What is CPT? – CPT incoterms 2020 (Carriage Paid To) is the latest version of CPT ICC’s Incoterms. Carriage Paid To is belong to group C (Main Carriage Paid), the seller concludes a transport contract with the forwarder and takes the costs. In this case, the seller is responsible for conducting export clearance. The risk is transferred at the time of posting the goods to the buyer. All matters arising after loading costs related to transporting and other events are the buyer’s responsibility. Group C includes the following Incoterms rules: CFR, CIF, CPT, and CIP.
What is CPT – Carriage Paid To
Carriage Paid To means that the seller delivers the goods – and transfers the risk – to the buyer:
- By handing them over to the carrier;
- Contracted by the seller;
- Or by procuring the goods so delivered.
- The seller may do so by giving the carrier physical possession of the goods in the manner and at the place appropriate to the means of transport used.
Once the goods have been delivered to the buyer in this way, the seller does not guarantee that the goods will reach the place of destination in sound condition, in the stated quantity, or indeed at all. This is because risk transfers from seller to buyer when the goods are delivered to the buyer by handing them over to the carrier; the seller must nonetheless contract for the carriage of the goods from delivery to the agreed destination. Thus, for example, goods are handed over to a carrier in Las Vegas (which is not a port) for carriage to Southampton (a port) or to Winchester (which is not a port). In either case, delivery transferring risk to the buyer happens in Las Vegas, and the seller must make a contract of carriage to either Southampton or Winchester.
This rule may be used irrespective of the mode of transport selected and may also be used where more than one mode of transport is employed.
In Incoterms 2020 CPT, two locations are important: the place or point (if any) at which the goods are delivered (for the transfer of risk) and the place or point agreed as the destination of the goods (as the point to which the seller promises to contract for carriage).
The parties are well-advised to identify both places, or indeed points within those places, as precisely as possible in the contract of sale. Identifying the place or point (if any) of delivery as precisely as possible is important to cater to the common situation where several carries are engaged, each for different legs of the transit from delivery to destination. Where this happens and the parties do not agree on a specific place or point of delivery, the default position is that risk transfer when the goods have been delivered to the first carrier at a point entirely of the seller’s choosing and over which the buyer has no control.
Should the parties wish the risk to transfer at a later stage (e.g., at a sea or river port or at an airport), or indeed an earlier one (e.g. an inland point some way away from a sea or river port), they need to specify this in their contract of sale and to carefully think through the consequences of so doing in case the goods are lost or damaged.
The parties are also well-advised to identify as precisely as possible in the contract of sale the point within the agreed place of destination, as this is the point to which the seller must contract for carriage and this is the point to which the costs of carriage fall on the seller.
If the seller incurs costs under its contract of carriage related to unloading at the named place of destination, the seller is not entitled to recover such costs separately from the buyer unless otherwise agreed between the parties.
Incoterms 2020 CPT requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import or for transit through third countries, or to pay any import duty or to carry out any import customs formalities.
CPT – Carriage Paid To‘s Cost and obligation
Blue: Cost/ Yellow: Risk/ Orange: Insurance
Using Incoterms 2020 CPT takes costs
- All costs relating to the goods and their transport until delivery to the carrier;
- Loading costs (at the carrier) and possible unloading costs;
- Transit costs for the buyer’s account and the costs of export clearance;
- Costs incurred by the buyer related to export formalities.
Main obligations of the seller
- Seller provides a commercial invoice and other required documents in paper or electronic form.
- Seller is responsible of delivery of goods to the carrier at the place of delivery on the agreed date or within the agreed period.
- Seller is responsible for damage or loss of goods until they are handed over to the carrier at the named point and within the specified time.
- Seller has to contract or organize the transport of goods to the named place of destination. If such a place does not exist, the seller can choose the point that best suits this purpose.
- One of the seller obligations is operating according to all transport-related security requirements for transport to the destination.
- Seller has to carry out and pay for export clearance, as well as assist the buyer with import clearance.
- Seller counts and weigh goods and, if required, packs the goods at its own expense.
- Seller informs the buyer about the delivery of goods to the carrier and provides the buyer with documents authorizing the buyer to take over the goods.
The seller is not obliged to make a contract of insurance but must provide information for this purpose at the buyer’s request.
The buyer takes costs
- All costs relating to the goods and their transport from the moment they were handed over to the carrier (excluding the seller’s obligations);
- Transit costs excluding the seller’s obligations stated in the contract of carriage;
- Unloading costs, unless it is the seller’s obligation stated in the contract of carriage;
- Import clearance and transit costs;
- Possible costs incurred by the seller related to import formalities.
Obligations of buyer
- Buyer takes up the delivery of the goods.
- He takes responsibility for damage or loss of goods from the time they have been handed over to the carrier.
- Buyer accepts documents provided by the seller.
- Buyer has to carry out and pay for import clearance, as well as assist the seller with export clearance.
- He informs the seller about the place and date of delivery.
But it’s good to remember that the buyer is not obliged to make a contract of carriage.
He is also not obliged to make a contract of insurance.
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