CPT - Carriage Paid To

The Incoterm CPT stands for “Carriage Paid To.” Under CPT, the seller is responsible for delivering the goods to a carrier or another person nominated by the seller, and for paying the transportation costs to bring the goods to the named destination. However, the risk of loss or damage to the goods transfers from the seller to the buyer once the goods are handed over to the first carrier, not when they reach the destination.

​Key Features of CPT:

1. Cost Responsibility: The seller pays for the transportation of goods to the agreed destination, which can be a terminal, warehouse, or another location.
2. Risk Transfer: The risk of loss or damage to the goods passes from the seller to the buyer once the goods are delivered to the first carrier, not upon arrival at the destination.
3. Insurance: Unlike CIF or CIP, the seller is not required to provide insurance under CPT. If the buyer wants coverage, they must arrange it themselves.
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Example of CPT:

A company in Germany sells machinery to a buyer in Mexico under CPT terms. The German seller arranges and pays for the machinery’s transport to a port in Mexico. However, once the machinery is handed over to the shipping company at a port in Germany, the risk of loss or damage shifts to the Mexican buyer, even though the seller continues to pay for transportation to the final destination.

​Significance of CPT:

1. Balanced Responsibilities: CPT balances cost and risk between the seller and buyer. The seller takes responsibility for transportation costs, but the buyer assumes risk once the goods are handed over to the carrier, making it crucial for the buyer to consider insurance.
2. Risk Clarity: This Incoterm clearly separates the point at which cost and risk transfer, helping both parties understand their respective responsibilities in the transaction.
3. Cost Predictability: By specifying that the seller must pay for transportation, CPT provides cost predictability for the buyer regarding freight expenses.

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In summary, CPT is significant in international trade because it provides a clear division of responsibilities, where the seller manages transportation costs up to the destination, while the buyer assumes the risk of the goods once they are handed to the carrier