Definition of the CPT Incoterm (Carriage Paid To)

Quick Overview

The CPT Incoterm (Carriage Paid To) means the seller contracts and pays for the main transport to the agreed destination, while risk transfers earlier, when the goods are handed over to the first carrier. Unchanged in Incoterms 2020, CPT is valid for all transport modes, including maritime, air, land and multimodal shipments across multiple successive carriers.

CPT explained in 30 seconds

Watch how the seller pays carriage to the named destination while risk transfers when the goods are delivered to the first carrier.

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

CPT Example: Two Different Points to Record

Hypothetical example: a US supplier sells components CPT [buyer’s full plant address], Guadalajara, Mexico, Incoterms® 2020.

The seller arranges and pays carriage to the named plant. The parties separately identify the agreed carrier handover point in Detroit. Normal risk transfers when the goods are delivered to that carrier, even though the seller continues paying for carriage to Guadalajara.

The buyer handles import clearance and applicable import duties and taxes. Neither party is required by CPT to purchase cargo insurance.

If the parties choose CIP instead, the seller must also arrange the required insurance, normally Institute Cargo Clauses (A) or equivalent, covering the buyer’s risk to at least the named destination.

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

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.