CPT Meaning: Carriage Paid To Explained

What does CPT mean?

CPT means Carriage Paid To: the seller arranges and pays carriage to an agreed destination, while cargo risk transfers at delivery to the carrier contracted by the seller. If several carriers are involved and no specific delivery point is agreed, risk passes at handover to the first carrier.

It applies to road, rail, air, sea and combinations of these modes. For buyers sourcing from China, the essential distinction is between the delivery point where risk transfers and the destination to which freight is paid.

CPT: who pays and who carries the risk?

This table describes the normal allocation under CPT. Handover means delivery to the seller-contracted carrier at the agreed delivery point, or to the first carrier if no specific point is agreed. Risk means loss of or damage to the goods; paying a charge does not determine who carries that risk.

Where exactly does risk transfer?

Risk passes when the goods are delivered to the seller-contracted carrier at the agreed delivery point. If several carriers are involved and no specific delivery point is agreed, the default is handover to the first carrier at a point chosen by the seller. Collection by that carrier at the factory can therefore transfer risk before the goods reach a Chinese port or airport.

Specify both locations: write CPT followed by the precise destination and Incoterms 2020, then separately identify the carrier-handover point in the contract. Request evidence of handover and timely delivery notification.

Who handles customs and insurance?

For goods exported from China under CPT, the seller must arrange and pay for applicable export clearance. The buyer must arrange and pay for applicable import clearance and required transit-country customs formalities, including related duties and taxes. This describes the allocation between seller and buyer under the sale contract.

CPT does not oblige either party to arrange cargo insurance for the other. If you want cover, arrange it to start no later than the risk-transfer point and check the route, exclusions and claims procedure.

When should you use CPT, and when should you choose another term?

Consider CPT if you want the seller to book and pay freight and are prepared to manage cargo risk after handover, decide on insurance, and handle transit and import customs formalities.

Consider CIP if the seller should arrange insurance, or FCA if you want to arrange main carriage yourself.

For seller risk through to the named destination, compare DAP, where delivery is ready for unloading, and DPU, where delivery follows unloading. For seller responsibility for import clearance and applicable import duties and taxes, investigate DDP and its practical requirements.

For sea and inland-waterway alternatives, read CFR and CIF. Compare the wider allocation in the Incoterms chart.

China example: freight paid to Cambridge, risk transferred in Shenzhen

Illustrative scenario: a buyer orders goods from a Shenzhen factory. The contract names the buyer's Cambridge warehouse as the CPT destination and specifies delivery to the first carrier at the factory.

The factory pays the agreed carriage to that warehouse and handles applicable export clearance. The buyer carries cargo risk from that handover, handles applicable transit and import clearance, and pays related duties and taxes. Confirm whether unloading is included in the seller's carriage contract; where it is for the seller's account, the seller cannot separately recharge that unloading cost unless otherwise agreed.

Before accepting the quote, request the destination address, handover details, transport documents and an itemised explanation of destination charges.

UK example: customs value and import VAT

For this shipment to Cambridge, HMRC guidance includes transport and insurance costs to the UK place of introduction in customs value. The precise place depends on the transport mode. Post-introduction UK transport included in the goods price may be deducted if distinguishable and supported by evidence. Avoid adding freight twice if it is already in the CPT price.

Import VAT valuation starts with customs value and also includes applicable customs duty, excise duty and other import charges except VAT itself, plus relevant incidental expenses to the first UK destination and a further UK destination known at importation. Include costs only once. Ask for a freight breakdown; CPT alone does not establish the taxable value. For other markets, consult the destination customs authority's valuation rules.

Before approving a CPT order

Record the exact destination, carrier-handover point, insurance decision, customs arrangements and unloading allocation. Keep product specifications, inspection requirements and payment terms explicit alongside the transport term.

For a broader introduction, read Incoterms explained.

Sources

The ICC rules and explanatory notes support the responsibility table and delivery-point distinctions. ICC Academy, the ICC checklist and DHL provide supplementary explanations. HMRC sources support the UK valuation example.