What are CPT Delivery Terms

CPT (Carriage Paid To) terms require the seller to deliver the goods to their chosen carrier and handle export customs clearance, while the buyer is responsible for import customs clearance. Under CPT, the seller must arrange a transportation contract to the agreed destination without unloading the goods from the transport vehicle.

These terms are somewhat risky for the seller, as they assume responsibility for all organizational aspects of the shipment. If the buyer refuses to accept the goods, the seller bears significant risks. 

CPT delivery terms are governed by the Incoterms rules. According to these rules CPT does not specify the price of goods or the payment method; it does not establish when payment should be made and it does not regulate the transfer of ownership or the consequences of breaching the contract. The price, payment terms and transfer of ownership must be outlined in the sales contract. 

Additionally, when CPT terms are applied, a terminal often plays an essential role in the trade.

Seller and Buyer Responsibilities under CPT

The seller delivers the goods at their own expense to the carrier or another party designated by the seller. They pay for the export clearance of the goods and are responsible for delivering the goods to the carrier appointed by the seller. The carrier can be an individual or legal entity responsible for transporting the goods (by air, sea, rail or road) or a party engaged to carry out the transportation.

The transfer of all risks from the seller to the buyer occurs at the moment the goods are handed over to the carrier. From this point on, the buyer assumes responsibility for the safety of the goods. The transfer of risks and ownership must be documented. These details are recorded in the goods and transport waybill, including the date of transfer.

According to the documentation, the buyer must pay not only for the goods, but also for import clearance. Along with the responsibility for the goods, the buyer must collect them. If something happens to the cargo, the buyer bears the liability.

It is important to note that the buyer has the right to inspect the cargo when signing the acceptance documents. If defects or poor-quality goods are discovered during the inspection, it could be considered an insurance case. In such instances, an insurance company representative is called to document the case. If there are doubts about whether the situation qualifies as an insurance case, the policy must be carefully reviewed, and actions should follow the procedures outlined within it.

Advantages and Disadvantages of CPT Terms

In international practice, issues often arise due to misunderstandings between the terms CPT and DAP. Under CPT, the risks and costs of delivering goods fall on the buyer, who shares responsibility with the carrier. Conversely, under DAP, the supplier is responsible for the goods during transit. This distinction is crucial in determining the transportation costs and defining zones of responsibility.

Another issue in fulfilling contracts can result from an inaccurate address for the destination point. Incorrect details can lead to delays or empty transport runs. 

Additionally, unforeseen circumstances during transit, such as force majeure events, may increase transportation costs. Insurance for goods in transit is not a mandatory requirement under CPT terms. However, insurance is at the buyer’s discretion. 

When drafting supply contracts, the parties must separately agree on the moment of ownership transfer, which does not always coincide with the handover of goods.

“From our experience, CPT is one of the most common types of contracts for cargo delivery. Typically, coordination of this documentation package is the responsibility of brokers representing both the sender and the recipient. This usually occurs during the contract signing process. Once agreed upon and with a set readiness date for shipment, ETS specialists take over their part of the contract, specifically ensuring transportation and delivery. If you are new to foreign economic activities (FEA), we can provide consultations, answer your questions in detail and help you choose the most optimal delivery terms for your needs. You can contact us via the feedback form on the ETS website or through our listed contacts,” says Oleksandr Minyailo, founder and director of the transport and forwarding company European Transport Systems.