CPT (Carriage Paid To) is an Incoterms® 2020 rule that can be used for any mode of transport. Its most important feature is that cost and risk separate: the seller pays carriage to the named destination, but risk transfers when the goods are handed to the carrier at the delivery point.
Delivery, Risk and Cost
The seller delivers by handing the goods to the carrier it has contracted. Risk transfers at that delivery point. Even though the seller pays for transportation to the named destination, the seller does not retain transit risk merely because it pays the freight.
| Activity | Seller | Buyer |
|---|---|---|
| Export clearance | Yes | — |
| Contract/pay carriage to named destination | Yes | — |
| Transit risk after carrier handover | — | Yes |
| Insurance | No mandatory insurance obligation | Arrange if desired |
| Import clearance/duties | — | Yes |
Example
CPT Riyadh Distribution Centre: the seller hands the goods to its contracted carrier in Bahrain and pays transportation to Riyadh. Risk, however, transfers when the goods are handed to that carrier in Bahrain. The named destination therefore tells you where the seller pays carriage to—not necessarily where risk transfers.
CPT vs CIP
CPT and CIP share the same basic delivery/risk logic. The major difference is that under CIP the seller must arrange cargo insurance meeting the Incoterms® 2020 insurance requirement; CPT has no equivalent seller insurance obligation.
Common Mistakes
- Assuming risk transfers at the named destination because the seller pays freight there.
- Leaving the delivery point unclear when multiple carriers are involved.
- Assuming CPT includes cargo insurance.
Reference: ICC Incoterms® 2020, CPT explanatory notes.
