Assumption of costs by the seller, versatility in the type of transport and suitability for containerized cargo are some of the keys to the CIP Incoterm. Discover in this post all that is hidden behind these points and many others that will make you conceive it as a serious option in your trading actions.
Meaning of the CIP Incoterm
Under the acronym CIP hides the term “Carriage and Insurance Paid to”, which could be interpreted as the seller’s responsibility for the cost of transporting the goods and the corresponding insurance, as well as the delivery of the goods at the place of destination.
The CIP Incoterm can be easily adapted to any means of transport, providing great flexibility. However, it is very practical in the case of containerized cargo, as explained below.
CIP transport and risk transfer
As mentioned above, transportation is at the seller’s expense. This means that the seller is responsible for the costs from the time it leaves his property until it arrives at its destination. However, the transfer of risk does not take place at the same time, since the seller ceases to be liable as soon as the goods are accepted by the shipping company.
As the acronym indicates, transportation and insurance is paid for by the seller to the place of destination, so the mode of transportation is also selected by the seller, as well as the insurance, which is mandatory in this Incoterm. We always recommend to have a transport insurance
transport insurance
The absence of such insurance can result in serious commercial losses.
Therefore, the seller is also responsible for the departure costs, as well as all the necessary documentation. In the meantime, the buyer must bear the costs of arrival, customs duties and taxes, as well as transportation within the country of destination.
CPT and CIP Which one to choose?
We may find ourselves in a situation where the seller does not want to assume neither the management nor the costs of the transport insurance. In this case, a serious alternative is to choose the CPT, or “Carriage Paid To” incoterm. The similarities between the CPT and CIP incoterms are many, starting with their name, however, the difference in such a relevant aspect as the treatment of insurance makes them to be classified as different incoterms.
At Partida Logistics we are
authorized economic operator
and specialists in customs and commercial management. Given the great complexity of all these procedures and formalities, we always recommend having a trusted and experienced advisor to guide your steps in the changing trade sector.
