What is CPT? Carriage Paid To (CPT) is an Incoterms 2020 rule that applies to all modes of transport. The seller pays the cost of freight to a named place of destination, but risk transfers from seller to buyer as soon as the goods are handed to the first carrier at the origin. CPT is typically used where the seller arranges transport but the buyer wants to control their own insurance. It places more cost obligation on the seller than FCA, but more risk on the buyer than CIP.
CPT stands for Carriage Paid To. When a supplier quotes you a price on CPT terms, they are telling you: “We will pay to get your goods to the named destination.” That sounds reassuring. But there is a catch that trips people up every year. The seller pays the freight bill to your door, but if something is lost or damaged on the way, that is your financial problem to sort out. Understanding that split between cost and risk is the key to using CPT safely.
Under CPT, the seller takes responsibility for getting the goods to a named destination, and pays for the freight to get there. But they hand over the risk much earlier than that. Here is the full sequence from start to finish.
Contract agreed. Buyer and seller agree on CPT terms and name a specific delivery destination (for example, “CPT Sheffield warehouse” or “CPT Felixstowe Container Terminal, UK”). The more specific the named place, the clearer the cost boundary between the two parties.
Seller prepares the goods. The seller packs, labels, and readies the shipment for collection.
Seller handles export clearance. The seller files all export customs paperwork in their country and pays any export duties. The buyer has no role in the export process.
Seller hands goods to the first carrier. This is the risk transfer point. The moment the goods are with the first carrier, a haulier, freight forwarder, or airline, risk passes to the buyer. This might be a lorry collecting from the seller’s factory gate, not a ship leaving a port.
Seller pays the freight. Even though the buyer now carries the risk of loss or damage, the seller pays the freight all the way to the named destination. This is CPT’s defining split: the seller’s wallet is still active, but it is the buyer’s risk.
Goods travel to destination. The main journey, by road, rail, sea, or air, is on the seller’s account but the buyer’s risk.
Buyer handles import clearance. At the destination country, the buyer handles customs clearance, pays import duties, and pays import VAT. In the UK, this means filing a customs entry through the Customs Declaration Service (CDS) and holding an Economic Operators Registration and Identification (EORI) number issued by HMRC.
Buyer receives the goods. Delivery is complete at the named destination, and the seller’s CPT obligations are fulfilled.
| Responsibility | Seller | Buyer |
|---|---|---|
| Export customs clearance | ✅ Yes | ❌ No |
| Export duties | ✅ Yes | ❌ No |
| Pre-carriage to first carrier | ✅ Yes | ❌ No |
| Handing goods to first carrier | ✅ Yes — risk passes here | — |
| Main freight to named destination | ✅ Yes (pays the bill) | ❌ No (but bears the risk) |
| Cargo insurance during transit | ❌ Not required | ✅ Buyer should arrange |
| Import customs clearance | ❌ No | ✅ Yes |
| Import duties and taxes | ❌ No | ✅ Yes |
| Import VAT | ❌ No | ✅ Yes |
| Unloading at destination | ❌ No (unless agreed) | ✅ Yes |
The most important line in this table is the freight row. The seller controls the freight arrangement and pays for it, but the buyer bears the risk of loss or damage from the moment the goods leave the seller’s hands. If goods are damaged mid-journey, the buyer has no claim against the seller, only a claim against whoever insured the shipment. And under CPT, the seller has no obligation to insure it.
When a supplier quotes you a price “CPT [named place]”, here is what that price covers.
Included in the seller’s CPT price:
– Packing and preparation of goods for shipment
– Pre-carriage from the seller’s premises to the first carrier
– Export customs clearance and any export duties in the seller’s country
– The main freight (carriage) all the way to the named destination
NOT included, the buyer arranges and pays separately:
– Cargo insurance (the seller has no obligation to provide this under CPT)
– Import customs clearance at the destination
– Import duties
– Import VAT (in the UK: typically 20% of the customs value)
– Any unloading costs at the destination, unless the contract specifically states otherwise
For a UK importer receiving container goods from a supplier in China on CPT terms to Felixstowe, the buyer’s additional costs on a £40,000 shipment might look roughly like this:
| Cost | Estimate |
|---|---|
| Import duty (rate depends on commodity) | £0–£4,000 |
| Import VAT at 20% (on value + freight + duty) | around £8,800 |
| UK customs broker fees | £150–£400 |
| Drayage from Felixstowe to warehouse | £300–£700 |
None of these figures are in the CPT price the supplier quoted. Budget for them before you agree terms.
