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CIP | Carriage and Insurance Paid to
Incoterms® 2020

When talking about Incoterms, reference is always made to transportation risks and costs. The agreed Incoterm always indicates where and when the costs and risks are transferred from the seller to the buyer.

All Incoterms Build your booth

Main international transportation methods

Air Freight

Recommended transportation method for international purchases or sales requiring a short delivery time

Sea Freight

Recommended transport method for international purchases or sales requiring lower freight rates

Land Freight

Recommended transport method for international/domestic purchases or sales with short to medium transit distances

Rail Freight

Recommended transport method for international purchases or sales requiring large load volumes. Multimodal transport with low accident rate.

Express Freight

Recommended method of transportation for domestic purchases or sales with small cargo volumes.

Before you know...

¿What are the real risks during transport?

UNINTENDED ACCIDENTS

During loading/unloading of goods. During the handling. During transshipment storage (if the goods are to be temporarily stored en route)

NATURE OF THE GOODS

Leaks, explosion of dangerous goods,
oxidation, rust.

HUMAN INTERVENTION

Theft, piracy, accidents due to carrier negligence, faulty handling.

FLAWED GOODS

Previous defects or deficiencies in the goods themselves or in the packaging.
The Seller must ensure that the packaging is adequate to avoid surprises in case of possible incidents.

ACCIDENTS OF TRANSPORTATION

Sea: Shipwreck. Stranded or aground. Approach or intentional collision. Unintentional collision.
Air: aircraft crash.
Road: overturning, collision...
In any means of transport: fire, explosion,...

SOCIAL-POLITICAL

Wars, strikes, revolutions, riots,...
Risks that have in common the concurrence of the collective action of man in the realization of the risk.

¿Should I insure the goods?

Accidents are unpredictable, but as we have
seen, there are certain situations
that increase the risk of accidents.

Dangerous or fragile goods
Location of buyer or seller in conflict zones
Transport route through unsafe areas
Handling of transports that require a lot of manipulations. Except for door-to-door transports (full truck loads or full containers), all other transports imply that the goods will pass through many transit warehouses, so the goods will be subject to several manipulations, increasing the probability of an accident.
Dangerous or fragile goods
Location of buyer or seller in conflict zones
Transport route through unsafe areas
Handling of transports that require a lot of manipulations. Except for door-to-door transports (full truck loads or full containers), all other transports imply that the goods will pass through many transit warehouses, so the goods will be subject to several manipulations, increasing the probability of an accident.

Carrier coverages

The carrier usually has contracted a policy for the transports it manages, but this policy normally overcovers up to a limit, depending on the rules of each means of transport:

SEA | Haya Visby Rules

666,67 SDR per package, or unit load, or 2 SDR /Kg gross weight. The higher of the two shall apply.

AIR | Montreal Convention

19 SDR /kg gross weight of merchandise lost, damaged or delivered late.

ROAD | CMR Convention

8,33 SDR /kg gross weight for loss and damage and the price of transportation for delays.

Special Drawing Rights ('SDR') is the International Monetary Fund's Unit of Account. It is a basket of currencies that includes the Euro, US Dollar, Japanese Yen and Pound sterling. It is determined daily and published on the IMF's website. Its value can be consulted on the IMF's home page: https://www.imf.org/en/Home

CIP Process

CIP – Carriage and Insurance Paid to

CIP – place, is an Incoterm for any means of transport where the seller loads the goods on the means of transport contracted by him, but the risk of loss or damage is transferred from the seller to the buyer when the goods are loaded on the transport. In other words, the seller pays for the main carriage to the named place but the risk of such carriage is borne by the buyer.

Therefore, when this Incoterm is used, two points or places must be agreed: the place where the goods are loaded on the main transport (when the risk is transferred) and the place where the goods are delivered (where the costs are transferred).

In addition, the seller must take out insurance on the goods for the main carriage.

Regarding transport and handling, the seller must bear all the costs of packing and checking the goods correctly, transporting the goods to the agreed place to load them on the main transport and contracting the main transport to the agreed place.

The buyer, on the other hand, will bear all the costs of unloading the main transport (where he will have to accept the rate of the carrier contracted by the seller), unless the unloading was agreed to be at the seller's expense. Once the goods have been unloaded, the buyer shall bear all import and transport costs to his premises.

At the documentary and customs level, the seller must process all the necessary documentation at origin, both for export and for the subsequent import, assuming the costs of the necessary documentation for export, as well as the customs export formalities and possible fees and taxes.

The buyer assumes the cost and obligation of processing the necessary documentation at destination, as well as the import clearance and the relevant duties.

In any case, there must be an implicit collaboration between buyer and seller so that the documentation and formalities can be carried out without hindrance.

In relation to the insurance of the goods, the seller is obliged to take out insurance for the main carriage and provide the policy to the buyer. Such insurance must have broad coverages, such as clauses (A) of the Institute Cargo Clauses (for more information: here) and must insure, as a minimum, 110% of the value and currency stated in the contract. The buyer has no obligation to the seller.

