CIP (Carriage and Insurance Paid to)

Incoterms, also known as international commercial terms, are set to eliminate or decrease confusions and conflicts between buyers and sellers in international trade and to facilitate the trade and commerce process globally. Incoterms were created by the International Chamber of Commerce (ICC) in 1936 and since then, they are updated on a regular basis to suit changing trade trends.
EXWFCACPTCIPDAPDPUDDPFASFOBCFRCIF
Free CarrierCarriage Paid ToCarriage Insurance Paid ToDelivered at PlaceDelivered at Place UnloadedDelivered Duty PaidFree Alongside ShipFree On BoardCost & FreightCost, Insurance & Freight
Charges/FeesEx Works
At a named place, the seller transfers the goods to the buyer; the buyer is responsible for all risks.1.) when seller loads goods to buyer’s carrier or 2.) when goods are at the buyer’s disposal & ready for unloading at a named placedwhen the goods are handed over to the seller’s nominated carrier at a named placewhen the goods are handed over to the seller’s nominated carrier at a named placewhen the goods are placed at the buyer’s disposal at a named place or agreed point within that placewhen the goods are delivered and unloaded at a named place or agreed point within that placewhen the goods are placed at the buyer’s disposal at a named place or agreed point within that placewhen goods are alongside the vessel nominated by the buyer at named portwhen goods are on board the vessel nominated by the buyer at named portwhen the goods are on board the vessel nominated by the seller at originwhen the goods are on board the vessel nominated by the seller at origin
Risks Transfer
Commercial InvoiceSellerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Packaging & QCSellerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Loading & DeliveryBuyerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Export Duty & TaxesBuyerSellerSellerSellerSellerSellerSellerSellerSellerSellerSeller
Origin Terminal HandlingBuyerBuyerSellerSellerSellerSellerSellerBuyerSellerSellerSeller
Cargo InsuranceNegotiableNegotiableNegotiableSellerNegotiableNegotiableNegotiableNegotiableNegotiableNegotiableSeller
Carriage ChargesBuyerBuyerSellerSellerSellerSellerSellerBuyerBuyerSellerSeller
Destination Terminal HandlingBuyerBuyerSellerSellerSellerSellerSellerBuyerBuyerBuyerBuyer
Delivery to DestinationBuyerBuyerSellerSellerSellerSellerSellerBuyerBuyerBuyerBuyer
Unloading at DestinationBuyerBuyerBuyerBuyerBuyerSellerBuyerBuyerBuyerBuyerBuyer
Import Duty & TaxesBuyerBuyerBuyerBuyerBuyerBuyerSellerBuyerBuyerBuyerBuyer
Incoterms 2020
CIP

According to CIP incoterm, the seller takes all risks until the goods are delivered to the first carrier at the site of shipment—not the place of destination. All risks pass to the buyer once the goods are delivered to the first carrier.

However, until the freight reaches the stated destination, the seller is responsible for the cost of transportation as well as risk insurance coverage.

Any person or corporation that transports things, such as a shipping line, airline, trucking firm, railway, or freight forwarder, is referred to as a carrier. Remember that CIP incoterm is a versatile term since it can also be used for intermodal transportation.

Seller’s Responsibility Under CIP

  • Goods delivery
  • Packaging and marking
  • Transportation of the goods in the country of origin
  • Proof of delivery
  • Insurance
  • Customs handling fees in the country of origin
  • Customs formalities and export licenses
  • Charges in the country of origin

Buyer’s Responsibility Under CIP

  • Goods payment
  • Charges in the destination country
  • Customs handling fees in the destination country
  • Customs formalities and import licenses
  • Transportation of the goods in the destination country
  • Payment of taxes and duties

Cargo Insurance in CIP

The CIP Incoterm is one of only two in which insurance is required (the other being the CIF Incoterm). The seller is responsible for getting cargo insurance, according to both incoterms.

If you can get better or cheaper insurance as a buyer, consider going with CPT instead, where the seller is not contractually obligated to provide cargo insurance, and you, as the buyer, can choose your desired insurance.

FAQ

What does CIP refer to?

CIP refers to Carriage and Insurance Paid To. According to CIP incoterm, the seller takes all risks until the goods are delivered to the first carrier.

What shipping mode is CIP used for?

CIP incoterm is a versatile term since it can also be used for intermodal transportation.

Who is responsible for the payment of duties and taxes under CIP?

The buyer is in charge of paying duties and taxes during the shipping process.

ow is CIP different from CPT?

Under CPT, the seller is not contractually obligated to provide cargo insurance, and you, as the buyer, can choose your desired insurance, while in CIP, it’s vice versa.

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