CPT (Carriage Paid To) is an Incoterm under which the seller pays for carriage to a named destination, but risk passes to the buyer as soon as the goods are handed to the first carrier.
CPT (Carriage Paid To) is an Incoterm under which the seller arranges and pays for carriage to a named destination, but the risk transfers to the buyer much earlier — as soon as the goods are handed over to the first carrier. This split between the cost point and the risk point is the defining feature of CPT and its insured counterpart, CIP.
Under CPT, the seller clears the goods for export and delivers them to the first carrier, then pays for transport all the way to the agreed destination. However, once the goods are handed to that first carrier, the buyer bears the risk of any loss or damage in transit. CPT can be used for any mode of transport and for multimodal shipments.
The key to understanding CPT is that the cost and risk points are different. The seller pays freight to the destination (the cost point), but risk passes to the buyer at the origin, when goods reach the first carrier (the risk point). Because of this, buyers are advised to arrange their own cargo insurance, since the seller is not obliged to insure the goods under CPT.
The seller handles export clearance, delivers to the first carrier and pays carriage to the destination. The buyer bears risk from the first carrier onward, arranges insurance if wanted, and handles import clearance and customs duty at destination.
CPT and CIP are identical except that CIP requires the seller to arrange insurance. CFR is similar to CPT but applies only to sea and inland waterway transport, with risk passing when goods are on board the vessel. For containerised cargo, CPT or CIP is generally more appropriate than the sea-only rules.
CPT suits sellers who can obtain competitive freight rates to the destination and buyers who are comfortable arranging their own insurance. It provides the buyer with a delivered-to-destination freight cost while keeping insurance flexible.
CPT is a useful multimodal Incoterm in which the seller pays carriage to the destination but risk passes early, at the first carrier. Recognising the gap between the cost and risk points is essential: buyers should arrange insurance to protect goods in transit. If seller-provided insurance is required, CIP is the equivalent rule. Always name the destination precisely and state the Incoterms version.