What Is CPT? Carriage Paid To Meaning, Risk Transfer, and CPT vs CIP & CFR

Under CPT the seller pays carriage to destination, but takes out no insurance, and risk has already passed to the buyer at origin. The key is to avoid the assumption that "the seller paid the freight, so it is safe to destination."

This guide looks at CPT alone. For a full comparison of all 11 rules, see the complete Incoterms 2020 guide.

What Is CPT?

CPT (Carriage Paid To) is the Incoterms rule under which the seller pays carriage to the named destination. It works for any mode of transport (sea, air, road, or multimodal) and belongs to Group C, where the seller pays the main carriage. You write the rule and destination together in the contract, like "CPT Incheon."

CPT is a rule with no insurance obligation. Add a seller insurance obligation to it and it becomes CIP (Carriage and Insurance Paid To).

Who Bears What Under CPT

The seller pays carriage to destination but has no insurance obligation. To cover incidents in transit, the buyer must arrange cargo insurance directly.

Cost Runs to Destination, Risk Transfers at Origin

The core trap of CPT. The cost divide and the risk divide are different points.

• Cost: the seller pays carriage to destination
• Risk: transfers to the buyer at origin, once the goods are handed to the first carrier

So if there is an incident in transit, the risk of damage already sits with the buyer even though the seller paid the freight. Because CPT carries no insurance obligation, a buyer who does not arrange cover is fully exposed in that gap.

CPT vs CIP: Only Insurance Differs

The most confusing comparison. Both work for any mode, both put carriage to destination on the seller, and both transfer risk on handover to the first carrier. The only difference is insurance.

Use CIP when you want the seller to insure too; use CPT when the buyer will insure the cargo directly.

CPT vs CFR: Any Mode or Sea Only

CPT and CFR (Cost and Freight) share the idea that the seller pays only freight, with no insurance. The difference is mode.

• CPT: any mode (incl. air, multimodal); risk transfers on handover to the first carrier
• CFR: sea/inland-waterway only; risk transfers on board at the load port

For containers, air, or multimodal cargo, CPT is accurate, not CFR. CFR is a sea rule built on loading on board.

Import Duty and CPT

Korea assesses import duty on a CIF-based customs value (freight and insurance included). Since CPT already includes carriage, you add insurance to the CPT amount to reach the customs value.

This guide is for general information. Actual contracts depend on the detailed rules and each deal, so confirm against the ICC rules and with a specialist.