Risk passes from seller to buyer when the goods are delivered to the first carrier, not when they arrive at the named destination. This is CPT’s most counterintuitive feature, and it is the source of most CPT disputes.
The seller is still paying the freight bill, but from the moment the first carrier has the goods, the buyer carries the risk of loss or damage. The named destination in the contract only determines who pays for the freight leg, it has nothing to do with when risk moves.
What does “risk” mean in plain English? If the goods are destroyed, lost, or damaged after the risk transfer point, it is the buyer’s financial problem. The seller has no liability under the CPT contract. The buyer would need to claim on their own cargo insurance policy, if they arranged one.
A concrete example: A seller in Shenzhen, China ships electronics on CPT terms to a UK buyer with the named place being “CPT Sheffield warehouse.” A Chinese haulier collects the goods from the Shenzhen factory. At that moment, risk passes to the UK buyer. While the goods are waiting at Nansha port for loading onto a vessel, a typhoon damages the container. The loss falls on the UK buyer, even though the Chinese seller is still paying for the ocean freight. The seller’s freight obligation continues, but their risk exposure ended at factory collection.
Why does this split exist? Under CPT, the seller hands goods to a carrier they selected and booked. The goods may pass through several carriers before reaching the named destination. The International Chamber of Commerce (ICC), which publishes the Incoterms rules, decided the risk transfer should be clean and early, at the first handover, rather than ambiguous somewhere mid-transit.
The named destination matters for cost, not for risk. Whether the contract says “CPT Southampton” or “CPT buyer’s warehouse in Leeds”, risk still passes at the first carrier in the origin country. The named place determines where the seller’s freight-paying obligation ends.
CPT places no insurance obligation on the seller whatsoever. The seller’s only transport obligation is to pay the freight. Insurance is entirely outside the seller’s responsibilities under CPT.
This means the buyer is bearing risk from the first carrier in the origin country with no guaranteed insurance cover unless they arrange it themselves.
What should the buyer arrange?
A marine cargo insurance policy (or air cargo equivalent) covering the transit from the origin handover point to the final destination. This is typically arranged through:
What level of cover? Ask for Institute Cargo Clauses A (commonly called “all risks” cover) where possible. Clauses A covers loss or damage from any external cause except those specifically excluded by the policy. Cheaper alternatives. Clauses B or Clauses C, cover only named perils such as fire, sinking, and collision. They may not pay out on, for example, water ingress during port handling or theft from a container yard.
A practical warning: The seller may hold their own cargo insurance to protect against liability disputes. But that policy protects the seller’s interests, not yours. You need your own policy. “The seller has insurance” is not the same as “I am insured.”
The £135 de minimis threshold: For low-value consignments under £135, import VAT is handled at the point of sale rather than at the UK border. This is a separate issue from cargo insurance, you should still consider arranging cover for small consignments if a loss would cause you a commercial problem, particularly for fragile or high-margin goods.
Control over freight costs and routing. The seller negotiates and pays for freight, which means they choose the carrier, the route, and the timing. For sellers who ship regularly and have negotiated volume rates, this is commercially advantageous. They can recover the freight cost in the quoted price and still make a margin.
Risk passes early. Although the seller pays freight to the destination, risk leaves the seller’s books the moment the first carrier takes the goods. If something goes wrong in transit, the seller has no liability. This is a clean legal position that experienced exporters value.
No insurance obligation. Unlike CIP, the seller under CPT has no requirement to arrange or pay for cargo insurance. This reduces cost and removes administrative burden. The seller does not need to arrange cover, keep proof of insurance, or handle claims on the buyer’s behalf.
Works for any transport mode. CPT applies to road, rail, air, and sea freight. A seller shipping from Germany to the UK by road, or from Hong Kong by air, can use CPT for all of them. This flexibility makes CPT operationally useful for exporters with diverse shipment profiles.
