GLOBAL SELLING BLOG

CPT Incoterms 2020: Meaning and shipping terms

CPT stands for Carriage Paid To — an international trade term used to define when a seller pays transportation cost of goods. Learn more about its usage in this blog.

Shipping goods internationally requires a clear understanding of various common terms that are used in international trade. This helps businesses take appropriate decisions to get the desired result in any contract. Incoterms are one such important series of predefined terms published by the International Chamber of Commerce (ICC) that define the responsibilities of exporters and importers in international trade and transactions. Within Incoterms, there are multiple types and categories.

What are the CPT shipping terms?

CPT Shipping Terms are part of the 11 Incoterms defined by the ICC under Incoterms 2020. The term CPT stands for ‘Carriage Paid To’, and it represents a standard set of conditions for delivery of goods from exporters to importers. Under CPT Incoterms, the exporter is responsible to arrange and pay for transportation of goods from their location to the importer’s specified destination.

The rule is applicable for any or a combination of various modes of transportation. The exporter is responsible for the carriage of goods, and not for insurance and risk of goods after they have been handed over to the carrier at the delivery point¹.

Exporter and importer obligations

CPT Incoterms 2020 outlines the obligations of both the importer and the exporter in the shipping process. It is important to understand in CPT Incoterms who pays freight. The exporter is responsible for arranging and paying for transportation of goods, including cost of loading and unloading goods at their location. The importer also has a set of responsibilities under CPT Incoterms, including responsibility of unloading goods at the destination port, and handling any further transportation costs. The risk of loss or damage to the goods is transferred from the exporter to the importer when the goods are delivered to the first carrier².

Exporter’s responsibility

Under CPT Incoterms 2020, some of the responsibilities of the exporter are:
· Arranging and paying for transportation of goods from their location to the importer’s specified destination.
· Loading goods onto the shipping vehicle at their location.
· Obtaining and providing all necessary export documentation, including customs clearance documents.
· Ensuring that the goods are properly packaged for shipment.
· Delivering goods to the first carrier at their location.
· Paying for any terminal handling charges (THC) that may be incurred at the port of departure.
· Ensuring that goods are shipped on time and meet all quality standards agreed upon in the contract.
· Responsible for the risk of loss or damage to the goods until they are delivered to the first carrier.

Importer’s responsibility

Under CPT Incoterms 2020, some of the responsibilities of the importer are:
· Unloading the goods at the destination port.
· Paying for any further transportation costs, including cost of transporting goods from the port of arrival to their final destination.
· Obtaining and paying for any necessary import documentation, including customs clearance and any duties or taxes that may be incurred.
· Assuming the risk of loss or damage to the goods from the moment they are handed over to the first carrier at the port of departure by the exporter.
· Ensuring that they have the necessary facilities and personnel in place to unload goods upon arrival at the destination port.

Carriage Paid to Incoterms 2020 rule: Key changes and updates

Carriage Paid To (CPT) Incoterms 2020 is a widely used shipping term that defines the responsibilities of both the importer and the exporter in the international trade of goods. The latest update to CPT Incoterms, published in September 2020, brings some important changes and updates to the rule. Some of the key changes and updates to CPT Incoterms 2020 rule are³:

Definition of delivery:

The definition of delivery has been updated to clarify that delivery occurs when goods are handed over to the first carrier at the port of departure.

Terminal Handling Charges (THC):

The rule now explicitly states that the exporter is responsible for paying for THC at the port of departure unless otherwise agreed upon by both parties.

Documentation:

The rule now emphasizes the importance of providing all necessary export documentation, including customs clearance documents. In the case of CPT, the exporter is expected to provide documentation till the point of delivery while the importer is expected to arrange for paperwork related to important movement of goods after delivery by the exporter.

Insurance:

The rule has been updated to reflect the importance of obtaining insurance coverage for goods during transport. The importer is responsible for arranging and paying for insurance coverage.

Risk of loss or damage:

The rule has been updated to clarify that the risk of loss or damage to goods passes from the exporter to the importer when goods are handed over to the first carrier at the port of departure.

