CPT (Carriage Paid To): Who Pays, Who Bears the Risk

CPT Carriage Paid To, Incoterms 2020: the seller pays freight to destination but risk passes at origin. Costs table, documents, air example, CPT vs CIP.

CPT, Carriage Paid To, is the first of the four "C" rules of Incoterms® 2020. The seller contracts and pays for carriage to an agreed destination, yet delivers the goods, and transfers the risk to the buyer, as soon as it hands them to the carrier at origin. In other words, the seller pays for a journey whose risk it does not bear. The buyer takes the risk of loss or damage during the main carriage, clears the goods for import and pays the duties.

This split between cost and risk is the source of most CPT misunderstandings. This lesson explains how to use the rule safely, which documents it involves and how it compares with CIP, CFR and FCA.

When should you use CPT?

CPT suits any transport mode, so it fits:

• air freight, where it is the correct replacement for the "CFR by air" seen on many invoices;
• road and rail shipments across borders;
• container shipments by sea or multimodal routes;
• deals where the buyer wants a delivered freight price but will insure the goods itself, for example because its own policy or its country's rules require local insurance.

Avoid CPT if the buyer expects you to bear the transit risk: use a D rule instead. And if the buyer wants you to insure, use CIP.

Where does delivery happen and when does risk pass?

The seller delivers by handing the goods to the carrier it has contracted with, at the agreed place of delivery and on the agreed date. Risk passes at that moment. The named place in the term, such as "CPT Abidjan airport", is the destination to which freight is paid, not the place of delivery.

When several carriers are involved, for example a trucker to the port and then a shipping line, and the parties have not agreed a specific delivery point, risk passes when the goods reach the first carrier, at a point chosen by the seller. If the buyer wants risk to pass later, say at the port of loading, the contract must say so.

Who pays what under CPT?

If the seller's contract of carriage includes destination charges, such as unloading or terminal handling, those are for the seller, and the seller cannot recover them from the buyer unless the parties agreed otherwise. Settle destination terminal charges explicitly in the quotation.

Documents and payment

The seller must provide, at its own cost, the usual transport document for the carriage it contracted: an air waybill, a road consignment note, a multimodal transport document or a bill of lading. The document must cover the contract goods, be dated within the agreed shipping period, and allow the buyer to claim the goods from the carrier at destination. If a negotiable document is issued in several originals, the full set goes to the buyer.

Because the seller holds the transport document, CPT works well with a letter of credit or a documentary collection. With air or road freight, though, the document is not a document of title: the carrier releases the goods to the named consignee, so be careful who you name as consignee if you have not yet been paid.

The seller must also notify the buyer that the goods have been delivered and give any notice needed for the buyer to take delivery.

Insurance under CPT

Neither party owes the other an insurance contract. Since the buyer bears the risk from the handover at origin, it should insure from that point to its warehouse. The seller must provide, at the buyer's request and cost, the information the buyer needs to insure.

Worked example: cosmetics by air to Abidjan

A cosmetics manufacturer in Sétif sells 2,400 kg of skincare products to a distributor in Abidjan, CPT Abidjan Félix-Houphouët-Boigny airport, Incoterms® 2020.

The seller hands the pallets to the airline's handling agent at Algiers on 3 June 2026 and sends the air waybill and invoice to the buyer. During transshipment at a connecting hub, two pallets are crushed.

Who bears the loss? The buyer, because risk passed at Algiers. The buyer had assumed the seller was responsible since the freight was prepaid, and had not insured the shipment. Its only remedy is a claim against the airline, whose liability under the international air conventions is limited per kilogram and usually far below the value of cosmetics. The lesson for both sides: under CPT, the buyer must insure from origin, or the parties should have agreed CIP.

CPT compared with its neighbours

CPT and CFR share the same logic, but CFR only works when goods are loaded on board a ship. All eleven rules are compared in the Incoterms matrix.

Common mistakes with CPT

• Buyer assumes the seller bears transit risk because the seller paid the freight, and leaves the goods uninsured.
• Using CFR for air or road freight: CFR is a sea rule; CPT is its any-mode equivalent.
• No delivery point stated on a multi-leg journey, so risk passes earlier than the buyer expects.
• Destination charges left unclear: the buyer receives a terminal bill it thought was in the freight price.