Disadvantage of contracting CPT terms for buyer
CPT, disadvantages to Importer (Buyer)
This post is one of the series of web posts about the practical advantages and disadvantages when handling each delivery rules based on the Inco Terms 2020.
Under this post, the weaknesses of importer under CPT terms is explained.
Here are those challenges one by one under CPT terms for a buyer:
01. One of the main disadvantages for importer under CPT delivery rules is that, in an import export business, one of the main disadvantages under CPT for importer is that the cost of movement of goods is taken care till the named place by the exporter, but the risks of movement of goods are on importer’s shoulder immediately up on the cargo loaded in to the Vessel, under CPT terms of delivery.
02. The main carriage is controlled by the exporter under CPT terms in export import business by handling main carriage freight either. Appointing a poor shipping carrier or a poor freight forwarder to save freight by the seller may affect the movement of goods in rendering good service to importer in delivering the goods. This is another important drawback for importer when movement of goods is under CPT terms of delivery.
03. Another challenge for importer under CPT delivery rules is that in export import trade, the importer under CPT terms of delivery should be well conversant with import customs clearance process, import documentation, import licensing procedures, import taxes if any etc. failing which he is liable to meet additional expenses than anticipated resulting loss in the said business transaction.
04. Usually, CPT delivery rules are executed under sale contract for movement of goods to Dry ports, Warehouse to Warehouse, movements to ICDs, LCL movements etc. The importer under CPT terms also is liable to undertake on carriage process from the destination named port to his final destination. Lacking sound knowledge and experience in handling local transportation results additional costs than calculated. This is a demerit for buyer when contact of carriage is on CPT basis.
05. Another disadvantage for buyer under CPT terms is that The exporter handles main carriage under CPT delivery rules. So, the importer has to request the exporter for getting export data, EGM or Vessel sailing details. This is a demerit for buyer under CPT terms.
06. Although the cost is paid to the named location by seller, the unloading liability is with the buyer under CPT delivery rules. This is another drawback for importer when carriage of goods is on CPT basis. So the costs and risks involved under unloading goods at buyer’s place is under the liability of buyer.
07. One of the other disadvantages for importer under CPT terms is that the risks in unloading of goods are on the shoulder of importer under CPT terms of delivery, and he is responsible for any damage or loss of goods when unloading cargo.
The above information is about the disadvantages to importers under movement of goods on CPT basis.
Your comments are requested below based on your knowledge and experience about this post, demerits under CPT terms to a buyer under contract of carriage.