Incoterm CIP explained

What is Incoterm CIP?
Incoterm CIP is very similar in content to CPT. This Incoterm is most common when transporting goods in containers. The seller is responsible for arranging and paying for the transportation to its destination. So if you, as the seller, like to have control over the transportation and associated costs without being responsible for the risks, Incoterm CIP is a good option. Are you the buyer of the goods and prefer to leave the transportation to the seller? Even then, CIP is a suitable Incoterm.

Incoterm CIP meaning
CIP means "Carriage and Insurance Paid To," or Freight Free Including Insurance Paid To. Buyer and seller agree on the destination to which the seller transports the goods. The mode of transportation does not matter; any modality is possible.

CIP transport
With CIP, the mode of transport does not matter. In fact, the seller is free to use more than one modality during transportation. The seller is responsible for the entire transportation process; from pre-transportation to delivery of the goods. However, the risk of damage and loss of the goods already lies with the buyer from the moment the goods are handed over to the first carrier. The selling party is obliged to take out insurance that provides adequate coverage during transport. In case of damage, the buyer must have recourse to the insurance.

Incoterm CIP costs
Most of the costs are paid by the seller. These are not only transportation costs, but also any costs for exporting the goods. Customs fees and documents for exporting the goods must also be arranged by the buyer. The cost of importing the goods is borne by the buyer. This also applies to the costs incurred for any further transportation of the goods.

Seller obligations under CIP
Most obligations under Incoterm CIP are for the seller. The seller arranges the entire transport from pre-transportation to delivery at the agreed destination. All costs involved are paid by the seller. This also includes arranging and preparing all documentation for the export of the goods. Once the goods are handed over to the first carrier, the seller no longer bears any risk. To protect the buyer, the seller must take out insurance for damage or loss of the goods.

Obligations of buyer under CIP
As a buyer, you have relatively few obligations under Incoterm CIP. Because the seller is responsible for the transport, you do not have to arrange or pay for anything. However, as a buyer you do bear the risk as soon as the goods are handed over to the first transport. The mandatory insurance is arranged by the seller, but in agreement with the buyer to ensure that the right level of coverage is agreed upon. However, the buyer is responsible for all documents and costs associated with importing the goods. If the goods need to be transported beyond the destination, the buyer arranges and pays for this as well.

Incoterm CIP vs. CPT
Incoterm CIP and CPT are very similar in content. With both, you as the seller are responsible for transporting the goods to the agreed destination. Once the goods reach the first carrier, the risk of damage and loss of the goods lies with the buyer. In order for the buyer to have recourse with the insurer, with Incoterm CIP, insurance must be purchased by the selling party. With CPT, the seller is not responsible for such insurance.

Sea freight or air freight shipments with customs obligation?
Global shipments and shipments within Europe to/from non-EU countries are subject to customs obligations. What measures do you need to take and what documents are required? With the knowledge and experience of our specialists in the Rotra customs department, we are able to provide solutions for all your customs obligations that fit your logistics process while you focus on your own core business. For more info contact us directly.