CPT Incoterms: Carriage Paid To, and How It Differs From CIP
CPT, Carriage Paid To, means the seller contracts and pays for carriage to a named destination. It sounds like the seller is responsible until the goods arrive. It is not, and that gap is the single most important thing to understand about this rule.
The cost and risk split
Under CPT the seller pays for carriage all the way to the named destination. But risk passes to the buyer when the goods are handed to the first carrier, which usually happens at origin.
So the seller is paying to move goods that already travel at the buyer's risk. If the cargo is damaged in transit, the buyer bears the loss and must pursue the claim, even though the seller booked and paid for the transport.
This is not a flaw in the rule. It is deliberate, and it is shared by CIP, CFR and CIF. But a buyer who assumes that whoever pays the freight carries the risk is exposed without knowing it.
The first carrier point
Where there are several carriers on a journey, risk passes at the first one. If a truck collects from the seller's factory and takes the goods to a port where they are loaded onto a vessel, risk passed when the goods were handed to the trucker, not at the port.
Multimodal journeys make this easy to get wrong. If you want risk to pass at a later point, name that point explicitly in the contract.
CPT compared with CIP
The two rules are identical except for insurance. CIP requires the seller to buy cover; CPT does not.
Under Incoterms 2020 CIP cover must be at the Institute Cargo Clauses A level, which is all risks. Under CPT nobody is obliged to insure at all, so if the buyer does not arrange cover, uninsured goods travel at the buyer's risk for the whole journey. That is a real and common exposure.
CPT compared with CFR
CFR is the sea equivalent, and it is restricted to sea and inland waterway transport. CPT works for any mode, including air, road, rail and multimodal container movements. For containers, CPT is appropriate where CFR is not.
When to use CPT
CPT suits sellers with good freight rates who want to offer a delivered price without taking on insurance or destination risk. It suits buyers who hold their own open marine cover and do not want to pay a seller to insure on their behalf.
Avoid it where the buyer has no cargo insurance in place, since nobody is obliged to arrange any.
Where this rule sits
CPT belongs to the carriage paid family alongside CIP, CFR and CIF. All four have the seller paying for a journey the buyer is carrying the risk on, and reading them any other way is the most expensive misunderstanding in the whole system.
For the full set, see our guide to all 11 Incoterms 2020 rules, or work through how to choose the right rule for a given shipment. Our Mastering Incoterms 2020 course covers every rule with worked examples from Gulf trade lanes.
Frequently asked questions
What does CPT mean in Incoterms?
Carriage Paid To. The seller contracts and pays for carriage to a named destination, but risk passes to the buyer when the goods are handed to the first carrier.
Does the seller carry risk under CPT until delivery?
No. Risk passes at the first carrier, usually at origin. The seller pays for the carriage but the goods travel at the buyer risk.
What is the difference between CPT and CIP?
They are the same except that CIP obliges the seller to buy insurance, at the all risks level under Incoterms 2020. CPT has no insurance obligation on either party.
Can CPT be used for sea freight?
Yes. CPT works for any mode of transport including sea, and it is the correct choice for containers where CFR would not be.
