What is CPT (Carriage Paid To)?

CPT is the all-modes version of CFR. It suits road, rail, air and containers, where the goods are given to a carrier or terminal rather than loaded straight onto a ship. The seller pays for the journey, the buyer carries its risk. For the other rules, see what are Incoterms.

This is a general explanation, not legal, insurance or customs advice.

Why CPT matters

A buyer sees one price that already includes the freight to its door or a nearby terminal. A seller who has a good freight contract can offer that price and keep control of the transport.

The trap is the same as under CFR. Cost passes one way and risk passes another. Once the first carrier has the goods, loss or damage on the road is the buyer's problem, even though the seller paid for the truck.

Where delivery happens

Delivery is complete when the seller hands the goods to the carrier it has contracted, at the agreed place of delivery, or when it procures goods already delivered that way. If several carriers are used one after another and no other point is agreed, risk passes when the goods go to the first carrier.

Name the destination place in the term, such as "CPT Warsaw". It is the place the seller pays carriage to, not where risk passes, so state the place of delivery in the contract as well.

Who does what under CPT

The seller

• Contracts for the carriage and pays the freight to the named destination.
• Clears the goods for export and hands them to the first carrier.
• Gives the buyer notice that the goods have been delivered to the carrier.
• Provides the commercial invoice and the usual transport document.

The buyer

• Carries the risk from the moment the goods are handed to the first carrier.
• Pays unloading costs at the destination, unless the seller's contract of carriage includes them.
• Clears the goods for import and pays import duties and taxes.

Neither side has to arrange insurance under CPT. The buyer should insure from the point it takes the risk. If the seller should insure, use CIP.

Where risk passes

Risk passes when the goods are handed to the first carrier. This can be at the seller's own door, which is far earlier than the destination the seller pays carriage to.

An example from product sales

Say a packaging distributor's price for 24 pallets of film is $18,000 at its warehouse. For CPT the buyer's warehouse, it books a truck for $1,400 and clears export for $300. Its CPT price is $19,700.

The truck driver signs for the pallets at the seller's dock. If the truck crashes on the way, the loss is the buyer's, so the buyer needs its own insurance. On top of the price, the buyer pays import clearance, duties and taxes, and any unloading the freight does not cover.

Common mistakes with CPT

• Reading CPT as delivered. For delivery to the buyer's place use DAP.
• Assuming the seller insures. It does not have to.
• Using a sea-only rule for mixed transport. FOB, CFR and CIF are for sea and inland waterway transport only.
• Vague destination. A city is not enough when the cost depends on the exact terminal.

Related terms

• Incoterms: the 11 rules CPT belongs to.
• CFR: the sea version of CPT.
• CIP: CPT plus insurance.
• FCA: the buyer pays the main carriage.
• DAP: risk passes at the destination.

How PromptLab handles it

Choose CPT in the trade terms field on the sales order, which lists the 11 Incoterms 2020 rules, and write the destination in the order's note. If a customer always buys on CPT, store it as the account's preferred terms and each new order fills it in.

Frequently asked questions

What does CPT mean?

CPT means Carriage Paid To. The seller pays the carriage to the named destination, and risk passes to the buyer when the goods are handed to the first carrier.

Who pays insurance under CPT?

Nobody has to. For seller-arranged insurance, use CIP instead.

Where does risk pass under CPT?

When the goods are handed to the first carrier, not at the named destination.

What is the difference between CPT and CFR?

CFR is for sea and inland waterway transport and delivers on board the ship. CPT works for any mode of transport and delivers to the first carrier.

Who clears customs under CPT?

The seller clears export. The buyer clears import and pays the duties and taxes.