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CPT Incoterms: What Does CPT Mean in International Shipping?

According to a UN trade and development report, global trade hit a staggering $33 trillion in 2024. This growth has been possible due to a clear understanding of Incoterms. Also, the International Chamber of Commerce (ICC) mentions that different incoterms define different tasks, costs and risks in a trade transaction. One such term is CPT-carriage paid to. As per the Incoterms of 2020, CPT Incoterms is a multi-model rule where the seller’s risk starts with export, the seller delivers the goods to the agreed carrier, and the freight is paid for the goods to be shipped to a designated location. The shipment’s risk is further transferred to the buyer when the shipment is handed over to the carrier. The term CPT has different roles and obligations for a buyer and a seller. In this article, we will explain what is CPT and about CPT Incoterms and what the roles under it are.

What is CPT?

CPT—Carriage Paid To is an incoterm that means that the seller delivers goods to a carrier at a designated location and pays for the transportation to the selected location. The transportation can be by air, road, rail, or sea. Under CPT, both sellers and buyers have their distinct obligations.

CPT Incoterms, among others, is essential for land and intermodal shipments. Also, traders more often use the CIF term for maritime shipments. Incoterms like CPT are significant to understand, as they specify who is responsible for the payment and arrangement of shipment, insurance, customs clearance, documentation, and other logistical activities.

Responsibilities of Seller and Buyer Under CPT

The roles and responsibilities concerning shipments of a seller and buyer are clearly defined as per CPT Incoterms and are explained below:

Seller’s Responsibility

  • Arranging and ensuring that the goods are delivered to the carrier at a preset location.
  • The seller must handle all export clearances, licensing, and inspections required in the country of origin.
  • The seller is responsible for paying for the main carriage at the agreed location. This will also include loading the goods onto the transport at the origin and paying freight charges, terminal charges, carriage charges and handling fees until the destination terminal.
  • The seller must also provide the buyer with all important transportation documents, such as the bill of lading, bill, and truck consignment note. This helps the buyer claim the goods. In the case of a shipment sent via sea, the seller must issue a negotiable lading bill.

Buyer’s Responsibility

  • Buyers’ first responsibility is to take care of the goods when they get delivered via a carrier at the pre-decided location.
  • A buyer must handle import clearances and pay for import duties and taxation in the destination country. The buyer must also arrange any outward carriage beyond the decided destination and pay for the unloading at the final destination.
  • Under CPT Incoterms, the buyer is not obligated to get insurance for the goods. However, it is a fair practice. Buyers can obtain insurance once the risk passes.

Advantages and Disadvantages of CPT

Like others in Incoterms, CPT has advantages and disadvantages for buyers and sellers. Let us understand the pros and cons of the CPT Incoterm for both parties:

Advantages and Disadvantages for Sellers

Advantages

Cost Control

The seller can control and pay for the main transport until the final destination. It helps predict the cost and leads to better scheduling. Sellers can also leverage freight contracts to avail of better rates than buyers.

Consolidated Shipments 

Sellers who ship regularly can easily coordinate deliveries if they use their carrier. This will also help to reduce the chance of congestion at the loading point.

Simplify Process

As the seller takes care of the logistics in the country of origin, the buyer will not have to worry about it. Also, the seller handles export packaging, loading and customs clearance to simplify the entire process till the carrier delivers the shipment.

Versatility 

CPT Incoterms is a concept that works with all modes of transport, offering flexibility for mixed shipments.

Disadvantages

Transport Responsibility 

It is the seller’s responsibility to bear the cost of delivering the goods to the location in the buyer’s country. This means the seller might be exposed to delays or price changes if anything goes wrong with the carrier. 

Limited Control After Delivery 

The seller cannot ensure the shipment’s safety once the goods are handed over to the carrier. 

Advantages and Disadvantages For the Buyer

Advantages

Convenience

The seller handles the long-haul part of a journey. Hence, the buyer only has to deal with the local import steps once the shipment arrives at the destination. This makes managing logistics easier for the buyer.

Saves Cost

Since the seller negotiates freight rates, the same can be reflected in the sale price. The buyer can benefit from the seller’s buying power without negotiating.

Disadvantages

Early Transfer Risk

One of the biggest drawbacks for buyers is that the risk starts once they get the goods with the carrier, even though the seller controls the main transportation. This becomes even more complex when a buyer may not be aware of the location or the condition of the goods. Hence, the buyer cannot claim against the carrier until the documents are present.

Cost of Imports

The buyer has to handle the unloading, customs clearance, and import duties when the shipment reaches the destination. Hence, it can increase the import cost. Also, if these costs are not anticipated, it can further lead to delays.

Also check – DAP vs DDP: Which Shipping Term Is Right for You?

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Conclusion

CPT (Carriage Paid To) is an Incoterm used in the shipping industry, irrespective of the mode of shipment. Under CPT, the seller handles the main carriage, but the buyer bears the shipment risk in the destination country. Transparency is essential for traders choosing CPT, and the place of the delivery and destination must be specified. It is also necessary to ensure that both sides understand when the risk will actually be transferred to the other party.

Related – Mastering Incoterms in Logistics: Key Terms You Need to Know

FAQs About CPT

Who is responsible for the trade cost as per CPT Incoterm?

The seller is the one who is responsible for arranging and paying for the shipment shipped to a specific destination.

Does CPT apply to sea shipments?

Yes, CPT can be used for all modes of transport, whether sea, road, rail, or air.

Is CPT different from CIP?

CPT stands for Carriage Paid To, while CIP stands for Carriage and Insurance Paid To. Unlike CPT, under CIP, the seller must also purchase insurance for goods shipped to a specified destination.

Who will be responsible for import duties and taxes under CPT?

The buyer is responsible for import clearance, taxes and any other formalities required to be fulfilled in the destination country.

Mariyam Jameela
Author

Mariyam Jameela

Mariyam Jameela works as a content writer at WareIQ. With a proven track record of working with renowned brands such as GO Digit, Urban Ladder, Juspay, Hong's Kitchen, and many more. She actively contributes to the creation of blog posts centered on eCommerce operations, fulfillment, and shipping, in addition to providing insights on various strategies and techniques tailored for eCommerce sellers

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