CPT

CPT (Carriage Paid To) is the Incoterm under which the seller arranges and pays for the carriage of the goods to a named destination, but risk transfers from seller to buyer when the goods are handed over to the first carrier — not when they reach the destination.

This split between cost and risk is the defining feature of CPT (and its cousins CIP, CFR, and CIF) and is one of the most commonly misunderstood concepts in international trade.

Under CPT, the seller must:

• Contract and pay for carriage to the named destination
• Hand the goods over to the carrier on the agreed date
• Handle export clearance
• Provide the transport document

Under CPT, the buyer must:

• Bear the risk of loss or damage from the moment the goods are handed to the first carrier (even though the seller is still paying freight)
• Arrange cargo insurance (CPT does not require the seller to insure)
• Handle import clearance and pay duties at destination

CPT works for any mode of transport — air, ocean, road, rail, or multimodal. The corresponding sea-and-inland-waterway-only rule is CFR, which is functionally similar but uses on-board-vessel as the risk transfer point.

When goods are damaged in transit under CPT and the buyer has not arranged its own insurance, the buyer bears the loss despite not having paid for the freight. This catches inexperienced buyers off guard — if cargo insurance matters, the parties should use CIP instead, where the seller is contractually obligated to procure cover on the buyer's behalf.