Delivery At Place (DAP) and Carriage Paid To (CPT) are two very similar Incoterms that often cause confusion among shippers. Although both DAP and CPT can be used for all modes of transport, it is important to know the differences between CPT and DAP before deciding which Incoterm is better for your particular situation. This guide will clear all doubts and help you choose between CPT and DAP when shipping.
The tricky part of choosing between CPT and DAP when shipping is that both Incoterms share many similarities. In general terms, in both CPT and DAP, the seller is responsible for arranging and paying for the transport of the goods to the named location defined under the contract.
However, the main difference between the CPT and DAP Incoterms is that the point where the risk transfers from the seller to the buyer are different in each case.
This difference in risk transfer between CPT and DAP may seem small, but it has a significant impact in case something goes wrong. Under CPT, if there is any problem or loss during the main carriage of the goods, the seller is not held responsible for them. The buyer will have to cover the costs of the loss.
When shipping under the CPT or DAP Incoterms, the contract established between both parties must include the important locations that determine the cost and risk transfer points.
For shipping under CPT:
The agreement must establish the delivery point and the named destination. The delivery point is where the seller will deliver the goods to the carrier, and it marks the point where the risk transfers from the seller to the buyer.
The named destination is the final location where the goods must be delivered, normally a location defined by the buyer. This is the point that marks where the costs transfer from the seller to the buyer.
For shipping under DAP:
In this case, only one location needs to be named: the delivery place. This is the point where the goods must be delivered and where the costs and risks transfer from the seller to the buyer. In most cases, it is a location in the country of destination, either a warehouse or hub defined by the buyer.
Both CPT and DAP Incoterms can be used for any mode of transport, but when it comes to practical terms, there are different situations in which they are advised as the best solution.
The CPT is an Incoterm that can bring quite some risks since the costs and risks are transferred at different points of the operation. For this reason, CPT is mostly used when transporting cargo overland from one place to another, for example, when moving goods from warehouse to warehouse.
On the other hand, the DAP Incoterm is often used when shipping by sea or air freight from the seller’s premises to the buyer’s.
|Type of transport||All modes of transport||All modes of transport|
|Export duties||Costs: Seller|
|Loading the goods||Costs: Seller|
|Freight charges||Costs: Seller|
|Import charges||Costs: Buyer|
|Unloading and handling upon arrival at the named place||Costs: Buyer|
|Risk transfer||Once goods are loaded on the carrier at the origin||When goods are made available for unloading at the destination|
As you have seen, the differences between CPT and DAP Incoterms 2020 may seem small, but they can have a significant impact on your operations. Understanding the shipping terms is crucial before arranging the international transport of goods. To help you understand the Incoterm topic better, check our dedicated guides below:
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