Incoterms 2020 · Seller pays freight, risk moves earlier
CPT — Carriage Paid To
The seller pays carriage to the named destination, but risk passes when the goods are handed to the first carrier.
Key facts
| Risk passes | When the goods are handed to the first carrier |
|---|---|
| Export clearance | Seller |
| Import clearance and duty | Buyer |
| Main carriage | Seller pays to the named destination |
| Insurance | Neither party is obliged; buyer should insure because it bears transit risk |
| Unloading at destination | Buyer, unless the contract includes it |
| Best for | Multi-modal shipments where the seller has better freight rates |
| Source | ICC Incoterms 2020, CPT |
Paying freight does not mean owning the risk
Under CPT the seller can pay for the whole journey while the buyer bears the risk from the first carrier. If the container is lost mid-ocean, the buyer's cargo insurance responds, even though the seller arranged and paid the freight. That split surprises first-time sellers.
Because the buyer bears transit risk, the buyer should insure from the first handover. The seller should give the buyer enough information to insure, including the carrier, the route and the date of handover.
CPT versus CIP
CIP is CPT plus a seller-paid insurance obligation. Under Incoterms 2020, CIP requires Institute Cargo Clauses (A), the broad all-risk cover, at 110% of the contract value unless the parties agree otherwise. CPT leaves insurance to the buyer.
If the buyer wants a delivered price and broad cover arranged by the seller, CIP is the cleaner rule. If the buyer has its own cargo policy, CPT avoids paying twice for insurance.
Frequently asked questions
Who insures under CPT?
Neither party is obliged by the rule. Because risk passes at the first carrier, the buyer should insure from that point.
Does CPT include import duty?
No. Import clearance and duty stay with the buyer unless the contract adds them explicitly.
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