08 Flies in the ointment for exporter under CPT terms
Okay, now let us discuss from the point of view of seller when he contract delivery terms on CPT basis. What are the benefits if an exporter enters in to an agreement of carriage on CPT basis? Let us discuss one by one below:
01. One of the main disadvantages under CPT terms for exporter is that the importer undertakes on carriage from destination named port to his final destination under CPT terms of delivery. The exporter does not have control over tracking data of shipment till arriving goods at final destination.
02. Although the risk of main carriage ends when cargo loaded to Aircraft or vessel, under CPT delivery rules, the Seller has to pay freight till the named destination contracted. The exporter should have sound knowledge and experience about the main carriage handlers and their service to serve the importer for good business relationship. This is a drawback for exporter under CPT terms.
03. Another demerit for seller under CPT delivery rules is that, if any port congestion, vessel shortage or vessel cancellation occurs at loading port, under CPT terms of delivery in export import business, the exporter is responsible to bear such costs and risks. Difficulty in meeting delivery time with buyer may also be faced.
04. Under CPT delivery terms, the seller has no control over on carriage till final destination of importer under CPT terms of delivery under international trade. This is another disadvantage under CPT terms for exporter.
05. One of the other drawbacks under CPT rules in export import biz for exporter is that, the exporter should have sound knowledge and experience in handling export regulations, export documentation, export taxes if any against his product failing which the exporter is liable to pay additional expenses than anticipated when contracting sale agreement.
06. The exporter does not have any control over safety of goods, once the cargo is loaded in to Vessel. This is a demerit for seller under CPT terms. So, the seller cannot assure the safety of goods sold, from that point to final destination including unloading of cargo at importer’s premises as the importer is responsible for all such movement of goods.
07. Compared to other inco terms except DDP, under CPT terms, the exporter does not want to learn import clearance, import government regulations in buyer’s country. This reason may lack exporter to enter into a sale contract where the buyer specifically ask for DDP terms of delivery. This is a drawback for exporter when contracting carriage of goods on CPT basis. So in our point of view, every exporter and importer should learn and experience government rules and regulations of both exporting and importing country for strengthening their business.
08.Usually CPT delivery rule is used under the shipment to move goods from warehouse to warehouse, LCL consolidation movements, and shipments to Dry ports or intermediary ports. This is another disadvantage under CPT terms for exporter. The exporter cannot track the final delivery of goods and the safety of goods cannot be assured for an exporter as unloading of goods is under the responsibility of importer under CPT terms.
We are trying to point out above, the demerits involved for an exporter when he contracts his carriage on CPT basis.
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