Part of the Comprehensive Incoterms Guide
CPT In Plain English
CPT (Carriage Paid To) is a tricky incoterm. Read the details carefully. Only recommended if using a Letter of Credit.
Where Is The Named Place For Handing Over Responsibility From The Seller To The Buyer?
The seller is responsible and liable for all the steps in their country, or as far as the buyer’s forwarder’s warehouse. The seller is also responsible for booking main carriage to a terminal in the buyer’s country, or even further to the buyer’s warehouse. Either way, the seller is not liable after the goods arrive at the terminal or warehouse in their own country.
What Does The ICC Say?
Recommended for containerized freight.
Is This A Good Choice?
Importers who don’t have a representative at the port should be wary of using this term unless they are sure that the carrier’s rates include terminal handling charges. If not, your seller’s forwarder will use a 3rd party agent to manage import clearance, duties, and terminal charges. Many importers get caught with inflated charges and dubious fees that they are effectively unable to challenge.
CPT Tips And Tricks
- By contrast, this incoterm is often an excellent choice for larger importers, if they have an agent responsible for goods (clearing and delivery) once they reach the terminal at the import country.
- If there is more than one carriage in the export country, e.g. via a forwarder’s warehouse for consolidation, the seller is not liable or responsible for the middle man (second carriage), unless that is made clear in the sales contract.
- Risk (liability) and responsibility (for tasks and payment) are handed over at different points for C terms. Risk is transferred in the export country when the carrier receives the shipment (at the named place of delivery), even though the buyer has booked and paid for the main carriage.
- When the incoterm is mentioned in a contract of sale, the named place immediately follows, e.g. EXW (address of seller’s factory). For those incoterms where risk and responsibility are split, use the named place of destination (responsibility). Be sure to specify the named place of delivery (liability) elsewhere in the sales contract.
- The buyer should arrange insurance cover from where liability is transferred (the named place of delivery), i.e. the terminal in the export country.
One of the four C terms should be selected when the sales contract includes a letter of credit.