Incoterms rule
CPT — Carriage Paid To
Under CPT the seller pays for carriage to a named destination. Risk, however, passes to the buyer when the goods are handed to the first carrier — which is usually at origin, and usually much earlier than either party pictures.
Two named points, and only one of them is in the term
CPT is one of the rules with a structural feature that catches people out: it has two geographically distinct points. There is the place where delivery happens and risk passes, and there is the place carriage is paid to. They are not the same place, and only the second one normally gets written into the contract.
That asymmetry is deliberate and it is the whole design of the rule. The seller organises and funds the main carriage; the buyer bears what happens to the goods during it. A contract that names only the destination has left the more consequential of the two points unstated.
Delivery happens at the first carrier
Handing the goods to the first carrier completes the seller's delivery obligation. Where there is a chain of carriers — a road leg to a terminal, a main carriage, a delivery leg — the first one in that chain is the one that matters, and it is frequently a vehicle collecting from the seller's own premises.
So a buyer who agrees CPT to their own city is not buying goods that are the seller's problem until they arrive. They are buying goods that become their problem at a loading bay in another country, with the seller having pre-paid the transport.
Nobody has to insure it
CPT carries no insurance obligation on either side. The buyer holds the risk for the main carriage and has no policy behind it unless they arrange one, and the seller has no reason to arrange one because the risk is not theirs.
This is the practical difference between CPT and CIP, and it is the reason the two rules exist separately. A buyer who wants cover under CPT has to buy it, and has to buy it before the goods move rather than after something has happened to them.
Where the term suits the situation
CPT works for any mode and for combinations of modes, which makes it the sensible choice for containerised and multimodal movements where a maritime rule would be a poor fit. It suits a seller with good freight arrangements and a buyer who is content to carry transit risk or to insure it themselves.
It suits less well where the buyer expects delivery to mean arrival. If the commercial intent is that goods reach a business address as the seller's responsibility, a delivered rule expresses that and CPT does not.
In practice
What this means for a shipment.
- Name both points in the contract, not only the destination — the delivery point is where risk actually passes
- Establish who is arranging insurance for the main carriage, because the rule obliges neither party to
- Check whether the first carrier is a road haulier collecting at origin, which is usually where risk transfers
- Remember that the seller pre-paying carriage does not extend their responsibility for the goods
- Import formalities, duties and taxes at destination remain the buyer's, as they do under every C-rule
Original explanation written for shippers, not a reproduction of the rule. The Incoterms rules are published and copyrighted by the International Chamber of Commerce and revised periodically; because CPT's two-point structure has been described differently across revisions, work from the current ICC text and name the version in the contract.
Use the reference
Apply the definition to the actual contract and shipment.
A reference explains the role of a rule or document. The applicable edition, terms and requirements still need to be confirmed for the case.
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