What is CPT?

CPT or Carriage Paid To, is one of the 11 Incoterms used to guide how goods should be transported between the seller and the buyer in any global trade. Think of it as a set of rules that define who is responsible for what during the shipping process, helping both parties know exactly what to expect.

Under CPT, the seller is responsible for paying for the transportation of goods until they reach a specific destination. This destination could be a port, warehouse or any location agreed upon by both the seller and the buyer. Now, once these goods are handed over to the carrier, the risk shifts to the buyer. This means that if anything happens to the goods while they’re in transit after this point, the buyer is responsible.

Key Features of CPT that Make It Different

1. Seller Pays for Transport: In CPT, the seller pays to get the goods to the agreed destination. It’s like the seller is taking care of the shipping bill up to a certain point.
2. Risk Transfers to the Buyer Quickly: Even though the seller pays for the transport, the risk passes to the buyer as soon as the goods are handed over to the carrier. So, the buyer must be ready to take on the responsibility for any issues that arise after this moment.
3. Flexibility in Delivery Locations: The seller and buyer can agree on a specific location for delivery. This flexibility makes CPT suitable for a variety of shipping routes and international transactions.
4. No Need for Import Customs: The seller doesn’t have to deal with customs when the goods reach the destination country; that’s on the buyer’s shoulders. So, the seller’s job is to make sure the goods reach the buyer’s preferred location safely, not handle any import paperwork.

How Does CPT Work in Shipping?

CPT (Carriage Paid To) is a useful Incoterm that clearly defines the roles and responsibilities of both the seller and the buyer during the shipping process. Here’s a breakdown of how it works, focusing on what each party is responsible for:

Responsibilities of the Seller

1. Pay for Shipping Costs: The seller is responsible for covering the cost of transporting the goods to the agreed destination. This could include the cost of the main transportation (such as sea air freight, or road transport) up to a specific location (like a port or warehouse).
   
2. Organize Transport: The seller arranges and books the carrier (the company that will move the goods). This could be a shipping line, airline, or trucking company depending on the route and method of transportation.
3. Handle Export Customs: The seller must clear the goods for export, including handling all paperwork and necessary formalities for leaving the country. This means dealing with export customs duties and fees in the seller’s country.
   
4. Deliver Goods to the Carrier: The seller’s responsibility ends once the goods are handed over to the carrier at the agreed location. After this point, the buyer takes on the responsibility for any risk associated with the shipment.

Responsibilities of the Buyer

1. Risk After Delivery to Carrier: After the seller delivers the goods to the carrier, they become buyer’s responsibility. So, if anything happens to the goods during transportation, such as loss or damage, the buyer will have to bear the risk.
   
2. Import Customs and Duties: The seller is in charge of clearing the goods through customs once they reach the destination country. This includes paying any import duties, taxes, or fees required by local authorities.
   
3. Final Delivery and Receipt: The buyer arranges and pays for the final leg of transportation from the destination point to the delivery location (such as a warehouse, store, or home). The buyer is also responsible for receiving the goods in good condition.

Shipping Process Under CPT

1. Seller Prepares the Goods: The seller packs the goods and gets them ready for export, ensuring they meet the necessary standards and requirements.
2. Seller Books and Pays for Shipping: The seller books the carrier and arranges for transport from their location to the agreed destination.
3. Seller Delivers Goods to the Carrier: Once the goods are in the hands of the carrier (like a shipping company), the seller’s responsibility is considered fulfilled.
4. Buyer Takes Over Risk: From this point, the risk of any damage or loss during transit shifts to the buyer. The buyer should have insurance or other measures in place to protect the goods during shipping.
5. Buyer Handles Import and Final Delivery: The buyer takes responsibility for clearing customs, paying import duties, and arranging for the goods to be delivered to their final destination.

In short, CPT allows for a smooth sharing of responsibility between the seller and the buyer. The seller takes care of most of the logistics, while the buyer assumes the risks and final delivery once the goods are handed to the carrier.