Incoterms - CPT/CIP

Incoterms - CPT/CIP

CPT (Carriage Paid To) is the multimodal equivalent of CFR. The named place where the costs end by seller can be a point other than a seaport (as well as being a seaport) in the buyer's country.

CPT may be used for airfreight, road freight and rail freight as well as for sea freight when the ship's rail serves no purpose. E.g. if the destination is an inland point or a modern port with conditions as discussed under FOB.

CPT requires the use of multimodal documents and documents such as Bills of Lading or Airway bills may prove inappropriate in recording the passage of risks under this term.

Under CPT, seller passes the risk and responsibility to the buyer when the cargo is handed to the first carrier (with a carrier defined as either an Actual or Contractual carrier i.e. a Freight Forwarder or Multi Transport Operator could act as 'carrier' as could an airline or shipping line).
However, responsibility for costs only transfer when the goods arrive at the stated place where carriage is 'paid to'.

Buyers expressed the cautions on using CFR are equally applicable to CPT with additional complications in the transfer of risks can begin earlier. If the carrier is collecting the cargo from the seller's premises then the risks of carriage pass to the buyer at that point, whereas the buyer's ability to control the costs and schedule of carriage only pass at the destination point.

Although these reservations warrant serious consideration for a buyer, they represent great risk-management opportunities for the seller.

CIP (Carriage & Insurance Paid to) represents CPT with the addition of Insurance. The cautions and notes made regarding CPT equally applicable to CIP.