Clean competitive pricing. Quoting “CPT [destination]” allows the seller to present a single inclusive freight price, which is commercially attractive in competitive tendering. The buyer sees one figure covering goods and delivery, without the seller needing to include insurance in that calculation.
Freight is included in the price. The buyer receives a price that covers the main freight cost. There are no surprises on the freight invoice, that is the seller’s responsibility. For buyers who struggle to benchmark freight costs themselves, having the seller include it is a genuine convenience.
The buyer retains control of insurance. Under CPT, the buyer arranges their own insurance. This sounds like a disadvantage but is actually a benefit for buyers who want to control the quality and level of cover. They can choose Clauses A coverage with a trusted insurer, rather than relying on whatever minimum the seller might choose.
Import clearance stays with the buyer. The buyer handles customs clearance in their own country, which means they control the process, the timing, and the choice of customs broker. For experienced importers with established procedures and a preferred broker, this is preferable to having a foreign seller manage UK customs on their behalf.
All-mode flexibility. Buyers importing by air, road, rail, or sea can all use CPT. There is no need to switch Incoterms between shipment types: one Incoterm covers your entire import programme.
Potentially lower landed cost than CIP. Because the seller has no insurance obligation, CPT quotes may be slightly lower than equivalent CIP prices. Buyers who already hold a company cargo policy can effectively bring their own insurance to a CPT arrangement rather than paying for the seller’s cover within a CIP price.
Freight cost exposure. The seller commits upfront to paying freight to the named destination. If fuel costs spike, freight rates change between quote and shipment, or the seller misjudges routing costs, that difference comes out of their margin. In volatile freight markets, tight CPT pricing carries real financial risk.
Disputes over delivery completion. If the seller pays freight to “CPT buyer’s warehouse in Leeds” but the carrier delivers late, to the wrong address, or in the wrong condition, the seller may face commercial pressure even though legal risk has passed. The seller’s legal position is clean but the commercial relationship gets complicated quickly.
Buyer confusion over the risk split. Some buyers genuinely do not understand that the seller paying freight does not mean the seller bears the risk of loss. Sellers regularly find themselves in disputes with buyers who assumed their damaged goods would be covered by the seller, and blame the seller when it turns out they are not. Managing this misunderstanding before it becomes a claim is an ongoing commercial cost.
Responsibility to choose a suitable first carrier. The seller must deliver goods to a carrier in a manner appropriate to the goods and the buyer’s needs. If the buyer needs temperature-controlled transport or specific handling and the seller chooses an inadequate carrier, there may be a legal argument that the seller breached their CPT obligations, even if risk technically transferred at handover.
Bearing risk without controlling transport. The buyer bears risk from the first carrier but has no say in which carrier the seller uses, when they collect, how goods are handled, or what route they take. If the seller’s chosen carrier is unreliable, the buyer’s goods are at risk with no direct contractual relationship with the carrier to pursue.
Insurance is easy to overlook. Because the seller is paying freight and the price looks inclusive, buyers sometimes assume they are covered against loss. They are not. Arriving at Felixstowe or Heathrow to find a damaged shipment with no cargo insurance in place is an expensive and avoidable lesson.
Import clearance and costs. The buyer must handle UK customs clearance, pay import duty, pay import VAT, and file declarations with HMRC via the Customs Declaration Service. Buyers who are new to importing, or who have previously traded on DDP terms where the seller handled everything, can be caught off guard by both the cost and the process.
EORI number requirement. Every UK business importing goods commercially must hold an EORI number. Without one, goods cannot be cleared through UK customs. Buyers new to importing under CPT sometimes discover this requirement only when their first shipment is sitting at the port. Register with HMRC in advance.
Named place ambiguity causing cost disputes. If the CPT contract says “CPT United Kingdom” rather than “CPT Felixstowe Container Terminal, UK”, there is genuine ambiguity about where the seller’s freight obligation ends. The seller may argue their obligation stops at a UK port; the buyer may assume delivery extends to their warehouse. Vague named places create real invoice disputes that are preventable with specific contract language.
