(1) The boundary of risk division
Under CPT terms, although the seller is responsible for concluding a transport contract from the place of departure to the designated destination and paying the freight, the risk borne by the seller does not extend to the destination. According to the interpretation of the 2010 Incoterms, the risk of the goods during transportation from the place of delivery to the destination is borne by the buyer rather than the seller. The seller only bears the risk before the goods are handed over to the carrier. In the case of multimodal transport, the risk borne by the seller is transferred to the buyer when the goods are handed over to the first carrier.
(2) The division of responsibilities and costs
When using CPT terms, the buyer and seller must specify the shipment period and destination in the contract so that the seller can select a carrier, conclude a transport contract at its own expense, and transport the goods to the designated destination. After the seller hands over the goods to the carrier, it should send a notice of delivery to the buyer so that the buyer can receive the goods at the destination. If the two parties fail to determine the specific place at the destination where the buyer will receive the goods, the seller can choose the place that best suits its requirements at the destination.
Under CPT, the seller only bears the normal freight from the place of delivery to the designated destination. Other related costs other than normal freight are generally borne by the buyer. The loading and unloading costs of goods can be included in the freight and borne by the seller, or they can be separately stipulated by both parties in the contract.
(3) Similarities and differences between CPT and CFR According to the interpretation of the 2010 Incoterms, in trade contracts concluded under CPT and CFR, the risks borne by the seller are transferred at the place of delivery when the delivery obligation is fulfilled; the seller is responsible for arranging the transportation from the place of delivery to the destination and bearing its costs. In addition, contracts concluded under these two terms are both shipping contracts. The seller only needs to guarantee on-time delivery, but not on-time arrival.
The main difference between CPT and CFR is: the applicable mode of transportation and risk division are different. CFR applies to water transport, the place of delivery is at the port of shipment, and the risk division is when the goods are loaded on board; while CPT applies to various modes of transport, the place of delivery is agreed upon by both parties due to different modes of transport, and the risk division is when the goods are handed over to the carrier. In addition, there are also differences in the seller’s responsibilities, expenses, and documents to be submitted.