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Incoterms 2020 CPT: Spotlight on Carriage Paid To

On: December 15, 2021 | By: David Noah | 6 min. read

Incoterms 2020 CPT: Spotlight on Carriage Paid To | Shipping Solutions

Incoterms 2020 rules are the latest revision of international terms of trade published by the International Chamber of Commerce (ICC). They are recognized as the authoritative text for determining how costs and risks are allocated to parties conducting international transactions.

Incoterms 2020 rules outline whether the seller or the buyer is responsible for, and must assume the cost of, specific standard tasks that are part of the international transport of goods. In addition, they identify when the risk or liability of the goods transfer from the seller to the buyer.

In this article, we’re discussing the Incoterm CPT, also known as Carriage Paid To.

There are 11 trade terms available under the Incoterms 2020 rules that range from Ex Works (EXW), which conveys the least amount of responsibility and risk on the seller, to Delivered Duty Paid (DDP), which places the most responsibility and risk on the seller. The Incoterms 2020 Rules: Chart of Responsibilities and Transfer of Risk summarizes the seller and buyer responsibilities under each of the 11 terms.

For a summary of Incoterms 2020 and a short definition of each of the 11 terms, read An Introduction to Incoterms, or watch the video below.

Carriage Paid To Responsibilities and Risk

Under the Incoterms 2020 rules, CPT means the seller is responsible for clearing the goods for export and delivering them to the first carrier or another person stipulated by the seller at a named place of shipment (usually a foreign freight terminal) at which point risk transfers to the buyer. The seller selects and pays the international carrier, and is responsible for loading and offloading goods at the named place of destination. Some buyers don't realize that though the seller routes the international carrier, the buyer carries the risk during the main carriage.

Since this is a standard export transaction, the seller or its agent is responsible for submitting the Electronic Export Information (EEI) through AESDirect on the ACE portal.

Carriage Paid To Transportation Options

The ICC has divided the 11 Incoterms into those that can be used for any mode of transportation and those that should only be used for transport by “sea and inland waterway.” Under Incoterms 2020, CPT can be used for any mode of transportation.

Using Carriage Paid To

With all of the C-group terms, including CPT, the seller is responsible for contracting international transportation. The named place where the transfer of responsibility occurs is always on the buyer’s side.

CPT is beneficial to the seller when a letter of credit is used or in other situations where the seller needs to control the export process.

It may be advantageous for a buyer to use CPT when the seller has greater buying power and can negotiate better rates for transportation.

CPT Frequently Asked Questions (FAQs)

What does CPT (Carriage Paid To) mean in Incoterms 2020?

CPT means the seller is responsible for delivering goods to a carrier and paying for transportation to a named place of destination. However, risk transfers to the buyer as soon as the goods are handed over to the first carrier, not when they arrive at the final destination.
Who pays for freight under CPT?

The seller pays for international freight under CPT. This includes the cost of carriage to the named place, but risk during transit is assumed by the buyer once the goods are delivered to the first carrier.
Who is responsible for export clearance under CPT?

The seller is responsible for export clearance, including documentation and regulatory filings such as the Electronic Export Information (EEI) through the ACE portal in the United States.
Who is responsible for customs clearance at the destination under CPT?

The buyer is responsible for import customs clearance at the destination country. This includes paying duties, taxes and handling any import-related documentation or inspections required by local authorities.
When does risk transfer from seller to buyer under CPT?

Risk transfers at the point where the goods are handed over to the first carrier. This is often at a terminal or loading point in the exporter's country—not the final destination—so buyers must be aware of this critical distinction.
Can CPT be used for sea freight?

Yes, CPT is suitable for any mode of transportation—including sea, air, road, rail or multimodal shipments. Unlike some Incoterms that are maritime-specific (like FOB or CIF), CPT offers more flexibility.
What are the advantages of CPT for sellers?

CPT gives sellers control over the export logistics, including the ability to select the carrier, route and timing. This can be especially important when shipping under a letter of credit, as the seller manages key delivery documentation.
When should a buyer agree to CPT terms?

CPT may benefit the buyer when the seller has better shipping rates or more experience with international logistics. However, buyers must understand that they bear the risk during the main carriage, even though they didn’t choose the carrier.
What’s the difference between CPT and CIP?

Under both CPT and CIP, the seller arranges and pays for transportation. The key difference is that CIP also requires the seller to obtain insurance coverage for the goods in transit. CPT does not include insurance unless separately agreed upon.

Learn More about Incoterms 2020 Rules

If you are regularly involved in international trade, you need to understand the risks and responsibilities as defined by Incoterms 2020 rules, not just pick the term you always use. Start by getting a copy of ICC's Incoterms® 2020 Rules book.

For a more detailed understanding of which term or terms make the most sense for your company, register for an Incoterms® 2020 Rules seminar or webinar offered by International Business Training. If you don't want to attend a half-day class, you can get the book provided at these seminars and webinars: Incoterms® 2020 for Importers and Exporters.

Read our articles about all of the other Incoterms 2020 rules here:

If history is any indication, the Incoterms 2020 rules will be around for at least a decade. Now seems like the perfect time to make sure you understand each of the terms, so you can make sure you’re speaking the same language as your international trading partner.

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This article was first published in March 2017 and has been updated and revised based on the changes made with the release of the Incoterms 2020 rules.

About the Author: David Noah

As president of Shipping Solutions, I've helped thousands of exporters more efficiently create accurate export documents and stay compliant with import-export regulations. Our Shipping Solutions software eliminates redundant data entry, which allows you to create your export paperwork up to five-times faster than using templates and reduces the chances of making the types of errors that could slow down your shipments and make it more difficult to get paid. I frequently write and speak on export documentation, regulations and compliance issues.

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