Risks and costs for the seller
The seller is responsible for arranging and paying for transport to the buyer's appointed carrier, and for obtaining all necessary export documentation. Once the goods have arrived at the first carrier, the risk is transferred to the buyer. This may be the sea or air freight carrier, or a carrier using another mode of transport, such as a barge, train or truck.
Risks and costs for the buyer
The buyer is responsible for unloading the cargo and loading it onto the carrier's truck. The buyer is also responsible for organizing and paying for import documentation. The seller is obliged to provide any documents or information required for successful import, at the buyer's expense. Import duties and taxes must also be paid by the buyer.
Potential problems for the buyer
As risk is transferred to the buyer as soon as the shipment is handed over to the first carrier, the buyer is responsible for any loss or damage to the shipment. The buyer is responsible for taking out insurance if he so wishes. As the seller organizes the transport and loading of the shipment at the port, he may inflate the costs and charge them to the buyer.
Use of Paid Transport
CPT applies to multimodal shipments and works well for shipments backed by a letter of credit. Please note that responsibility for the shipment is transferred to the buyer once the goods have been handed over to the first carrier. This Incoterm is therefore unusual, as the risk is borne by the party who may not have chosen the carrier.
Other INCOTERMS
If you'd like to know more about INCOTERMS and what they are, check out my previous article entitled "Incoterms: What are they?"
