Under the CPT Incoterm or “Carriage Paid To”, the seller is responsible for bringing the goods to destination and payment of the cost of international freight. Unlike some other Incoterms, the transfer of risk is made when the goods have been loaded on board the means of transport.
The CPT Incoterm is versatile as it can be used for all modes of transportation.
Both the seller’s and buyer’s obligations under CPT is identical to that of CFR. But that’s not to say that the two Incoterms can be used interchangeably.
The main difference between CPT and CFR is that unlike CFR, CPT is appropriate for containerized cargo.
Under Incoterms rules, it is not mandatory for the buyer or seller to provide insurance under the CPT Incoterm. Buyers and sellers are free to arrange their own cargo insurance coverage. When doing so, define your insurance terms clearly in your sales contract.
When negotiating insurance for your CPT shipment, you may want to also consider the CIP Incoterm. CPT and CIP are nearly identical, with the only difference in the provision of insurance.
Under CIP, the seller is contractually obliged to provide cargo insurance. That said, if the buyer is able to obtain better cargo insurance coverage than the seller, CPT would be the better option.
If you’re still not sure if the CPT Incoterm is what your ocean freight shipment needs, you may download our ebook on how to choose the best Incoterm. Alternatively, do contact us. Our import and export consultants will be glad to assist you.
"The problem with these costs is that they’re often impossible to predict and are thus hardly ever considered when analyzing and comparing ocean freight rates"
Klaus Lydsal, vice president of operations at iContainers