Carriage Paid To (CPT)

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DEFINITION of 'Carriage Paid To (CPT)'

A commercial term denoting that the seller delivers the goods to a carrier or to another person nominated by the seller, at a place mutually agreed upon by the buyer and seller, and that the seller pays the freight charges to transport the goods to the specified destination. “Carriage Paid To” (CPT) means that the risk of damage or loss to the goods being transported is transferred from the seller to the buyer as soon as the goods have been delivered to the carrier. The seller is responsible only for arranging freight to the destination, and not for insuring the goods shipment when it is being transported.

BREAKING DOWN 'Carriage Paid To (CPT)'

The term CPT is typically used in conjunction with a destination. For example, CPT Chicago would mean that the seller will pay freight charges to Chicago.

Carriage or freight charges refer to transportation charges for any accepted mode of transport such as road, rail, sea, inland waterway or air, or a combination thereof. An important point to note is that when multiple transport modes are used in combination – as for example, road and then air – the risk is transferred from the seller to the buyer as soon as the goods have been delivered to the first carrier. So if a truck carrying a shipment to the airport encounters an accident in which the goods are damaged, it is the buyer’s responsibility to ensure that adequate insurance has been purchased beforehand to account for this risk.

The seller may also choose an interim place to deliver the goods, rather than to the buyer’s final destination, provided it has been mutually agreed upon beforehand by the seller and buyer. The seller only pays freight charges for delivery to this interim place. This situation may arise if the buyer can arrange for freight to the eventual destination at a significantly cheaper rate than the seller, or if the goods are in such demand that the seller can dictate terms.

CPT is one of the 11 international commercial terms (Incoterms) specified by the International Chamber of Commerce in the latest revision (Incoterms 2010) of these globally accepted trade terms.

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