Pay-and-carry, in the context of international trade, describes a system where a buyer must pay for goods in full before the seller ships them, and the buyer is also responsible for arranging and covering the cost of transportation. This typically places all risk and responsibility for logistics and potential losses (damage, theft) on the purchaser. This contrasts with other trade terms that share these responsibilities or allocate them differently. It's often used in situations involving high-value or sensitive goods and sometimes due to political or economic instability.
Pay-and-carry meaning with examples
- The small arms dealer, fearing sanctions, insisted on a pay-and-carry arrangement. The government had to pay upfront, and arrange transportation for delivery. This placed all the risk on the buyer, but circumvented some sanctions. The deal went through, as the military needed the goods.
- During the economic crisis, the struggling company resorted to pay-and-carry with its key supplier. This ensured prompt payment for raw materials, but added significant logistical and financial burden to their operation. The buyer was responsible for transport.
- With the war escalating, governments and aid organizations often negotiated pay-and-carry contracts for emergency supplies. They'd have to find transport. Despite the difficulties this ensured rapid delivery, but at a higher overall cost, as it was the buyer who organised logistics and accepted responsibility for the goods immediately after payment.
- The antique collector agreed to a pay-and-carry deal for the rare artifact, a historical item. While risky, he needed to secure the item from auction competition, as shipping was at his cost and risk. He paid in advance. As he had an interest in shipping he was happy to take on the responsibility.
- The diamond merchant, wary of potential insurance claims, preferred to sell their gems using a pay-and-carry system. This gave the merchant peace of mind, as the buyer bore the risks associated with delivery, and payment was received at the start of the process.