When the buyer has established import infrastructure. If your business already has a customs broker, an EORI number, and a working relationship with a UK freight agent, CPT is an efficient choice. You control the import side; the seller controls the export and freight side.
When the buyer holds a company cargo insurance policy. Businesses that import regularly often hold an open cargo policy covering all inbound shipments. CPT is ideal in this situation. You bring your own insurance, which is likely Clauses A quality and better value than per-shipment cover, and the seller handles the freight booking.
For road freight from Europe to the UK. CPT is particularly common for road freight from EU suppliers to UK buyers post-Brexit. The seller pays for the truck to cross the Channel and deliver to a UK destination; the buyer handles UK customs clearance at Dover or via a bonded freight station. This is a clean, practical division of responsibility.
When the seller has strong freight relationships. If your supplier regularly ships to the UK and has negotiated competitive freight rates, CPT lets them use that commercial advantage for your benefit. You get a lower effective cost without having to manage the freight booking yourself.
If you have no cargo insurance and are buying high-value goods. Risk transfers at the first carrier in the origin country. If goods worth £50,000 are damaged at Shanghai port while waiting for loading, after the haulier collected them, that is your loss under CPT. Without a cargo insurance policy in place before collection, you have no recovery.
If you have no EORI number. You cannot import goods into the UK without an EORI number registered with HMRC. If you are a first-time importer, register before your first shipment is booked. CPT is not appropriate until that registration is confirmed.
If you want the seller to handle UK customs. CPT leaves all UK customs clearance with the buyer. If you are not equipped to handle this, consider DAP (which still leaves customs with you but gives you more time), or DDP where the seller handles everything including import duties.
If the contract named place is vague. If you cannot agree on a specific, named delivery point with the seller, CPT creates cost ambiguity. A vague contract is worse than choosing a different Incoterm. Fix the named place or choose an Incoterm that avoids the ambiguity.
Mistake 1: Assuming insurance is included.
It is not. The seller has no insurance obligation under CPT. Buyers who confuse CPT with CIP, which requires the seller to arrange comprehensive Clauses A insurance, are left unprotected when damage occurs. Fix: arrange your own cargo insurance before the goods are collected by the first carrier.
Mistake 2: Assuming risk transfers at the destination.
Risk transfers at the first carrier in the origin country, not at the named destination. The named place only determines who pays the freight bill. Fix: read the risk section of this article before signing any CPT contract, and make sure your cargo insurance is in place from the collection date.
Mistake 3: Using a vague named place.
Writing “CPT United Kingdom” instead of “CPT Felixstowe Container Terminal, UK” leaves the freight cost boundary undefined. The seller may argue their obligation ends at a UK port; you may believe it extends to your warehouse. This is a genuine and common invoice dispute. Fix: always name a specific, agreed delivery point in the contract.
Mistake 4: Confusing CPT and CFR for sea-only routes.
Some sellers use CFR (Cost and Freight) and CPT interchangeably. They are not the same. CFR is restricted to sea and inland waterway transport. CPT covers all modes. For road freight from Poland or air freight from India, CFR does not apply. CPT is correct. Fix: confirm the transport mode before agreeing Incoterms.
Mistake 5: Forgetting to register for an EORI number.
A buyer receiving goods on CPT terms is responsible for UK customs clearance. Without an EORI number, HMRC’s CDS system cannot process the import entry. Goods can be held at the port and demurrage charges, container storage fees: mount quickly. Fix: register for an EORI number via HMRC’s website before the first shipment departs.
Mistake 6: Not specifying insurance arrangements in the contract.
If the buyer wants the seller to arrange insurance on their behalf, even with the buyer paying the premium, this must be written into the sales contract. Under CPT it is not automatic. Fix: if you want the seller to handle insurance, switch to CIP or write an explicit insurance clause into your agreement.
