CPT, short for “Carriage Paid To”, means the exporter is obligated to load the goods to the first carrier and pay the freight to the agreed destination in the importer’s country. It’s critical to know that the exporter is not responsible for the risks of the goods’ transportation; it just pays the freight and it’s done, all the risks transfer to the importer upon the goods’ loading at the exporter’s premises or any other agreed place. CPT is used in all modes of Transport.
There is another critical thing to know about transportation. When the parties agree on the CPT Incoterm rule, they have to specify the delivery and destination points clearly. Delivery point is where the risks transfer from the exporter to the importer which is mostly the exporter’s premises. Destination, on the other hand, refers to the point to which the exporter assumes the costs of the carriage.
As for the customs clearance, it’s the exporter that should assume the costs of export clearance. Other customs formalities and duties in the third country and the importer’s country fall on the importer.
An example to explain CPT process
To recap with an example; Aden the buyer from Lebanon and Miguel the seller from Portugal make a sales agreement according to which the Incoterm is “CPT Beirut ‘Forwarder’s Warehouse’”. When the delivery date is due, Miguel delivers the goods to the carrier that he had made a contract with. The carrier takes the goods to the port and loads them on board the vessel after Miguel’s customs broker clears the goods.
When the vessel arrives at the port of Beirut, the forwarder carries out THC operation and notifies Aden of the arrival. Then, Aden clears the goods through its own customs broker and Miguel’s forwarder delivers the goods at the forwarder’s warehouse which is the agreed upon destination. Aden unloads the goods and loads them onto its own forwarder’s vehicle to take to his premises.
In this transaction Miguel, having cleared the goods at his country’s customs, is responsible for paying the shipping from his factory (the delivery point at which the risks transfer to Aden) until the specified destination point; but if a problem has occured in transit for a reason, it wouldn’t be Miguel’s problem but Aden’s. So Aden had better keep in touch with Miguel’s forwarder during the whole process.