What does CPT mean?

Carriage Paid To (CPT) is an Incoterm (International Commercial Term) defined by the International Chamber of Commerce. It establishes the point in a transaction at which cost and risk transfer from the seller to the buyer. Under CPT, the seller is responsible for arranging and paying for carriage to a named destination. However, the crucial detail is that the risk passes to the buyer as soon as the goods are handed over to the first carrier, not when they arrive at the destination.

Unlike terms like FOB which are restricted to sea freight, CPT is applicable across all transport modes, including road, rail, air and multimodal shipments. This makes it one of the more flexible Incoterms, particularly suited to today's varied and interconnected shipping networks.

 

What does the CPT Incoterm dictate?

CPT defines a fairly clear division of responsibility. The seller must package the goods, clear them for export, deliver them to the agreed point, and cover the costs of carriage to the named destination. However, from the moment the goods are in the carrier’s hands, the buyer assumes the risk.

In practice, this means the seller arranges and pays for transportation to the named place (often a terminal or destination country), but if anything goes wrong in transit; loss, damage, delay, it’s the buyer who bears the burden.

For example, imagine a seller in France shipping goods to a buyer in Canada under CPT terms. The French seller pays to get the goods to Toronto, but the Canadian buyer is responsible for the risk from the moment the goods are loaded onto the truck or container at Calais.

It’s important to note that CPT does not obligate the seller to insure the goods in transit. Because of this, buyers will often arrange their own cargo insurance to protect against any unforeseen issues after the goods have been handed to the first carrier.

 

CPT Shipping Obligations

Here’s a handy breakdown of the different obligations that apply to the buyer and the seller when using CPT logistics:

 

Obligations of the buyer

Under CPT, the buyer's obligations begin earlier than you might expect. The buyer must accept risk as soon as the goods are transferred to the first carrier. They are also responsible for handling import customs clearance, duties and local delivery at the destination. Since the seller is not obliged to cover insurance, the buyer should arrange it if required. Finally, the buyer must pay for the goods in accordance with the contract terms.

 

Obligations of the seller

Despite passing on the risk relatively early, the seller retains several key responsibilities. They must pack and label the goods suitably for international carriage, arrange transportation to the agreed destination, cover all freight and export costs, and provide the buyer with appropriate transport documents, such as a waybill or bill of lading, which allow the buyer to take possession at the destination.

These responsibilities make CPT especially appealing to sellers who want to maintain control of the export process and ensure timely handover of goods, without taking on full liability for the transit journey.

 

When should CPT shipping be used?

CPT is ideal in scenarios where the seller has better infrastructure or established relationships with carriers. It enables them to secure good freight rates and control the logistics up to a certain point, while minimising exposure to risks.

It’s particularly useful when: 

  • The seller regularly exports and is familiar with freight booking procedures 

  • The buyer prefers not to deal with complex or unfamiliar export arrangements 

  • Multimodal transport is involved, as CPT applies across transport types 

  • There’s a significant geographical distance between buyer and seller

However, CPT may not suit buyers with limited knowledge of insurance or those uncomfortable managing risks during international transit. In such cases, they may prefer Incoterms like DDP (Delivered Duty Paid), where the seller assumes more end-to-end responsibility.

 

View the SEKO Guide to Incoterms

With over three decades of expertise in logistics and supply chain management, SEKO Logistics is a trusted partner in navigating international trade. Our comprehensive Incoterms Guide covers each rule in detail and helps businesses identify the most suitable option for their shipping needs.