CPT and CIP, Carriage and Insurance Paid To, are almost identical Incoterms. The single difference is insurance.
| Key Difference | CPT | CIP |
|---|---|---|
| Who pays freight | Seller | Seller |
| Risk transfer point | First carrier at origin | First carrier at origin |
| Insurance obligation on seller | None | Yes — minimum Clauses A (all risks) since 2020 |
| Who handles import clearance | Buyer | Buyer |
| Mode of transport | All modes | All modes |
| Best suited to | Buyers with their own cargo policy | Buyers who want seller-arranged cover |
The practical distinction. Under CIP (which you can read about in our CIP Incoterm guide), the seller must buy comprehensive cargo insurance. Institute Cargo Clauses A as a minimum since Incoterms 2020, covering the buyer’s risk during transit. This is a substantial guarantee. Under CPT, the buyer gets no insurance from the seller and must arrange cover independently.
Choose CPT if you already hold a company cargo insurance policy and want to control the quality and terms of your cover. CPT prices may be slightly lower because the seller has no insurance cost to pass on.
Choose CIP if you do not hold cargo insurance, are shipping high-value or fragile goods, or simply want the seller to handle the insurance leg. CIP gives you Clauses A cover as a minimum, the most comprehensive standard available under Incoterms.
Cost and Freight (CFR) is often confused with CPT. The logic is similar, the seller pays freight, the buyer bears risk, but the mode of transport rule is completely different.
| Key Difference | CPT | CFR |
|---|---|---|
| Mode of transport | All modes (road, rail, air, sea) | Sea and inland waterway ONLY |
| Risk transfer point | First carrier at origin | On board vessel at port of shipment |
| Who pays freight | Seller | Seller |
| Who arranges insurance | Buyer (no obligation on seller) | Buyer (no obligation on seller) |
| Who handles import clearance | Buyer | Buyer |
| Container (FCL) shipments | ✅ Appropriate | ⚠️ Technically problematic |
The key difference. CFR only applies to sea and inland waterway freight. If a seller quotes you CFR terms for a road shipment from Germany or an air shipment from Hong Kong, they are using the wrong Incoterm. The contract would have no legal framework for road or air transport under CFR.
The container problem with CFR. CFR transfers risk when goods are “on board” the vessel, a concept that is ambiguous when goods are sealed inside a container that was loaded by a port terminal, not by the seller. CPT transfers risk at the first carrier, which is clean and unambiguous in a container context. For FCL container shipments, CPT is technically more appropriate.
Choose CPT if your goods move by road, rail, or air, or if you want a single Incoterm that works across all your transport modes. CPT is the all-mode equivalent of CFR.
Choose CFR if the shipment is ocean freight only, and both parties are comfortable using sea-specific Incoterms. But be aware that our CIP Incoterm guide explains why CIP is often the better choice for containerised ocean cargo, since it adds comprehensive insurance cover that CFR lacks.
CPT applies to all modes of transport: road, rail, air, sea, and multimodal combinations of two or more of these.
This is a major practical advantage over CFR and CIF, which are restricted to sea and inland waterway transport only. If your trade involves any mode other than ocean freight, CFR and CIF simply do not apply.
Practical examples of where CPT is appropriate:
Container (FCL) shipments. CPT is appropriate for containerised ocean freight. Unlike CFR, which transfers risk when goods are “on board the vessel”, a phrase that is poorly defined when a port terminal is loading sealed containers by crane. CPT transfers risk at the first carrier. This is the inland haulier or depot at origin, and it is entirely unambiguous. For this reason, the ICC guidance supports using CPT (or CIP) rather than CFR (or CIF) for container shipments.
Named place and transport mode. The named place in your CPT contract should match the delivery point for the mode you are using. For sea freight arriving in the UK, “CPT Felixstowe Container Terminal” is clear. For air freight, “CPT London Heathrow Cargo Terminal” works. For road freight, “CPT [buyer’s warehouse address including postcode]” is the most specific and is the best practice recommendation.
CPT itself was not majorly changed in the Incoterms 2020 revision. The core obligations, seller pays freight to the named destination, risk passes at the first carrier, buyer handles import clearance, remained the same as they were in Incoterms 2010.
The 2020 revision did clarify across all Incoterms that the transport documents required by the seller should reflect modern commercial practice. For CPT, this means the seller must provide whatever document the buyer reasonably needs, which may include electronic freight receipts or digital bills of lading rather than exclusively paper documents.
