Carriage Paid To (CPT)

With goods being shipped all over the world every day, it’s important to define at what point a buyer takes ownership of the goods along the journey. This is in case there's loss or damage...so a whole new vocabulary was invented called "Incoterms," which is followed internationally.

There are 11 different ways to ship products that define who pays for the freight costs and assumes liability at any point on the journey, and Carriage Paid To (CIP) is one of them.

There are generally three parties involved in moving goods from one point to another: the buyer, the seller, and one or more carriers. Sometimes the seller pays for the freight and assumes liability...sometimes the buyer does it...and sometimes they split the cost. They might take ownership of the goods at the shipping dock, when the goods are on the truck, when the truck delivers to an airport, when the goods arrive at the destination, or when they are unloaded and in the buyer’s warehouse.

With Carriage Paid To, the seller has agreed to pay for the cost of shipping up to a certain destination, when the seller’s carrier will take over. As soon as the seller delivers the goods to the first carrier (truck, plane, train, etc.), ownership and all risks transfer to the buyer.

Roses for Love Inc. in Nigeria is ready to ship 50 boxes of roses to arrive at Vince’s Flower Shop in New York City the day before Valentine’s Day. The shipping terms are CPT Abuja airport, meaning Roses for Love will ship the cargo by truck at their expense to the airport at the capital city of Abuja.

Once the roses are loaded on the truck going to the airport, Vince will take possession, as Roses for Love is only paying the trucking cost. However, the truck breaks down on the way to the airport and all the roses die due to lack of refrigeration.

Roses for Love was not required to pay for insurance, only freight, so hopefully Vince had insurance...and he will be the one to file a claim against the trucker. Next time, Vince may want to negotiate Carriage and Insurance Paid To terms so that Roses will also pay for insurance.