CPT – what is it?
CPT, standing for “Carriage Paid To”, is a term used in international trade and represents one of the Incoterms (International Commercial Terms). When a sales contract includes the CPT term, it means that the seller is responsible for arranging and paying for the carriage of the goods to a specified destination. However, the risk of damage to or loss of the goods, as well as any additional costs due to events occurring after the goods have been handed over to the carrier, is transferred from the seller to the buyer once the goods have been entrusted to the first carrier. This term can be used regardless of the mode of transport, including multimodal transport.
Most common questions
1. How is CPT different from other Incoterms?
Each Incoterm defines specific responsibilities and risks between buyers and sellers in international trade. CPT is unique in that the seller bears the carriage costs but transfers risk to the buyer once the goods are handed to the first carrier. This is different from terms like CIF or CFR where the seller also pays for additional costs like insurance.
2. When is it ideal to use CPT in trade agreements?
CPT is suitable when the seller has better access to or preferential rates for shipping or when the buyer prefers the seller to handle transport arrangements up to a certain point, but is comfortable assuming the risk once the goods are with the carrier.
3. Who is responsible for insurance under CPT?
Under CPT, the seller is not obligated to provide insurance. The responsibility of securing insurance, if desired, falls on the buyer, especially since the risk transfers to the buyer once the goods are with the carrier.
4. Can CPT be used for any mode of transport?
Yes, CPT is versatile and can be applied to any mode of transport, whether it’s sea freight, air freight, road, rail, or a combination (multimodal transport).
5. What happens if goods are damaged after being handed over to the carrier but before reaching the specified destination?
Under CPT terms, once the goods have been handed over to the first carrier, the risk transfers from the seller to the buyer. This means that if any damage or loss occurs after that point, it’s the buyer’s responsibility, and they would typically need to address it with their insurance provider, if insured.
