CPT incoterm is one of eleven incoterms defined by international chamber of commerce (ICC).
Under CPT term seller delivers the goods at named place and at that point risk is transferred to buyer. In this incoterm seller arranges transportation of goods (freight cost is seller's responsibility) but doesn't take insurance.
CPT can be used in any mode of transport.
Seller arranges custom clearance, freight, and hands over the goods to carrier at named place, once goods are handed over to the carrier seller's responsibility is over and from that point buyer's responsibility starts. If more than one carrier involved in transportation, seller's responsibility is to hand over goods to the 1st carrier.
When we talk about carrier it may be shipping line, cargo airline, Surface transporter, railway or any freight forwarder or it's agent.
CPT incoterm is mainly used for containerized cargo, for bulk cargo CFR is the suitable incoterm.
Risk:
The risk is with seller till the named place, once goods are delivered at the named place and 1st carrier acknowledged receipt of goods seller's responsibility ceases and buyer's responsibility starts.
Cost:
Seller pays the cost of packing, loading, transportation till 1st carrier, terminal handling charges (origin & destination), custom clearance charges & duties, air/ocean/surface freight. Buyer pays for custom clearance for import including duties & taxes, insurance if required, local delivery at destination and unloading.
Example:
Let us understand CPT incoterm or delivery term with clearly with the help of one example.
Let us assume one mobile phone manufacturer at Qingdao, China contacts with mobile phone seller/distributor at Bangalore, India, and they start discussion on further business.
Negotiation:
The manufacturer/ seller has good hold on shipping lines and freight forwarders at China and they can get good freight rates. So, buyer thinks it will be good option if seller arrange transportation and deliver the goods at Bangalore. After detailed discussion both seller and buyer decide to go ahead with CPT incoterm.
Contract:
Contract with CPT delivery term and CAD payment term gets signed. Final place of delivery of goods decided as Bangalore.
Operation:
After finalization of contract, seller starts manufacturing and shares tentative date of loading to buyer. Simultaneously they will place booking for containers.
Once finished goods are ready seller will pack those. For pre shipment inspection seller will call inspection agency, representatives of inspection agency will come to seller's premises and inspect the goods, after satisfactory results as per given parameter inspection agency will issue inspection certificate and hand over the same to seller, in case of COC(Certificate of conformity) they will share the COC certificate to buyer directly.
and contact liner or freight forwarder for containers, seller will arrange loading packed goods into containers and take the cargo to Qingdao port, after arrival of containers at port custom clearance will be done by seller's clearing agent and then the containers and all relevant documents will be handed over by seller to the carrier and inform buyer, seller's responsibility ends here.
After all port operation vessel will be onboarded. After vessel onboard completed seller will approach various offices for all post shipment documents.
Once documents are arranged seller will share scanned copies of documents to buyer through email and lodge the documents to their bank as per CAD payment term.
Documents:
1. Commercial invoice
2. Packing list
3. Bill of lading
4. Certificate of origin
5. Pre inspection certificate
5. Other documents if any
If buyer wants to take insurance, they will contact insurance agency and buy insurance for the cargo. Once documents arrived at buyer's Bank buyer will pay the invoice amount and take the documents.
Here the final delivery point is Bangalore, India, but sea port is not available at Bangalore, in this case vessel will carry the containers to nearest sea port to Bangalore and from there containers will be loaded into trailers or rail carrier and those will be taken to Bangalore, in this case nearest port to Bangalore is Chennai.
After vessel arrival at Chennai port, India, containers will be unloaded and the same will be loaded in vehicles or rail carrier which will be taken to final destination Bangalore ICD, once containers arrive at Bangalore ICD, unloading of cargo in CPT is negotiable, this responsibility is decided mutually by seller and buyer, in this case we are assuming unloading is in buyer's scope. Buyer will arrange import custom clearance and pay all the charges like THC, clearance charges, custom duty etc. and will take the cargo to buyer's premises.
This is the process of a shipment under CPT incoterm.
4. Certificate of origin
5. Pre inspection certificate
5. Other documents if any
If buyer wants to take insurance, they will contact insurance agency and buy insurance for the cargo. Once documents arrived at buyer's Bank buyer will pay the invoice amount and take the documents.
Here the final delivery point is Bangalore, India, but sea port is not available at Bangalore, in this case vessel will carry the containers to nearest sea port to Bangalore and from there containers will be loaded into trailers or rail carrier and those will be taken to Bangalore, in this case nearest port to Bangalore is Chennai.
After vessel arrival at Chennai port, India, containers will be unloaded and the same will be loaded in vehicles or rail carrier which will be taken to final destination Bangalore ICD, once containers arrive at Bangalore ICD, unloading of cargo in CPT is negotiable, this responsibility is decided mutually by seller and buyer, in this case we are assuming unloading is in buyer's scope. Buyer will arrange import custom clearance and pay all the charges like THC, clearance charges, custom duty etc. and will take the cargo to buyer's premises.
This is the process of a shipment under CPT incoterm.
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