Carriage and Insurance Paid To (CIP) is a commonly used Incoterm in shipping and logistics. 

 

What does CIP mean?

As mentioned above, CIP is short for Carriage and Insurance Paid To. It is an International Commercial Trade Term (Incoterm) agreed upon by both the buyer and the seller. 

The term dictates which party is responsible for the shipment at each part of its journey, and what those responsibilities include.

 

What does the CIP Incoterm dictate?

The CIP Incoterm dictates that:

  1. The seller must assume all risks with the shipment until it has arrived at the destination port for importation. The seller is also responsible for the cost of all-risk insurance until the shipment reaches its final destination.

  2. The buyer picks up responsibility for the shipment once the goods have arrived at the port of arrival for customs clearance. The buyer will be expected to arrange customs clearance, pay any applicable duty and tax, and then final delivery to their point of delivery. The seller’s insurance is still in place until the shipment reaches the final destination.

 

CIP Shipping Obligations

It is vital that you understand where obligations lie when using the CIP shipping term.

 

Obligations of the buyer

If you are the buyer, you are obligated to:

  • Customs formalities and payment of duties and taxes for the shipment.

  • Arrange delivery to the final delivery point.

  • Pay for the goods concerning the sales contract agreed with the seller.

 

Obligations of the seller

If you are the seller, you are obligated to:

  • Handle the commercial invoice and documentation for the goods.

  • Manage the packaging and marking for export.

  • Handle the licences and customs formalities for the export.

  • Manage and take responsibility for the pre-carriage and delivery.

  • Pay for loading charges.

  • Pay for the cost of freight through to the port of destination as named by the buyer.

  • Provide proof that goods are loaded on board.

  • Pay for all-risk insurance worth 110% of the contract value (Or at the agreed level of insurance).

 

View the SEKO Guide to Incoterms

SEKO has over 30 years of expertise in international shipping, logistics and supply chain management - so you can trust in us to guide you when it comes to shipping.

To help you continue learning about Incoterms, we’ve created a larger guide to Shipping Incoterms, which addresses several Incoterms questions and provides deeper knowledge of each Incoterm.