CPT (Carriage Paid To): where the cost stops and the risk starts
CPT has two geographies and most disputes come from reading it as if it had one. The freight runs to the named destination; the risk stopped at the first carrier, thousands of miles earlier.
CPT — Carriage Paid To — is an Incoterms® 2020 rule that can be used with any mode of transport. The seller contracts and pays for carriage to the named place of destination, but risk passes to the buyer far earlier: at the moment the goods are handed over to the first carrier the seller has contracted. Cost and risk therefore transfer at two different places. The seller clears the goods for export, the buyer clears them for import, and neither party is obliged to insure the cargo.
Two places, not one
Almost every CPT dispute comes from reading the rule as if it had a single geography. It has two, and they are rarely the same point.
- The place of delivery — where the seller hands the goods to the first carrier. Risk transfers here. It is usually the seller’s dock, a forwarder’s warehouse or an origin terminal, and it is often not in the contract at all.
- The place of destination — the place named after the letters CPT. The seller’s cost obligation runs to here, and this is the place everyone writes down.
So “CPT Rotterdam” means the seller pays freight to Rotterdam while the buyer has carried the risk since a lorry left a yard in Ningbo. ICC describes the assumption that risk follows the freight as a common but critical mistake. If the box is damaged mid-ocean the buyer owns that loss, still owes the price, and — since CPT obliges nobody to insure — may have no policy to claim against. Name both points: “CPT Rotterdam, delivery at the seller’s premises, Ningbo” is a clause; “CPT Rotterdam” alone is an argument waiting to happen.
CPT against the rules it gets confused with
| Rule | Modes | Risk passes | Seller pays carriage to | Seller must insure |
|---|---|---|---|---|
| CPT | Any | Hand-over to the first carrier | Named place of destination | No |
| CIP | Any | Hand-over to the first carrier | Named place of destination | Yes — Institute Cargo Clauses (A), minimum 110% of contract value |
| CFR | Sea and inland waterway only | On board the vessel at the port of shipment | Named port of destination | No |
| CIF | Sea and inland waterway only | On board the vessel at the port of shipment | Named port of destination | Yes — Institute Cargo Clauses (C) minimum, at least 110% of contract value |
| DAP | Any | At the named place of destination | Named place of destination | No |
| FCA | Any | At the named place of delivery | Buyer arranges and pays the main carriage | No |
Two pairings matter in practice. CPT and CIP are the same rule with and without insurance; Incoterms 2020 raised the CIP standard to all-risks Institute Cargo Clauses (A) at 110% of contract value, while CIF stayed on the restrictive (C) clauses. CPT and DAP look identical on an invoice and are opposites on a claim: the seller pays freight under both, but under DAP it carries the risk to destination and under CPT the buyer has carried it since origin.
Quoting and running a CPT file
- Fix the delivery point in writing. Name the place where the goods go to the first carrier as well as the destination. In the Incoterms 2020 structure, delivery sits at article A2/B2 and the transfer of risk at A3/B3; if A2 is vague, A3 is vague.
- Price to the named destination, not to the door. CPT ends at the named place. Cartage, unloading and storage beyond it are the buyer’s unless the contract says otherwise.
- Settle unloading before you book. Incoterms 2020 gathers every cost into article A9/B9. If the carriage contract already includes discharge or destination terminal handling, the seller has paid it and cannot re-invoice the buyer for it. Read the carrier’s tariff before you quote, not after the buyer disputes the charge.
- Clear export, and only export. Import clearance, duty and import taxes are the buyer’s. A seller who volunteers to file the import entry under CPT is doing unpaid work at its own risk.
- Decide who insures — explicitly. Neither side is obliged to. Tell the buyer in writing that no cargo policy is included, or sell them one, and get the transport document to them so they can take delivery and clear import. Under a letter of credit, check what the credit demands before you accept CPT at all.
What goes wrong
- The buyer claims against the seller for transit damage. They assumed risk followed the freight. Under CPT it did not, and the loss falls on an uninsured buyer who still owes the invoice.
- Destination terminal handling billed twice: once to the seller inside the carriage contract, once to the consignee under local tariff. Nobody reads the cost article and the forwarder absorbs the difference.
- “CPT delivered” written on a purchase order. That is not a rule. If the parties mean delivery at the buyer’s premises with the seller bearing risk until arrival, they mean DAP.
- An Incoterm quoted without an edition. There is no Incoterms 2023 edition; Incoterms 2020 has been in force since 1 January 2020, and earlier editions remain usable when a contract names them. That is why the edition belongs in the clause.
CPT is not always a trade term
The letters are overloaded, which is worth knowing before you search for them. In United States healthcare, CPT is Current Procedural Terminology, the procedure code set owned and maintained by the American Medical Association. Everything on this page refers instead to CPT as one of the eleven Incoterms 2020 rules published by the International Chamber of Commerce.
How software handles it
An Incoterm is not a label on a shipment. It is the rule that decides which charge lines belong to which party, so it should be recorded once and obeyed by everything downstream. Linbis holds the term on the quote and carries it into the file through freight quoting, prints it on the paperwork produced by document generation, and keeps buy and sell charges on one record, so a destination charge allocated to the wrong party is visible before the invoice goes out. The same discipline applies whether the file runs as ocean freight software or air freight software, because CPT can be used with either.
Questions operators ask
What does CPT stand for?
Carriage Paid To. It is one of the eleven Incoterms 2020 rules published by the International Chamber of Commerce, and one of the seven that can be used with any mode of transport.
Under CPT, when does risk transfer?
When the goods are handed over to the first carrier the seller has contracted, at the agreed place and point of delivery — not on arrival, and not at the place named after the letters CPT.
Does CPT include insurance?
No. Neither party is obliged to insure under CPT. If the buyer wants the seller to insure, the rule is CIP, which under Incoterms 2020 requires Institute Cargo Clauses (A) cover of at least 110% of the contract value.
Who pays duty under CPT?
The buyer. The seller carries out and pays for export clearance; import clearance, duties and import taxes at destination are the buyer’s obligation.
What is the difference between CPT and CFR?
CFR is restricted to sea and inland waterway transport and delivers when the goods are on board at the port of shipment. CPT works with any mode, including multimodal, and delivers when the goods reach the first carrier. For a container handed to a terminal days before it is loaded, CPT reflects what actually happens; CFR does not. The sea-only rule is set out in full under CFR, cost and freight.
We only run a handful of CPT files a year — is a system worth it?
The question is not how many CPT files you run, it is how many charge lines you allocate from memory. A spreadsheet will not stop a destination charge being billed to a party that already paid it inside the freight. Linbis starts at $150 per month including one user, with a free trial and no credit card.