CPT-Carriage Paid To

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CPT or Carriage Paid To, is one of the trade terms, which condition seller arrange the carriage. On other word, seller pay the transportation. The transportation should seller pay is from seller's warehouse until port destination. Regarding the insurance, buyer will arrange and pay the cost.

Buyers who place order in Indonesia, basically they always take FOB trade term. If the cargo readiness couldn't meets buyer requested, shipper will ask for extend shipment date, if it's really deadline, buyer will ask shipper to air the goods by prepaid. Means, shipper should pays the freight cost.

Buyers form Europe, such as France, determine the forwarder for collect or prepaid, called nominated forwarder. So that shipper and seller couldn't find out the forwarder the best, for their shipment. This condition is not good for seller because seller couldn't be freely to choose a forwarder who has a low freight rate, of course then, the freight charge or transportation will be high than expectation.

CPT is most commonly used in shipment by air. On the HAWB marked freight Prepaid.

Changing FOB to CPT like a monster for seller. Many companies couldn't survived forward or kept stand exists because of many shipment were changed from collect to prepaid, especially for a company who had a product heavy enough, such as shoes.

So that keep your production rush to meet buyer requirement in product and productivity. Avoid CPT or prepaid.

Choosing FOB Trade Term.

When we have a shipment from around the globe, we have to check first all the costs of shipment comprehensive. Not all shipment with any trade term is cheaper than other. It all depends on the port of loading and the quantity of our shipment, and the shipment mode, too.

Sometimes, FOB term is more expensive than CIF when the shipment is by air.

I want to put here my experience regarding shipment from China by sea with the CIF trade term. When we don't mention the trade term in our order sheet, they will automatically decide the term is CIF. The sound is so great, means shipper will pay the shipment cost until port of discharge, and the Insurance fee is included.

It's several years ago. The time was coming to us to clear the goods here, in Indonesia port. It's not a big volume, was arranged by LCL. We were so shocked watching the invoice unusual and maybe unreasonable. The local charges in Jakarta port were very expensive.

I tried to check to the forwarder and warehouse why did the cost so high. I got the information from them that, they got an offer to handle our shipment with the high price, too. They advised us to check directly to the origin. After I checked to the shipper, they didn't know too, why the cost was  so high.

I asked the forwarder to give us a discount. They then were willing to give us a discount with a requirement, that we had to make a contract with them, would use their service.

This case gave us a warning to use CIF trade term for sea shipment from China especially for LCL shipment.

I don't now until know, to whom should I blame on. Is it forwarder or shipper? 

FOB Term is Common Uses

There are several trade terms could buyer taken for their shipment besides FOB. But, why do they choose only FOB?

FOB is one of the trade terms, which buyer or shipper will covers the cost of shipment from on board at the port of loading until they receive the goods at their warehouse. Shipper or beneficiary only has the obligation to send the goods to the port and pays all the cost until, the clearance cost included.

There are two reasons why does they always choose FOB:

1. Getting the fixed cost.
When the shipment term is FOB, buyers will freely finding the forwarder out and compare one to each other. They make an agreement for a certain period. They also will get the fixed warehouse during clearance process, then, of course, by this condition, they will get lower cost because they promise to place all their goods in a certain warehouse. Usually they are getting a special rate because all the party can get the fixed job.

2. Getting the fixed lead time.
Deadline is the second major factors that shipper has to keep in time. Because buyer has prepared the market, the distribution, and the time of the goods on sale. Buyer wants to control all the things to make all are going smoothly. By taking FOB trade term, buyer will be able to control whether the goods has been on boarded or not.

3. Checking the cargo readiness.
Buyer could also checks the goods via forwarder for schedule agreed. Sometimes buyers in doubt when they received an information about cargo readiness. Buyer usually ask forwarder to check the goods with shipper. Forwarder will ask the shipment booking for a certain on board date. By doing so, buyer could get the the fixed schedule. 

Trick Buyer to Get Low Air Freight Cost

Today, the quality is not only a major factor company takes a look at, but the price is still number one after. Customer will sees the price, compares with another lower than. I read, in Japanese economic trend said so. Yes, we live today where the price will move forward to become number one for consideration.

Let's talk like the title. I have faced some cases in business, several buyer have been taken decision to ask shipper in Indonesia pay the shipping cost, Air Freight Cost, firstly then, they will refund full after. It's new case for me. They said that the freight rate in Japan is higher than Indonesia. I guess maybe because of their economic level is higher than Indonesia. All the price will be higher than here.

They also asked me to find out the lowest freight rate .

The problem will arises when the L/C has been mentioning the trade term is FOB Indonesia. The condition above mentioned, the trade term will be C&F or CIF instead, of course then, the discrepancy will happens. And the bank will refuses to sends a fund. It doesn't matter if buyer will covers the discrepancy cost and accepts the document that has a discrepancy.

Buyers, in this case, take an economic motion to make their company getting more profit through.
   

Penalties for Exportation to Canada

We, one of exporters from Indonesia, recently, has received an order from Canada. As usual, for the first order buyer gives a little quantity, and this buyer from Canada as well. The Buyer only gave us 2400 pieces as stated on the order sheet they given.

Buyer  have also sent us the manual for handling their order. When I read the manual until end of the page, I got some surprises when I read some penalty because of some conditions. This kinds of penalty is so high than we have ever. Here I will mention some conditions, which will bring us to take some penalties:

Late delivery.

The discount taken on late delivery, which divide to several interval:

•  6-10 days late from initial delivery. It will taking discount 10% from the total invoice.
• 11-15 days late form initial delivery. This condition takes us to pay air freight charges. It means that the shipment mode will be changed from by sea to air shipment under our account.
• 16-20 days late from initial delivery. The shipment will be by air prepaid or we'll pay the cost shipment until port destination, and additionally, buyer gets 15% discount from total invoice from us.
• 21-25 days late from initial delivery. We'll pay the air freight and buyer gets 20% discount because of this lateness.
• 26-30 days late from initial delivery. Because of this lateness, shipment will do by air prepaid or we pay the air freight and buyer gets 25% discount on invoice.
• 31 plus days late. We pay the air freight charges and the discount to become 50% from invoice.

Shortage and Overage.

The tolerance of shortage or overage buyer given is 5% from the initial quantity. If the shortage or overage out of tolerance, buyer will apply discount depending on the quantity of shortage or overage.

• 50% to 10%. This shortage or overage condition brings us to pay 15% from total amount of invoice.
• 10% to 20%. Buyer takes 20% discount from the total invoice from us if this shortage or overage happened.
• More than 20%. The discount will be 50% from the total amount of invoice, or the order will be cancelled.

Missing price tickets.

We'll pay US$0.50 for each price ticket missing.

Wrong retail price.

We'll be charged US$250.00 at minimum for wrong retail price. 

Wrong ticketing.

Wrong ticketing is when we are wrong on placing or attaching the ticket. For example, we attach size XL hang tag label on size L garment. We will pay US$250.00 for this.

Wrong packing list.

If the packing list differ from the goods shipped or received, US$500.00 will be applied to us as the penalty.

Wrong carton content.

If there is a discrepancy between carton marking and the carton content, we'll pay US$10.00 for each carton with a minimum of US$100.00.

Marking.

Charge for wrong carton marking is US$5.00 per carton.

Late shipping documents.

If buyer receive shipping document two days prior to ETA, we should pay US$1000.00 per shipment and US$500.00 per shipment for late document received one week after on board date.

Missing shipping document.

Buyer charges us US$500.00 per shipment if the shipping documents are missing or wrong.