What changed nearby? The most major 2020 change in the C-group Incoterms was to CIP, CPT’s sister rule. CIP’s minimum insurance standard was upgraded from Institute Cargo Clauses C (narrow named-perils cover) to Institute Cargo Clauses A (comprehensive all-risks cover). This change widened the practical gap between CPT, which carries no insurance obligation, and CIP, which now requires genuinely comprehensive cover.
If you are a buyer deciding between CPT and CIP, the 2020 insurance upgrade makes CIP majorly more protective than it was before. That is worth factoring into your Incoterm choice for high-value or vulnerable goods.
If you are reviewing an older contract that references “CPT Incoterms 2010”, the obligations are functionally the same as CPT 2020. It is good practice to update contract language to reference the current 2020 rules to avoid any ambiguity when referring to older guidance.
For UK importers buying on CPT terms:
When goods arrive in the UK on CPT terms, customs clearance is entirely your responsibility. Here is what you need in place before the first shipment lands:
An EORI number. Every UK business importing goods commercially must hold an Economic Operators Registration and Identification (EORI) number. You register for one through HMRC. Without it, goods cannot be cleared through UK customs, and your container may be held at Felixstowe or another port while charges accumulate.
A UK customs broker. Unless you have in-house customs expertise, you will need a licensed customs agent to submit your import declarations via the Customs Declaration Service (CDS): the system HMRC uses since the replacement of the older CHIEF platform. Your customs broker files the import entry, calculates the duty and VAT due, and arranges payment on your behalf.
Import duty. The rate depends on your commodity code, found using the UK Global Tariff tool on gov.uk. Post-Brexit, UK duty rates are set independently of EU rates, they are not automatically the same.
Import VAT. Typically 20% of the customs value, which is calculated on the goods value plus freight plus any insurance. VAT-registered businesses can reclaim this on their next return.
HMRC uses the transaction value of goods as the basis for customs valuation. Under CPT, freight is included in the seller’s price, so HMRC’s customs value will reflect the freight-inclusive figure. This affects the duty and VAT calculation. You can read current HMRC guidance on how Incoterms affect customs valuation at gov.uk/guidance/customs-valuation.
Post-Brexit context. Before January 2021, UK importers buying from EU suppliers on CPT terms had no customs requirements: goods moved freely within the single market. That changed with Brexit. Every consignment from the EU now requires a full UK customs declaration. If your supplier in France, Germany, or Italy quotes CPT terms, you are now handling UK customs clearance yourself. Make sure your customs broker is briefed before the first shipment ships.
The £135 de minimis threshold. For goods with a customs value below £135, import VAT is collected at the point of sale rather than at the UK border. For most commercial CPT shipments, the goods value will exceed £135 and standard customs procedures will apply. But if you are testing a new supplier with small sample orders, be aware of this threshold, it affects how VAT is paid and by whom.
For UK exporters selling on CPT terms:
The seller handles all UK export customs clearance and pays for freight to the named destination abroad. As a UK exporter, you need your own EORI number for UK export declarations. The export sale is zero-rated for UK VAT, you do not charge VAT on the export. The buyer handles import clearance and pays any import taxes in their own country.
The scenario. A UK retailer based in Birmingham orders 2,000 units of branded kitchenware from a manufacturer in Guangzhou, China. Agreed terms: CPT Birmingham warehouse.
How the shipment unfolds:
The Guangzhou manufacturer packs and prepares the goods. They arrange export clearance in China and book a freight forwarder.
A Chinese haulier arrives at the factory and collects the goods. At this moment, risk passes to the UK buyer. The seller is still paying the ocean freight, but the buyer now bears the risk of loss or damage.
The goods arrive at Nansha port and are loaded onto a container vessel bound for the UK. The seller has paid the ocean freight under the booking they arranged.
The container arrives at Felixstowe. The UK buyer’s customs broker submits an import entry via CDS to HMRC. Suppose the goods have a customs value of £32,000 (goods value plus freight): import duty at 3.7% costs around £1,184; import VAT at 20% on the dutiable value costs around £6,637. The buyer pays both.
