FCA and CPT are two important conditions mentioned in Incoterms 2020, which are effective from January 1, 2020. There are many differences between the two conditions.
- FCA condition (Free Carrier: Delivered to carrier)
- CPT condition (Carriage Paid To: Freight paid to)
1. Regarding the writing on the contract
- How to write FCA condition: FCA [Designated place of delivery] Incoterms 2020
- How to write CPT condition: CPT [Designated place of delivery] Incoterms 2020
2. Regarding the seller’s responsibilities
2.1. FCA condition
- Deliver goods to the carrier or another person designated by the buyer at the place where the buyer receives the goods according to the agreement signed in the foreign trade contract.
- The seller is not obliged to sign an international transport contract and purchase insurance. If the buyer requests, the risk for this transportation will be borne by the buyer. The seller has the right to refuse to sign an international insurance transport contract at the request of the buyer.
- Regarding export customs clearance: If there is export customs clearance in the agreement, the seller must bear all costs and responsibilities for export customs clearance such as: export license; security inspection; inspection of goods; and any legal provisions.
- In addition, the seller is also required to support the buyer in providing necessary documents for import customs clearance.
In fact, nowadays, in FCA sales conditions, the seller is responsible for export customs clearance and supports the provision of import documents for the buyer.
2.2. CPT condition
- Deliver goods that have been cleared for export to the place where the buyer designates to receive the goods.
- Responsible for export customs clearance but not responsible for import customs clearance. Responsible for providing a license to support the buyer in import customs clearance.
- Sign a transport contract to deliver goods to the address where the buyer designates to receive the goods, which can be at the port of entry or deep inside the importing country.
3. Regarding the buyer’s responsibilities
3.1. FCA condition
- Receive goods at the designated place.
- Sign an international transport contract, purchase international insurance if necessary, sign a domestic transport contract from the port of entry to the buyer’s warehouse.
- Responsible for import customs clearance, pay taxes and fees in the importing country.
3.2. CPT condition
- Obliged to clear import customs.
- Receive goods at the designated place from the carrier hired by the seller.
- Unload goods into the warehouse for consumption.
4. Regarding the transfer of risk location
4.1. FCA condition
Transfer from the seller to the buyer at the place where the goods are handed over to the carrier or another person designated by the buyer.
4.2. CPT condition
The risk is transferred from the seller to the buyer after the goods are delivered to the first carrier. Therefore, CPT has the seller responsible for delivering the goods to the designated place of receipt but cannot ensure the safety of the goods, and the risk is still borne by the buyer.