The seller must provide all necessary information to the buyer in the event that the buyer decides to take out additional insurance.

Here is a summary of costs and responsibilities:

Packing
Verification
Control.

Licenses and authorizations.
Other formalities

Loading into truck or
container at factory
or warehouse

Inland
Insurance

Inland transportation country of origin.
(From factory to port/airport terminal or
to carrier)

Customs
formalities
export

Terminal handling costs
at origin
(Port, airport, rail)

Main international transportation

International
insurance

Inland
insurance

Destination terminal handling costs
(Port, Airport)

Customs formalities
import (tariffs, internal and special taxes and formalities).

Import licenses and authorizations

Inland transportation country of destination.
(From port,
airport or terminal to factory or logistics operator)

Unloading

Successful
delivery

Packing
Verification
Control.

Licenses and authorizations.
Other formalities

Loading into truck or
container at factory
or warehouse

Inland
Insurance

Inland transportation country of origin.
(From factory to port/airport terminal or
to carrier)

Customs
formalities
export

Terminal handling costs
at origin
(Port, airport, rail)

Main international transportation

International
insurance

Inland
insurance

Destination terminal handling costs
(Port, Airport)

Customs formalities
import (tariffs, internal and special taxes and formalities).

Import licenses and authorizations

Inland transportation country of destination.
(From port,
airport or terminal to factory or logistics operator)

Unloading

Successful
delivery

Who has the Obligation

Who assumes risk

Who bears the Cost

Origin

Have the goods ready and well packaged within the indicated
time limit

Obligation
Seller
Take risk
Seller
Assume cost
Seller

Processing the necessary documentation (commercial documentation, licenses, authorizations ...) for all your export procedures.

Obligation
Seller
Take risk
Seller
Assume cost
Seller

Processing the necessary documentation (commercial documentation, licenses, authorizations ...) for all your import procedures.

Obligation
Seller
Take risk
Buyer
Assume cost
Buyer

Loading of goods by truck or container

Obligation
Seller
Take risk
Seller
Assume cost
Seller

Inland insurance (from warehouse to main transport)

Obligation
Seller
Take risk
Seller
Assume cost
Seller

Inland transport (from the warehouse to the agreed point)

Obligation
Seller
Take risk
Seller
Assume cost
Seller

Export customs formalities, including possible duties and taxes.

Obligation
Seller
Take risk
Seller
Assume cost
Seller

Handling and loading charges to the main transport

Obligation
Seller
Take risk
Seller
Assume cost
Seller

Main Transportation

Main Transportation

Obligation
Seller
Take risk
Buyer
Assume cost
Seller

International Insurance

Obligation
Seller
Take risk
Buyer
Assume cost
Seller

Destination

Handling and unloading costs of the main transport

Obligation
Buyer
Take risk
Buyer
Assume cost
Buyer

Import licenses and authorizations

Obligation
Buyer
Take risk
Buyer
Assume cost
Buyer

Customs Import Formalities

Obligation
Buyer
Take risk
Buyer
Assume cost
Buyer

Taxes and fees

Obligation
Buyer
Take risk
Buyer
Assume cost
Buyer

Inland Insurance (from main transport to destination warehouse)

Obligation
Buyer
Take risk
Buyer
Assume cost
Buyer

Inland transport (from the main transport to the destination warehouse)

Obligation
Buyer
Take risk
Buyer
Assume cost
Buyer

Unloading of goods at final destination

Obligation
Buyer
Take risk
Buyer
Assume cost
Buyer

Origin

Have the goods ready and well packaged within the indicated
time limit
Seller
Seller
Seller
Processing the necessary documentation (commercial documentation, licenses, authorizations ...) for all your export procedures.
Seller
Seller
Seller
Processing the necessary documentation (commercial documentation, licenses, authorizations ...) for all your import procedures.
Seller
Buyer
Buyer
Loading of goods by truck or container
Seller
Seller
Seller
Inland insurance (from warehouse to main transport)
Seller
Seller
Seller
Inland transport (from the warehouse to the agreed point)
Seller
Seller
Seller
Export customs formalities, including possible duties and taxes.
Seller
Seller
Seller
Handling and loading charges to the main transport
Seller
Seller
Seller

Main Transportation

Main Transportation
Seller
Buyer
Seller
International Insurance
Seller
Buyer
Seller

Destination

Handling and unloading costs of the main transport
Buyer
Buyer
Buyer
Import licenses and authorizations
Buyer
Buyer
Buyer
Customs Import Formalities
Buyer
Buyer
Buyer
Taxes and fees
Buyer
Buyer
Buyer
Inland Insurance (from main transport to destination warehouse)
Buyer
Buyer
Buyer
Inland transport (from the main transport to the destination warehouse)
Buyer
Buyer
Buyer
Unloading of goods at final destination
Buyer
Buyer
Buyer

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