CIP is one of the incoterms created to determine the authorities and responsibilities of exporters and importers. CIP incoterm is described in incoterms 2010 with all the details.

CIP Delivery Term

CIP / Carriage Insurance Paid To (Paid to Carriage Fees and Insurance)

CIP Delivery term is the delivery method  where the shipment is organized by the seller company. The seller company responsible till the goods reach to the buyer facility. This delivery term mentioned on invoices and agreements as "CIP ... City"
As a note, incoterms including 11 different delivery methods and CIP is the one of this in C group incoterms..

Carriage Insurance Paid To

In the form of CIP delivery, the exporter company completes the operation in such a way as to deliver the cargo to an agreed place or the buyer's facility in the country of the buyer. So seller (exporter) company responsible to carry the goods from his factory to the destination point. 

This process include an expense; inland transportation, customs clearence, port charges, shipment costs, freight insurance, port charges in destination port and also inland transportation in buyer's country. Basicly, the seller (exporter) company responsible to deliver the goods to the destination port or any agreed adress.

For example, if the delivery term in the contract or in the proforma invoice is given as CIP London XYZ Warehouse, and the exporter company based in Istanbul city. The exporter company is responsible for the shipment processes and handle the insurance until the goods reach to London city, XYZ warehouse. As a note: The customs clearence should be handle by the buyer (importer) company.

CIP Delivery Term Insurance Obligation 

In the form of CIP transport, insurance is the seller's obligation. Seller's insurance covering the inland transportation, international shipment and also inland transportation at destination country. The insurance obligation finish till the goods reach to buyer's address

CIP, "Cost Insurance Paid To" How to Calculate Price

When calculating the CIP price, the seller, ie the exporter company, adds the profit share on the cost of the product, the packaging cost, the factory loading, the internal transportation to the port, the port costs (if its a sea shipment), the customs costs (in seller's country), the transportation insurance, the freight cost and also inland delivery. In this way CIP price is determined.

CIP Price Account: Product cost + profit share + packaging costs + loading in factory + inland transportation + port charges (if its a sea shipment) + customs expenses + insurance cost + freight cost + inland port charges (if agreed) transportation at destination country

CIP Delivery Term: How it works

According to the CIP delivery method, the seller makes the shipment plan including all process and steps in CIP delivery term. ETA (estimated date of arrival) to be taken from the carrier before shipment and buyer (importer) company let know about this. If buyer company has any deadline, shipment alternatives and delivery time checked when exporter company prepare the proforma invoice or contract. The buyer should know about the delivery time to to prevent future problems. 

CIP delivery term basicly using with truck deliveries. the seller company organize the truck shipment to agreed adress at destination point, it could be buyer's facility or any warehouse or point in buyer's country. CIP delivery terms also using for overseas shipments. In this scenerio; The truck or semi-trailer carry with the ro-ro ship to the destination port. The truck continue to its road after the port till its reach to the agreed adress to unload the goods.

CIP Delivery In the form of Buyer and Seller's Responsibilities

Seller (Exporter) responsibilities CIP delivery Term
  • The seller load the container in his own facilities, 
  • The seller should arrange the international shipment
  • Organizes the inland transportation to reach container to harbour, 
  • Ensures that the cargo is loaded to the ship on time 
  • Complete the customs clearence
  • International shipment costs belong to the seller.
  • The seller company should prepare the insurance covering all risks
  • Inland transportation from destination port to agreed place in destination country

Buyer (Importer)
  • The buyer's responsibilities start when the goods reach to destination port/place
  • Customs clearance at destination point (in buyer's contry)

CIP delivery is the most commonly used incoterms in "group C".

CIP "Carriage Insurance Paid To" Delivery and Distribution of Responsibility

The seller (exporter) company  should prepare the documents including: invoce, packing list, certificate or origin. Exporter company also should finish the customs clearence process

The seller (exporter) company handle the shipment process so they also managed the shipment with carrier company. As an advice, its better to send the Bill of lading draft to buyer (importer) company and get their confirmation before the Bill of lading done. 

The carrier company agent contact with buyer (importer) company before the ship reach to destination port and let them know about the arrival date and details about the goods. The seller company also should send the original documents to the buyer company before the ship arrives to destination port. The buyer company responsible for all demuraggae costs or any other extra expense at destination port, because of their faulty or latency about the customs clearence.

The seller (Exporter) company should send their export documents including; "invoice, packing list, freight insurance, certificate of origin, bill of lading and any other agreed  document" to the buyer by courier.

When agree on CIP delivery term, The port city and agreed delivery point should be clear and both parties Doublecheck if the destination delivery adress or port details  mentioned on proforma invoice or contract and get the confirmation from buyer company when its clear.

CIP Delivery Term :  Responsibilities for Both Side

details CIPCostsRisks
PackagingSeller ie exporterSeller ie exporter
Internal shipment (to the harbour)Seller ie exporterSeller ie exporter
Customs clearenceSeller ie exporterSeller ie exporter
Port Loading (handling charges)Seller ie exporterSeller ie exporter
Shipment (main shipment charges)Seller ie exporterSeller ie exporter
InsuranceSeller ie exporterSeller ie exporter
Port Unloading at destination (handling)Seller ie exporterSeller ie exporter
Customs clearence at destinationBuyer ie importerBuyer ie importer
Internal shipment at destination ( (www.ihracat.co)Seller/BuyerSeller/Buyer
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CIP is one of the incoterms created to determine the authorities and responsibilities of exporters and importers. CIP incoterm is described in incoterms 2010 with all the details.
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