In one sentence
CPT (Carriage Paid To) is an Incoterm where the seller pays for the carriage of the goods to the named destination. Risk, however, transfers from seller to buyer the moment the goods are handed to the first carrier at origin — not when the goods arrive at destination. The buyer is responsible for marine/cargo insurance if any is required.
CPT responsibility — who does what
| Activity | Seller | Buyer |
|---|---|---|
| Goods, packing, commercial invoice | Yes | — |
| Loading at origin | Yes | — |
| Export clearance | Yes | — |
| Main carriage (any mode) to destination | Yes | — |
| Marine/cargo insurance | — | Yes (optional but recommended) |
| Risk in transit | — | Yes (from first carrier) |
| Destination charges | — | Yes |
| Import clearance, duty, VAT | — | Yes |
| Delivery to door | — | Yes |
When CPT makes sense
- Airfreight — the natural equivalent of "freight prepaid" terms on airfreight shipments where the seller pays the airline
- Containerised sea freight — the technically correct alternative to CFR
- Road freight from EU sellers to UK buyers (post-Brexit, with the seller handling EU export and the freight to UK)
- Multimodal shipments — when the seller has good rates with a specific multimodal operator
- You want the seller to handle freight but don't need (or want) their insurance
When to use CIP instead of CPT
If you want the seller to provide cargo insurance as well as freight, use CIP (Carriage & Insurance Paid To). CIP requires the seller to provide cover under Institute Cargo Clauses (A) — the highest level — which is significantly better than CIF's minimum (C). If insurance is needed and you don't want to arrange it yourself, CIP is normally the better choice over CPT + your own policy.
Worked example — CPT London Heathrow (airfreight)
You buy 200 kg of electronics from a supplier in Shenzhen CPT London Heathrow:
- Goods + Shenzhen export handling + airfreight to LHR (supplier pays): supplier's invoice total £3,200
- You arrange marine cargo insurance via your UK broker: £20
- UK customs entry: £75
- LHR import handling, terminal fees: £85
- Delivery LHR → your premises: £180
- UK import duty + VAT (or PVA): per HMRC
- Total landed cost (ex duty/VAT): ~£3,560
Risk passed to you the moment the goods were handed to the airline at Shenzhen Bao'an Airport — so your insurance needed to attach from that point.
Common CPT mistakes
- Assuming the seller's freight cover includes insurance — it doesn't. Always arrange your own (or use CIP)
- Insurance attaching too late — under CPT risk transfers at origin's first carrier, so your policy must attach there
- Vague named destination — "CPT UK" is meaningless. "CPT London Heathrow" or "CPT buyer's warehouse, Birmingham" works
- Missing the cost-vs-risk disconnect — the seller paying freight does not mean the seller is responsible if the cargo is damaged
Verdict
CPT is the right term when you want the seller to arrange and pay for freight (often because they have better rates) but you'll handle insurance yourself — either with no cover, or with your own marine policy.
If you'd prefer the seller to bundle insurance into their arrangement, use CIP instead — under Incoterms 2020 it requires ICC (A) all-risks cover, which is much better than CIF's ICC (C) minimum.