To buy marine open policyCFR (Cost and Freight)
- Author :
- TATA AIG Team
- ●
- Last Updated On :
- 02/12/2024
- ●
- 2 min read
CPT(carriage paid to) is an international trade term in which the seller pays for the transport of goods to a specific destination. This includes arranging shipping and covering costs until the goods arrive.
Anyone involved in international trade should understand the details of CPT to ensure correct invoicing, customs clearance and risk management.
This guide delves into the intricacies of CPT, such as the Carriage Paid To meaning, advantages and disadvantages, to help avoid misunderstandings, reduce costs and prevent any disputes during the trade.
What is CPT Incoterm Meaning?
CPT is an international agreement that outlines the responsibilities of the seller and buyer regarding the delivery of goods. Under CPT incoterms, the seller is responsible for arranging and paying the transportation costs until the goods reach a specified destination. The seller also handles export procedures, while the buyer manages import formalities.
Once the goods are delivered to the first carrier, the risk of loss or damage transfers from the seller to the buyer. However, the buyer is only responsible for additional costs incurred after the goods arrive at their final destination. CPT is commonly used for various modes of transportation, including air freight, ocean freight and land transportation.
It is important to note that CPT does not require the seller to obtain insurance for the goods. The buyer is responsible for obtaining insurance coverage, if desired. Additionally, the seller’s delivery obligation can be fulfilled at either their premises or another agreed-upon location.
Seller’s Obligations Under the Carriage Paid To Incoterms
-A1 : Provide Goods and Invoice
The seller must provide the goods, commercial invoice and any other required evidence of conformity, such as analysis certificates.
-A2 : Deliver Goods to the Carrier
The seller delivers the goods by handling them to their contracted carrier, not when they reach the destination.
-A3 : Bear Risk Until Delivery
The seller bears all risks of loss or damage to the goods until they are handed over to the carrier.
-A4 : Arrange Contract of Carriage
The seller must arrange the transport of goods, following customary terms and routes, from the place of delivery to the agreed destination.
-A5 : No Obligation to Insure Goods
The seller is not obligated to insure the goods beyond delivery but must assist the buyer if they need information to arrange insurance.
-A6 : Provide Transport Documents
The seller must provide the buyer with transport documents, such as bills of lading if customary or requested.
-A7 : Handle Export Clearance
The seller must complete all export formalities, including permits, security clearance and pre-shipment inspections.
-A8 : Check, Package and Mark Goods
The seller is responsible for checking, packaging and marking the goods appropriately for transport.
-A9 : Pay Transport Costs Until Delivery
The seller must pay all costs up to the point of delivery, including loading and export-related costs.
-A10 : Notices
The seller must notify the buyer that the goods have been delivered and give any required notices to enable the buyer to receive the goods.
Buyer’s Obligations Under the Carriage Paid to Incoterms
-B1 : Pay for Goods
The buyer must pay the price for the goods as stated in the contract.
-B2 : Take Delivery at Destination
The buyer must receive the goods at the destination from the seller’s carrier.
-B3 : Bear Risk After Delivery
The buyer bears all risks of loss or damage once the goods are handed over to the seller’s carrier.
-B4 : No Obligation to Arrange Carriage
The buyer has no obligation to arrange a contract of carriage.
-B5 : No Obligation to Insure Goods
The buyer is not required to insure the goods but may choose to do so.
-B6 : Accept Transport Documents
The buyer must accept the transport documents provided by the seller as long as they conform to the contract.
-B7 : Handle Import Clearance
The buyer must complete all transit and import formalities, including permits, licences and inspections.
-B8 : No Obligation to Check or Package Goods
The buyer has no responsibility to check or package the goods unless otherwise agreed.
-B9 : Pay Costs After Delivery
The buyer is responsible for all costs after delivery, including unloading, import duties and taxes.
-B10 : Provide Delivery Instructions
The buyer must notify the seller of the time and place for delivery, if specified in the contract.
