Definition of the CPT Incoterm (Carriage Paid To)
The CPT Incoterm means that the seller is responsible for contracting and paying for the main transport to the agreed destination, but the risk transfers earlier, when the goods are handed over to the first carrier.
Incoterms 2020: CPT remains unchanged and is valid for all types of transport (maritime, air, land, multimodal).
It is widely used in operations involving multiple successive modes of transport, such as intercontinental shipments.
Seller's Obligations (CPT)
- Prepare the goods: inspection, measurements, weight, packaging, and labeling
- Deliver to the carrier at the agreed point and within the set timeframe
- Bear the risk until the goods are handed over to the carrier
- Contract and pay for main transport to the agreed destination
- Complete export clearance and associated costs
- Provide documentation: commercial invoice, proof of delivery, and notify the buyer of any requirements for cargo reception
- Insurance: not mandatory, but must provide necessary information if the buyer wishes to obtain insurance
Buyer's Obligations (CPT)
- Pay for the goods as per the contract
- Bear the risk from the moment the goods are delivered to the first carrier
- Handle import clearance, including duties, VAT, and taxes
- Assist the seller with any required documentation at the destination
- Provide timely notification of the exact place and date of delivery, if agreed
- Insurance: not required, but the buyer may obtain it independently
Transfer of Risk under CPT
- The point of delivery must be clearly specified in the contract, as that is where risk transfers to the buyer
- If multiple carriers are involved, the exact transfer point must be indicated
- The final destination must also be clearly defined, as the transport arranged by the seller ends there
Cost Allocation under CPT
Seller bears:
- All costs up to delivery to the first carrier
- International freight to the destination
- Loading, security, and export clearance
- If agreed, also the costs of unloading at destination
Buyer bears:
- Costs incurred after delivery to the carrier (except those already paid by the seller)
- Unloading and inland transport if not included in the seller’s contract
- Import customs clearance and associated charges
- Any additional charges due to lack of advance delivery notification
Scenario. A US automotive supplier ships $15,000 of auto parts Detroit, MI → Guadalajara, Mexico on CPT Guadalajara plant — multimodal: truck Detroit → Laredo border, truck Laredo → Guadalajara. Risk transfers at first carrier (Detroit) but cost stays with seller through Guadalajara.
| Cost line | Seller (CPT) | Buyer |
|---|---|---|
| Trucking Detroit → Laredo (first carrier) | $1,400-1,900 | — |
| US export documentation (EEI) | $45-85 | — |
| Cross-border drayage Laredo (US side → MX side) | $280-420 | — |
| Mexican customs broker + import duty + IVA 16% | — | $2,500-2,900 |
| Long-haul trucking Laredo MX → Guadalajara | $1,100-1,500 | — |
| Cargo insurance (NOT mandatory under CPT — buyer's option) | — | $95-180 |
| Seller's cost stack | $2,825-3,905 | — |
| Buyer's exposure | — | $2,595-3,080 + risk from Detroit onwards |
CPT's defining feature: risk transfers at first carrier (Detroit) but cost transfers at destination (Guadalajara). Buyer holds risk for ~2,000 miles of road transit but pays nothing on the freight. If buyer doesn't buy cargo insurance (not mandatory under CPT, unlike CIP), a Laredo border incident is the buyer's loss. CIP is identical to CPT except CIP forces seller to buy minimum insurance.
Footnote: For USMCA-qualifying auto parts, MX import duty may be 0% (under certificate of origin); IVA 16% still applies on customs value. Verify HS classification with Mexican broker. Cross-border drayage Laredo varies day-of-week (Sunday border closure adds cost).
Additional Considerations
CPT is useful in multimodal sales or when the buyer wants to reduce logistical involvement, but it's important to note that cost responsibility and risk do not align.
If the buyer prefers that the seller also assumes insurance, they should consider using the CIP Incoterm, which includes mandatory insurance coverage by the seller.
CPT vs CIP - The Only Difference is Mandatory Insurance
| Attribute | CPT (highlighted current term) | CIP |
|---|---|---|
| Mode of transport | Any mode | Any mode |
| Risk transfer point | Delivered to first carrier at origin | Delivered to first carrier at origin |
| Cost transfer point | Named place of destination (seller pays carriage) | Named place of destination (seller pays carriage + insurance) |
| Insurance obligation | Not mandated; buyer arranges own policy if desired | Mandatory: ICC Clauses (A) all-risks, 110% to destination |
| When CPT makes sense | Buyers who can negotiate better insurance terms independently or have a global cargo insurance program | Buyers who prefer a single bundled cost including insurance |
Sources and References
- ICC – International Chamber of Commerce: Incoterms® 2020 Rules
Official ICC source explaining Incoterms 2020, including detailed responsibilities for both seller and buyer under CPT. - International Trade Administration (U.S.): Know Your Incoterms
U.S. Department of Commerce guide summarizing major Incoterms including CPT, with an emphasis on risk and cost transfer. - Trade Finance Global: CPT – Carriage Paid To (Incoterms® 2020)
Comprehensive explanation of CPT including its proper use in multimodal transport, comparison to CIP, and who bears the risk. - IncoDocs: Incoterms® 2020 Explained – The Complete Guide
Covers when to use CPT, key seller/buyer obligations, and visual tools to understand CPT vs CIP. - ICC Academy: CIP or CPT – Choosing the Right Term
A focused article comparing CIP and CPT, highlighting when CPT is more suitable and its insurance implications.
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