Incoterm CPT (Carriage Paid To)
What is CPT?
industry manufacturing high tech
CPT, or “Carriage Paid To,” is an internationally recognized Incoterm used in both national and international commercial contracts. This term obligates the seller to bear the cost of transporting goods to a prearranged destination. This includes arranging and paying the freight costs to bring the goods to this location, but excludes the cost of import duties and taxes, which are the buyer’s responsibility.
The seller shall bear the risk until the goods are transferred to the first carrier. Once the goods are handed over to the carrier, the risk of loss or damage to the goods shifts to the buyer. This moment of risk transfer is crucial and must be clearly defined and understood by both parties to avoid misunderstandings and potential conflicts.
CPT is suitable for use in various modes of transportation such as by road, rail, sea or air. This makes it a flexible option for buyers and sellers who need to transport goods across different geographic and logistical scenarios. It provides clarity and simplicity in the planning and execution of international trade transactions.
In-depth Analysis of CPT in Procurement and Supply Chain
The Role of CPT in the Modern Supply Chain
With CPT, the seller takes responsibility for arranging transportation and paying the cost to transport the goods to the destination location. This means the vendor must contract with carriers and take care of all logistics processes all the way to the destination.
Risk-transfer
The risk of loss or damage to the goods passes from the seller to the buyer as soon as the goods are handed over to the first carrier. This is an important distinction from other Incoterms, where the risk may pass later.
Use in different transport modes
CPT can be used in all types of transportation, including road, rail, air and sea freight. This makes CPT a flexible option for many international trade transactions.
Frequently Asked Questions about CPT in Procurement and Supply Chain
How does CPT influence the choice of transportation methods in the supply chain?
CPT does not cover insurance for the goods in transit. Buyers should consider purchasing their own insurance.
How is CPT different from CIF?
Unlike CIF, where the seller must also arrange insurance, with CPT, only the transportation needs to be arranged and paid for by the seller.
Can CPT be used for domestic trade?
Yes, CPT can be used in both international and domestic trade, making it a versatile option for transportation contracts.
Who pays for customs fees under CPT?
Under CPT, the buyer is responsible for paying customs charges on importation, as well as any other charges that arise after delivery to the first carrier.
What happens if the goods are damaged after transfer to the first carrier?
Once the goods are transferred to the first carrier, the risk is with the buyer. Any damage after this point is the responsibility of the buyer unless otherwise agreed.
Why would a buyer choose CPT?
A buyer might choose CPT because of clarity on transportation costs. The seller arranges and pays for transportation, which simplifies planning and budgeting for the buyer.
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