CIP

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Understanding Shipping Term CIP in International Trade

Therefore, it is crucial to maintain a proper understanding of the shipping term CIP (Carriage and Insurance Paid to) for international business buyers and sellers. It specifically defines the final place where the cost of freight and insurance rest with the seller. Being aware of how sellers pay and buyers operate under CIP and the peculiarities of insurance and freight prices will help companies cooperate more effectively in global shipping. In any case, having information on CIP, CIF, DAP and other Incoterms, will help parties to reduce the risks and, therefore, make the international transaction as regular and as uninterrupted as possible given the constant changes of the supply chain world.

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Explained: Carriage and Insurance Paid (CIP) Incoterm

What makes CIP important for global trade is that it positions the risk on the seller to insure the goods at the agreed destination as well as provide carriage and insurance costs. The risk is however transferred to the buyer the moment the goods are handed over to the carrier. Although insurance, to be paid by the seller ensures that there is some level of assurance, the buyer has to make sure that the level of risk management and of coverage that has been assumed is sufficient for him. While CIP delivery terms are adaptable for all modes of transport they make transactions easy but one has to pay attention to the further costs and risk… On this versatile shipping agreement, buyers as well as sellers can make some good points if the parties involved approach the agreement with a lot of caution during arrangements.

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