Advantages of the Carriage Paid To Incoterms
-Reduced Risk for Buyer
The buyer’s transportation risk is minimised as the seller handles the goods until they are with the carrier.
-Attracts Buyers
By taking on transportation responsibility, sellers may encourage buyers to purchase, especially if distance or transport risks are concerns.
-Simplified Process for Buyers
The seller manages all the paperwork, customs duties, taxes and legal export requirements, which reduces the buyer’s administrative burden.
-Logistics Efficiency for Seller
Sellers with frequent shipments can benefit from coordinating transportation more effectively by using their own carrier.
-Lower Freight Costs for Buyer
Sellers may secure better freight rates due to their buying power and buyers will indirectly benefit from these savings.
-Easier Handling of International Logistics
Buyers avoid managing logistics in the seller’s country, which can be complicated by geographical and cultural factors.
Disadvantages of the Carriage Paid To Incoterms
Increased Risk for Seller
The seller assumes a higher risk as they are responsible for the goods until they are handed over to the carrier.
Risk Transfer to Buyer
Once the goods are with the carrier, the risk transfers to the buyer, even if the goods are still in the seller’s country.
Uncertainty of Delivery Point
The exact point of delivery can vary and must be clearly defined between the buyer and seller, which could otherwise lead to confusion or disputes.
Complex Transit Responsibilities for Buyer
The buyer is responsible for customs clearance and transit processes once the goods have reached the carrier, potentially increasing their responsibility.
Difference Between Carriage Paid To and Carriage and Insurance Paid To
| Characteristics | Carriage Paid To | Carriage and Insurance Paid To |
|---|---|---|
| Seller’s Responsibility | The seller pays for transportation costs until the goods reach the carrier. | The seller pays for both transportation and insurance until the goods reach the carrier. |
| Buyer’s Responsibility | The buyer handles import clearance, customs duties and further risks after the carrier takes control. | The buyer handles import clearance and customs duties but benefits from insured goods. |
| Insurance | No insurance is provided by the seller and the buyer bears the risk after the goods are handed to the carrier. | The seller is required to provide insurance to cover the goods in case of loss or damage during transport. |
| Risk Transfer | Here, the risk transfers to the buyer once the goods are handed over to the carrier. | Here, the risk transfers to the buyer once the goods are handed over to the carrier, but insurance protects the goods. |
| Coverage | CPT only covers transportation costs. | CIP covers both transportation and insurance costs. |
| Level of Protection | CPT incoterms offer a lower level of protection since no insurance is provided by the seller. | CIP offers a higher level of protection due to the seller’s obligation to insure the goods. |
Marine Insurance Under Carriage Paid To Incoterms
Marine insurance plays a critical role in (CPT) Carriage Paid To transactions since neither the seller nor the buyer is obligated to insure the goods. However, it is prudent for the buyer to consider securing a cargo insurance policy to protect against potential risks during transit. Sellers can also explore the option of marine insurance for protection against buyer defaults.
Selecting a reliable insurance provider is essential for ensuring comprehensive protection. TATA AIG stands out as a trusted choice for marine insurance in India, offering a range of benefits to safeguard goods during transit.
Our coverage ensures protection against loss or damage, providing liability protection for cargo damage, personal injury or pollution. With tailored policies to meet your specific needs, TATA AIG offers businesses peace of mind and a competitive edge.
Our marine cargo insurance not only covers financial losses from accidents, natural disasters or theft but our streamlined processing also ensures prompt claim settlements, giving businesses confidence in global trade.
Moreover, TATA AIG helps businesses comply with international regulations, ensuring smooth transport operations. For comprehensive and customised protection in global trade, TATA AIG’s marine insurance can provide the security needed for successful transactions.
Frequently Asked Questions
-What is the key difference between CPT and CIF?
CIF applies specifically to maritime shipping, while CPT is more general and can be used for any mode of transport.
-What is the key difference between DDP and CPT?
DDP requires the seller to bear all costs and risks until the buyer receives the goods at the destination, while CPT requires the seller to do so only until the goods are delivered to the first carrier.
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.
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