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International Business

What Does Carriage Paid To Mean

Incoterms are much abbreviated ! Nowadays, there are so many commercial terms used mostly in international business. But, how many of them are we well conversant with? One of the popular commercial terms is Carriage Paid To or simply CPT. What does it mean or what is the essence of this incoterm? No problem. Today, I am explaining the basic idea on this key commercial term CPT Carriage paid to (…named place of destination) for your easy understanding.

Carriage Paid To or CPT means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any other costs occurring after the goods have been so delivered (Incoterms 2000)

This contract term can be compared to the CFR term used for carriage by sea transport. The price quoted includes cost of goods and freight charges. The seller has to prepare the goods, pack them, pay for checking operations and take them for transportation to the carrier. If there is more than one carrier, the seller’s obligation is fulfilled when he delivers goods to the first carrier.

The risk for loss of or damage to the goods passes to the buyer when they are delivered to the first carrier. The formalities for export, like obtaining license, export duty, have to be borne by the seller. If customary, the seller should provide the buyer with the usual transport document.

The buyer, on receipt of intimation from the seller may arrange for insuring the goods. He should arrange for getting import license and pay import duties. If he required the seller to furnish him with certificate of origin or any other document, he should reimburse the seller for the expenses.

Documents require under Carriage paid to  or CPT contracts are as follows:

(a) Freight paid waybill,

(b) Invoice, and

(c) Other documents as required by the buyer.

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