CPT Shipping: Understanding the Jargon and Cost Allocation

Virginia Miller
Virginia Miller
August 26, 2024
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FAQs

1. What is CPT shipping and how does it work?

CPT shipping, short for Carriage Paid To, is a trade term in international commercial law. It means that the seller is responsible for arranging and paying for the transportation of goods to a specified location. Once the goods are handed over to the carrier, the risk transfers to the buyer. The buyer is then responsible for any additional costs, such as insurance, duties, and fees that may occur during transport.

2. What are the benefits of using CPT shipping?

Using CPT shipping can provide predictability in shipping costs for sellers, as they negotiate directly with the carrier. It also simplifies logistics for sellers, as they only need to manage a part of the shipment process. However, it's important to consider the potential downsides and risks associated with CPT, such as increased responsibility for initial logistics and potential additional costs for the buyer.

3. How are costs allocated in the CPT model?

In the CPT model, the seller bears the initial shipping cost, but the risk is transferred to the buyer once the goods reach the first carrier. The actual cost allocation can vary based on factors such as the selected carrier, shipping distance, transport method, and any additional insurance coverage or services purchased by the buyer.

4. What are the obligations of the seller and the buyer in CPT shipping?

Under CPT, the seller is responsible for arranging and paying for transportation of the goods to the agreed destination. The seller is also responsible for loading the goods if required. Once the goods are handed over to the carrier, the risk and responsibility transfer to the buyer. The buyer is then responsible for any further costs, including insurance, duties, and fees, as well as the unloading of the goods.