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Incoterms Explained: Carriage Paid To & Carriage and Insurance Paid To

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Incoterms Explained: Carriage Paid To & Carriage and Insurance Paid To

  • 6 January 2021

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Incoterms 2020: Carriage Paid To & Carriage and Insurance Paid To   

How well do you know your Incoterms rules? Let’s learn about Carriage Paid To and Carriage and Insurance Paid To, which apply to any mode of transport.

CPT: Carriage Paid To

“Carriage Paid To”, or CPT, is an Incoterm used when the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place.  The seller must contract for these goods and pay the costs of carriage necessary to bring the goods to their destination.

Remember the following:

  • Under CPT, the seller delivers the goods to the buyer by handing them over to the first carrier contracted by the seller.
  • The seller must arrange a contract of carriage for the goods and pay the costs associated with the freight to the agreed destination.
  • The risk of loss or damage to the goods transfers from the seller to the buyer, when the goods are handed over to the seller’s carrier.
  • CPT costs include export fees and taxes.

CIP: Carriage and Insurance Paid To

“Carriage and Insurance Paid To” is similar to CPT, with the critical addition of the insurance requirement. Under CIP, the seller is required to obtain extensive insurance to comply with the Institute of Cargo Causes (A). Should the buyer wish to have more insurance protection, they will need either to agree with the seller or to make their own extra insurance arrangements.

Keep this in mind:

  • The seller delivers the goods to the buyer by handing them over to the first carrier contracted by the seller.
  • The seller must arrange a contract of carriage for the goods and pay the costs associated with the freight to the agreed destination.
  • In CIP, there are two important locations: the place or point where the goods are delivered (for risk transfer), and the place or point agreed as the destination of goods (the point where the seller promises to contract for carriage).
  • The risk of loss or damage to the goods transfers from the seller to the buyer when the goods are handed over to the seller’s
  • The seller must obtain insurance cover complying at least with the maximum cover as provided by Clause (A) of the Institute Cargo Clauses.

 

Learn more about Incoterms at www.agility.com/smartshipping

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Incoterms® and the Incoterms® 2020 logo are trademarks of ICC.  Use of these trademarks does not imply association with, approval of or sponsorship by ICC unless specifically stated above. The Incoterms® Rules are protected by copyright owned by ICC. Further information on the Incoterm® Rules may be obtained from the ICC website iccwbo.org.

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Incoterms Explained: Carriage Paid To & Carriage and Insurance Paid To

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