Insurance of goods in CPT Incoterms 2020

Under the terms of CPT Incoterms 2020, the responsibility of obtaining insurance coverage for goods during transport falls on the importer. The exporter is not responsible for arranging or paying for insurance coverage. However, it is important to note that the CPT Incoterms 2020 rule only defines the responsibilities of the importer and exporter in terms of transport of goods and does not provide specific requirements for insurance coverage. It is up to the importer to ensure that they obtain adequate insurance coverage to protect the goods during transport.

It is also important to keep in mind that while insurance is not required under the CPT Incoterms 2020 rule, it is recommended. Shipping goods internationally can be risky due to changing weather conditions and policies, and insurance provides an important layer of protection in case of loss or damage to goods during transport.

Transport under CPT Incoterms 2020

Carriage Paid to Incoterms 2020 can be used for any mode of transport. CPT Incoterms 2020 in transport can be applied to multimodal transport. The transport document must include movement of contracted goods.

Delivery of goods under CPT Incoterms 2020

For seamless delivery of goods under CPT Incoterms 2020, the importer must accept the transport document provided by the exporter. However, the exporter is expected to ensure that the transport document is in line with the contract.

CPT is among the most commonly used Incoterms for shipping goods. There are other related Incoterms like CIP and CIF. It is important to have a clear understanding of the role and responsibilities of exporters and importers under each of these Incoterms to avoid any challenges during shipment. With the e-commerce exports program – Amazon Global Selling and its international logistics solution – FBA and SEND, shipping from India to the world has become simpler than before.

Explore Amazon SEND

Easy exports and hassle-free logistics with Amazon Global Selling

As an e-commerce exports program, Amazon Global Selling enables Indian exporters and businesses to sell across 18+ Amazon global marketplaces in the US, UAE, UK, Australia, Singapore and more. It also provides required tools and solutions like Fulfillment by Amazon (FBA) and Amazon SEND to assist with shipping – packaging, storage and delivery – across the world.

Frequently Asked Questions

What is the difference between CPT and CFR Incoterms?

Cost and Freight (CFR) is only applicable for goods that are being transported by ocean, while CPT applies to all goods irrespective of the mode of transportation.

What is the difference between CPT and FOB?

The risk is transferred to the importer once the goods are loaded at the origin point under CPT. However, in the case of FOB, the exporter bears risk of any damage to the goods during transit.

What is the difference between CPT and CIP?

In addition to the cost of freight, the exporter is expected to buy insurance coverage for the shipment under CIP. However, the exporter is only expected to pay for freight charges under CPT.

What is CPT Pricing?

CPT Pricing is the total cost of delivering goods to the destination selected by the importer. CPT pricing usually includes cost of manufacturing, export packaging, export fee, exporter’s warehouse-to-port delivery charges, and loading charges. In case the importer opts for CPT, the exporter usually adds the cost of transporting goods to the total price.

Published on March 29, 2023.

Sources:
1. https://www.shiphub.co/incoterms-2020-cpt/
2. https://www.tradefinanceglobal.com/freight-forwarding/incoterms/cpt-carriage-paid-to/
3. https://www.dripcapital.com/en-in/resources/blog/cpt-incoterms-carriage-paid-to
4. https://leelinesourcing.com/cpt/

What is Delivered at Terminal (DAT) incoterm?

All you need to know about Free Alongside Ship (FAS) incoterm 2020

Found this blog informative? Share it with your network

Sell across the world with Amazon Global Selling

Ready to start exporting from India?

Want to learn about Amazon Global Selling?

Here's your guide

Read more blogs

Disclaimer: Whilst Amazon Seller Services Private Limited ("Amazon") has used reasonable endeavours in compiling the information provided, Amazon provides no assurance as to its accuracy, completeness or usefulness or that such information is error-free. In certain cases, the blog is provided by a third-party seller and is made available on an "as-is" basis. Amazon hereby disclaims any and all liability and assumes no responsibility whatsoever for consequences resulting from use of such information. Information provided may be changed or updated at any time, without any prior notice. You agree to use the information, at your own risk and expressly waive any and all claims, rights of action and/or remedies (under law or otherwise) that you may have against Amazon arising out of or in connection with the use of such information. Any copying, redistribution or republication of the information, or any portion thereof, without prior written consent of Amazon is strictly prohibited.

*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.