The Basics of CPT Shipping Terms

CPT is used to indicate that the seller pays for the carriage of goods to a specified destination. But, here’s the kicker: once the goods are handed over to the carrier, the risk transfers to the buyer. So, while the seller takes care of the transportation costs, the buyer is on the hook for the risk once the goods are in transit.

The CPT term is particularly useful in scenarios where the seller has better access to transportation options or can negotiate better shipping rates. This can be an attractive option for buyers who are looking to minimize upfront costs. However, it is crucial for buyers to be aware of the point at which they assume risk, as this will determine their need for insurance coverage.

Key Points of CPT

• Seller’s Responsibilities: The seller handles all the costs to get the goods to the chosen destination. This includes export duties, taxes, and any fees related to shipping. It’s worth noting that the seller’s responsibility ends once the goods are handed over to the first carrier. At this point, the seller should provide the buyer with all necessary documentation to facilitate the smooth transfer of goods.
• Buyer’s Responsibilities: The buyer takes on the risk once the goods are with the carrier. That means if anything happens during transit, it’s up to the buyer to sort it out. The buyer must ensure that appropriate insurance is in place to cover potential losses or damages. This involves working closely with insurance providers to understand the coverage options available and selecting the most suitable one for their needs.
• Transfer of Risk: This happens not at the final destination, but as soon as the goods are handed to the first carrier. This is a crucial point to remember! It emphasizes the importance of clear communication and documentation between the buyer and seller. Both parties should ensure that the transfer of risk is clearly defined in their contract to avoid any potential disputes.

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