Incoterms Explained: Carriage Paid To (CPT)
When goods are bought or sold “Carriage Paid To” (CPT) it means that the Seller delivers the goods to a destination previously agreed to by the seller and the buyer. It can also be the handoff to the prefered carrier of the buyer.
Risks and Costs for the Seller
The seller is responsible for arranging and paying for transportation to the buyer-contracted carrier and arranging for any export documentation that is needed. Once the goods arrive at the first carrier the risk transfers to the buyer. This can be the ocean freight or air freight carrier, but can also be a carrier using another mode of transport, like barge, train, or truck.
Risks and Costs for the Buyer
The buyer is responsible for unloading the shipment and loading it onto their (carrier’s) truck. The buyer is also responsible for arranging and paying for any import documents. The seller is obligated to hand over any documents or information needed to enable the successful import, at the cost of the buyer. Import duties and taxes also need to be paid by the buyer.
Potential Issues for the Buyer
Because risk is transferred to the buyer once the shipment is handed over to the first carrier, the buyer is responsible for the loss of or damage to the shipment. The buyer is responsible for getting insurance if they want that. Because the seller arranges transportation and loading of the shipment at the port, they may inflate costs and charge them to the buyer.
Use of Carriage Paid To
CPT is applicable for multimodal shipments and works well for shipments supported by a letter of credit. please note that the responsibility for the shipment transfers to the buyer once the goods have been handed over to the first carrier. This makes this incoterm an unusual one, as the risk is being carried by the party that may not have chosen the carrier.
If you want to read more about INCOTERMS and what they are, then see my earlier post “Incoterms: What Are They?”.