The seller’s freight arrangement includes inland haulage from Felixstowe to Birmingham. A UK haulier delivers to the buyer’s warehouse. The seller’s CPT obligation is fulfilled.
What if something went wrong mid-transit?
If the container is damaged at Nansha port during loading, after the haulier collected the goods from the factory, the buyer bears the loss. The seller has no liability under CPT. If the UK buyer arranged cargo insurance before collection, they can file a claim. If they did not, the loss is entirely unrecovered.
Full cost summary:
| Cost Item | Who Pays |
|---|---|
| Packing and export preparation | Seller |
| China export customs clearance | Seller |
| Ocean freight Guangzhou to Felixstowe | Seller |
| Inland haulage Felixstowe to Birmingham | Seller (included in CPT) |
| Cargo insurance during transit | Buyer (if arranged) |
| UK customs broker fee (approx. £250) | Buyer |
| Import duty at 3.7% on £32,000 | Buyer — approx. £1,184 |
| Import VAT at 20% | Buyer — approx. £6,637 (reclaimable if VAT registered) |
What does CPT mean in shipping?
CPT stands for Carriage Paid To. It is one of the eleven Incoterms 2020 rules published by the International Chamber of Commerce (ICC). Under CPT, the seller pays for freight to a named destination, but risk transfers from seller to buyer when the goods are handed to the first carrier at the origin. It applies to all transport modes, road, rail, air, and sea.
What is the difference between CPT and CIP?
CPT and CIP (Carriage and Insurance Paid To) are identical except for insurance. Under CIP, the seller must arrange and pay for comprehensive cargo insurance covering the buyer’s risk during transit. Institute Cargo Clauses A as a minimum since Incoterms 2020. Under CPT, the seller has no insurance obligation. The buyer must arrange their own cargo cover. Both Incoterms transfer risk at the first carrier and apply to all transport modes.
Who bears the risk under CPT?
The buyer bears the risk from the moment the goods are handed to the first carrier at the origin. Even though the seller pays the freight all the way to the named destination, the seller has no risk exposure once the carrier has collected the goods. If goods are damaged or lost in transit, it is the buyer’s financial loss, recoverable only if the buyer arranged cargo insurance.
What is the difference between CPT and CFR?
Both CPT and CFR involve the seller paying freight with risk transferring early. The critical difference is transport mode. CFR (Cost and Freight) is restricted to sea and inland waterway transport only. CPT covers all modes, road, rail, air, and sea. For road freight from Europe or air freight from Asia, CPT is the correct Incoterm; CFR does not apply. For containerised ocean freight, CPT is also technically cleaner because its risk transfer point is unambiguous.
When should I avoid CPT?
Avoid CPT if you have no cargo insurance in place before the shipment begins. Risk transfers at the first carrier in the origin country, early in the journey, and if goods are damaged in transit, you have no claim against the seller and no insurance to recover from unless you arranged a policy in advance. Also avoid CPT if you do not yet have a UK EORI number, as you cannot handle UK customs clearance without one.
Is CPT appropriate for container shipments?
Yes. CPT is appropriate for Full Container Load (FCL) and Less than Container Load (LCL) ocean freight. It is technically cleaner than CFR for containerised cargo because CPT’s risk transfer point, the first carrier, is clearly defined, whereas CFR’s “on board vessel” trigger is ambiguous once goods are sealed in a container handled by a port terminal.
Does CPT include import duties?
No. Under CPT, the buyer handles and pays for all import clearance, import duties, and import VAT at the destination. In the UK, this means filing a customs declaration with HMRC via the Customs Declaration Service and paying applicable duties before goods are released from the port.
What does “named place” mean in CPT?
The named place in a CPT contract is the destination to which the seller pays the freight bill. It can be any location: a port, an airport, a warehouse, or a specific street address. The seller’s freight obligation ends at the named place. The more specific the named place, the clearer the boundary, “CPT Felixstowe Container Terminal, UK” is far clearer than “CPT UK” and prevents disputes about who pays for inland haulage beyond the port.
For official HMRC guidance on how Incoterms affect UK customs valuation, visit gov.uk/guidance/customs-valuation.
This article is part of a learning path — return to explore more topics.
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