and potential delays, affecting payment processes.
Transit Clearance Responsibility
Buyers must organize transit clearance with goods pass through a country, adding complexity.
Do you have questions about Incoterms or need assistance with your logistics needs? Our experts are here to provide guidance and support!