CPT: an Incoterm for intermodal transport
CPT Carriage Paid To Incoterms 2020 is the third Incoterm of the C group, after CFR and CIF. The big difference between CPT and the other two mentioned Incoterms, is that CPT allows more flexibility in the mode of transport, as it is not limited to ocean freight. In fact, here is how it is written:
CPT Carriage Paid To Incoterms 2020 (named place of destination)
By contrast, CFR and CIF state: named port of destination. What that means is that when the parties use the CPT Incoterm, they have to name the place where they want the goods to be delivered, because that place may not be necessarily a port. It can be an airport, a third-party warehouse, even the buyer’s premises.
Transfer of risk vs physical transportation
Another relevant feature of CPT Carriage Paid To is the place where delivery takes place. You might be thinking, what is the point, we just discussed delivery one line above. Actually, when we wrote that the place of destination must be named specifically, we were referring to the physical transportation of the goods, i.e. the place where the goods must be physically delivered to the buyer.
However, CPT Carriage Paid To Incoterms 2020, being part of the C group Incoterms, makes a distinction between delivery as per the moment when the transfer of risk of loss or damage shifts from the seller to the buyer, and the physical transportation of the goods at destination. For a full review of this topic, we suggest you read our article How to deal with Group C Shipment Contracts.
Under CPT, delivery, i.e. when the transfer of risk of loss or damage to the goods shifts from the seller to the buyer, takes place at origin, normally when the goods are collected by the first carrier at the seller’s facility. However, the seller is still obliged to pay for transportation up to the named place of destination.
A practical example
Let’s make an example. Suppose a Swiss food company from Lausanne buys cocoa beans from an Indonesian farm located 100 km from Jakarta. The cocoa beans shall be delivered at the Swiss company’s premises in Lausanne under CPT Carriage Paid To Incoterms 2020:
CPT Carriage Paid To (Swiss company address, Lausanne)
Delivery occurs at the moment the truck in charge of taking the beans from the farm to the place of shipment collects the goods at the Indonesian farm’s premises, i.e. the seller is relieved from the risk of loss or damage to the goods. The Indonesian farm is still responsible to pay for transportation up to the buyer’s premises in Switzerland, even if anything that happens to the goods up to that point is on the Swiss buyer.
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