Carriage Paid To (CPT) Definition
CPT refers to a foreign trade terminology wherein goods are delivered by the seller at their expense to either a carrier or someone whom the seller chooses.
A Little More on What is Carriage Paid To
This is one of the eleven current international commercial terms. It is a set of standard foreign trade terms which the International Chamber of Commerce publishes.
In a Carriage Paid To transaction, goods are delivered by the seller to the carrier or any other individual the seller chooses, at a rendezvous location of the seller and the buyer. The seller must pay the freight fee for transporting the products to the chosen destination. Once the goods have been handed over to the carrier, the risk of losing or damaging the goods is shifted from the seller unto the buyer. This seller takes responsibility only for organizing freight to the chosen destination, and is not responsible for insuring the shipment of the goods when it’s being transported.
CPT is always used along with a destination. For instance, CPT Chicago will mean that the seller would pay freight fees to Chicago.
Carriage Paid To in Practice
Freight costs responsibility also comprises any tax or export fee needed by the country of origin. Nevertheless, there is a risk transfer from seller to buyer immediately there is successful delivery of the goods to the initial carrier, even if various transportation means (air, land, for instance) are employed. Supposing a truck transporting a shipment to an airport gets involved in an accident that damages the goods, the seller isn’t responsible for any damage once the buyer hasn’t insured the goods because they had been delivered to the first carrier. It can be risky for the buyer because the seller has an incentive of finding the cheapest transportation means without considering the product’s safety while in transit. In a bid to offset the risk, the buyer might consider a CIP agreement, through which the seller gets to insure the products while in transit.
The seller might pick a temporary location for delivering the goods, as against the final destination of the buyer, as long as the buyer and seller have had a mutual agreement. Only freight fees for delivery are paid by the seller to this temporary place. The situation might arise supposing the buyer is able to arrange for freight to the final destination at a rate cheaper than the seller’s, or if the products are in demand making the seller dictate terms.