Incoterms: Carriage Paid ToPosted in Incoterms - 9 Jul 2018, 9:30 AM
Although this is also a commercial term like cost insurance and freight or CIF, carriage paid to or CPT has its differences. Starting from the definition, CPT is when the seller does the delivery of the goods to a carrier. If not to a carrier, the goods can also be delivered to another place nominated by the seller.
Of course, even if the place is nominated by the seller, that same place also has to be mutually agreed by both the seller and also the buyer. The seller also has to pay for the freight charges. These charges are for the transportation that will send the goods to the specified place or destination.
Things a seller has to watch out for regarding carriage paid to or CPT:
Just like cost insurance and freight or CIF, carriage paid to or CPT transfers the risks for any damages or loss regarding the goods to the seller. When does this occur, actually? This applies once the goods have already been delivered to the carrier.
Not only that, the seller also has to be responsible for the arrangement of freight to the destination. Another thing for the seller to be aware of is their responsibility for not insuring the shipment of goods when it is being sent.
Using carriage paid to or CPT in trading goods or shipment also means to go through Terminal Handling Charges or THC. These are the charges made by the terminal operator.
However, the carrier may or may not include THC in their freight rates. This is where the buyer has to actively enquire if THC is already part of their CPT price or not. That way, there will be no additional fee surprises at the very last minute. Not only it may cause some serious delay (especially if the buyer does not have enough money to begin with), this can also be considered part of bad business ethics.
Once the bridge is burned, the seller may not be able to gain the trust of the same buyer again. Although it is best for the buyer to ask first before paying, a wise seller should inform the buyer to avoid any unnecessary misunderstanding later on. If the agreement has been clear from the very beginning, then the seller will gain another benefit: retention or repeat orders.
Other facts related to carriage paid to or CPT:
If you are not careful, you might mix this up with another term that is almost similar, which is Carriage Insurance Paid To or CIP. The difference is obvious: one of them requires insurance for an additional and one is not. This is why if you choose to use carriage paid to or CPT, this means that there is no insurance added to replace the goods in case anything happens during the transport. Carriage Paid To or CPT is often used in trading business to transport goods without an additional insurance cost.