What is Carriage Paid To (CPT)
Carriage Paid To (CPT) is an international trade term denoting that the seller delivers the goods at their own expense to a carrier or another person nominated by the seller.
BREAKING DOWN Carriage Paid To (CPT)
Carriage Paid To (CPT) is one of the 11 current Incoterms (International Commercial Terms), a set of standardized international trade terms that are published by the International Chamber of Commerce.
In a CPT transaction 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. 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.
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.
CPT in Practice
The responsibility for freight costs also includes any export fees or taxes required by the country of origin. However, the risk is transferred from the seller to the buyer as soon as the goods have been delivered to the first carrier, even if multiple means of transportation (land, then air, for example) are employed. So if a truck carrying a shipment to the airport encounters an accident in which the goods are damaged, the seller is not responsible for damages if the buyer has not insured the products because the goods had already been transferred to the first carrier. This can put the buyer at some risk in that the seller has an incentive to find the cheapest means of transportation without any special concern for the safety of the product while in transit. To offset this risk the buyer may consider a Carriage and Insurance Paid To (CIP) agreement, by which the seller also insures the products during transit.
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.