What Is the Seller Responsible for Under the CPT Incoterm?
When agreeing to a contract using the CPT Incoterm, the seller agrees to pay all the transportation costs associated with moving the specified goods to the destination named in the contract.
For example, if the goods originate in Vietnam and the contract states “CPT Approved Freight Forwarders / 14777 Don Julian Rd. / City of Industry, CA 91746,” the seller is responsible for the costs to transport the goods to this destination. If the shipment is well-suited for air freight, the seller would foot the bill to move the goods to the nearest air cargo terminal, then pay for the air freight to LAX. Any export procedures from Vietnam would be handled by the seller. At the other end, the seller would also enlist a carrier to pick up the package at the air cargo terminal at LAX, then deliver it to the Approved Warehouse.
What Is the Buyer Responsible for Under the CPT Incoterm?
Once the shipment arrives at the agreed-upon destination, the buyer is responsible for any costs to move the package further. For example, if the buyer wants goods moved to a number of distribution centers in California, they would pay for a carrier to pick them up from the Approved warehouse and move them to the appropriate distribution center.
Additionally, they buyer also pays for any import costs, including duties, taxes, or customs clearance fees.
Overall, CPT can be a useful term for a buyer negotiating with a seller in a foreign country. After all, it saves the buyer the trouble of arranging most, if not all, of the transportation in a location they might not be as familiar with.
Incoterms Insights: CPT
If you’re considering a contract with the CPT Incoterm, talk to one of our experts. We can answer any questions you might have and help you select a designated place that makes sense—especially if you need to distribute these goods to multiple locations.