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INCOTERM CPT
What It Means for Importers and Exporters
Incoterm CPT (Carriage Paid To) is one of the most practical yet frequently misunderstood Incoterms® 2020 rules. Under Incoterm CPT, the seller pays for transport to a named destination, but risk transfers to the buyer as soon as goods are handed to the first carrier at origin.
This decoupling of cost and risk is the defining feature of Incoterm CPT—and the source of most confusion. Here’s what you need to know to use it correctly.
What Is Incoterm CPT?
Incoterm CPT stands for “Carriage Paid To” followed by a named place of destination (e.g., Incoterm CPT Rotterdam Terminal). The seller contracts and pays for the main carriage to that destination, but delivery—and risk transfer—occurs when goods are handed to the first carrier at the place of shipment.
Incoterm CPT can be used for any mode of transport: air, sea, road, rail, or multimodal shipments involving several carriers.
When to Use Incoterm CPT
Use Incoterm CPT when:
- The seller is willing to arrange and pay for main carriage to the buyer’s country or a specific inland destination
- The buyer prefers to handle import clearance and local delivery themselves
- The shipment involves multimodal transport (e.g., truck → sea → rail)
- The buyer has their own cargo insurance program and doesn’t need the seller to arrange coverage
Incoterm CPT is commonly used in containerized ocean freight, air freight, and road transport where goods move through multiple carriers before reaching the final destination.
Seller's Obligations
Under Incoterm CPT, the seller must:
Delivery and Risk Transfer
Deliver the goods by handing them over to the carrier contracted by the seller at the agreed place and point of delivery. Delivery is complete—and risk transfers to the buyer—at this handover point, not when goods arrive at the destination.
Costs Borne by the Seller
- Export packaging, marking, and labeling
- Export licenses and customs formalities
- Pre-carriage and delivery to the first carrier
- Loading charges at the place of shipment
- Main carriage costs to the named place of destination
- Proof of delivery documentation
Insurance
Insurance is not mandatory under Incoterm CPT. The seller has no obligation to procure cargo insurance but must provide any information the buyer requests to obtain coverage.
Buyer's Obligations
From the buyer’s side, Incoterm CPT means:
Risk Assumption
The buyer bears all risk of loss or damage from the moment the goods are delivered to the first carrier at the place of shipment. This is critical: even though the seller pays for transport to the destination, the buyer is on the hook for anything that happens during transit.
Costs Borne by the Buyer
- Payment for goods as per the sales contract
- Import formalities, duties, VAT, and taxes
- Unloading costs at the named place of destination (unless included in the seller’s transport contract)
- Inland transport from the destination point to the final delivery location
- Any additional charges arising from failure to notify the seller of the exact delivery point or date
Insurance
While not required, buyers are strongly advised to arrange their own cargo insurance from the point of handover to the first carrier through to the final destination. Unlike CIP, Incoterm CPT does not force the seller to buy insurance—so if goods are damaged in transit and the buyer has no coverage, the loss falls on the buyer.
Risk and Cost Transfer
One of the most important aspects of Incoterm CPT is understanding where risk and cost transfer points diverge.
Risk Transfer Point
Risk transfers from seller to buyer when the goods are handed over to the first carrier at the place of shipment (e.g., the seller’s warehouse, a freight forwarder’s terminal, or the origin port). This must be clearly specified in the sales contract.
Cost Transfer Point
Costs transfer at the named place of destination. The seller pays for all transport up to that point; the buyer pays for everything after arrival (unloading, inland haulage, import clearance, etc.).
Implications for Trade
This asynchronous transfer means the buyer holds risk for the entire journey—even though they don’t pay for the freight. If something goes wrong during transit (damage, theft, delay), the buyer must claim against their own insurance or absorb the loss.
Common Mistakes to Avoid with Incoterm CPT
When using Incoterm CPT in practice, watch out for these pitfalls:
- Not Specifying the Exact Delivery Point
The contract must clearly state where the goods are handed to the first carrier and where the named destination is. Ambiguity here leads to disputes over where risk transfers.
- Assuming Seller’s Risk Extends to Destination
Many buyers mistakenly believe that because the seller pays for freight to the destination, they also bear the risk. This is incorrect—risk transfers at the first carrier, not at arrival.
- Skipping Cargo Insurance
Because insurance is not mandatory under Incoterm CPT, some buyers forego it. This is risky: if goods are damaged in transit, the buyer has no recourse against the seller and must absorb the loss.
Practical Example: Incoterm CPT in Action
To illustrate Incoterm CPT, consider this scenario:
A Spanish machinery manufacturer sells equipment to a buyer in Mexico under Incoterm CPT Mexico City Terminal. The seller:
- Arranges and pays for truck transport from their factory in Barcelona to the port of Valencia
- Handles Spanish export customs clearance
- Contracts and pays for ocean freight from Valencia to Veracruz, then rail to Mexico City
- Delivers goods to the first carrier (the trucking company in Barcelona)
At that point, risk transfers to the Mexican buyer. The buyer:
- Bears all risk from Barcelona onward
- Arranges and pays for Mexican import clearance, duties, and VAT
- Pays for unloading at Mexico City Terminal and onward transport to their warehouse
- Optionally procures cargo insurance for the journey
If the goods are damaged during the ocean leg, the buyer’s insurance (if they have it) covers the loss—not the seller’s.
Is Incoterm CPT Right for Your Shipment?
Incoterm CPT makes sense when:
- You’re the seller and want to offer a competitive term that includes main carriage but not insurance
- You’re the buyer and have your own global cargo insurance program
- Your shipment involves multimodal transport where a single carrier won’t cover the entire journey
- You want clarity on costs (seller pays to destination) but can manage risk independently
If you prefer the seller to handle insurance as well, consider CIP instead. If you want risk and cost to transfer at the same point, look at FCA or DAP.
Need help with CPT requirements?
At Customs Complete, we provide customs clearance services for imports and exports across the UK, the EU and internationally. Get in touch to discuss your requirements.
