CPT
Also known as: Carriage Paid To
CPT, Carriage Paid To, means the seller pays carriage to the named destination, but the risk has already passed earlier: on handover to the first carrier. Under CPT, cost and risk therefore pass at different moments.
Who arranges what under CPT?
The seller concludes the contract of carriage to the named destination and pays the freight. They also file the export declaration. The buyer handles the import formalities and pays the duties and VAT. The seller chooses the carrier and the route, which gives them control of the booking, but not the risk in transit. Insurance is not mandatory under CPT. Anyone who wants that uses CIP, where the same split applies with an insurance obligation on top. Leave CPT uninsured and the buyer bears the transport risk without having chosen the carrier. That is the gap disputes arise over. CPT works for any mode: road, rail, air, sea and multimodal. For sea freight in containers CPT is usable; the sea-specific variant CFR puts the risk point at on-board and fits less well. Anyone booking a container from door to depot has enough with CPT, provided both the handover point and the destination stand in the contract.
Where does the risk pass under CPT?
On handover to the first carrier, so usually well before the destination named in the Incoterm. That is the point where CPT is most often misunderstood. The buyer reads Carriage Paid To Rotterdam and thinks the seller bears risk to Rotterdam. That is not so: the seller pays to Rotterdam and bears risk to the first truck or the first depot. If the cargo is lost on the way, that is the buyer's risk, even though the seller pays the freight to the end. Name both the place of handover and the destination in the contract. CPT Rotterdam (handover depot Eindhoven) shows both points; CPT Rotterdam alone does not. That gap between cost and risk is not a flaw in the term, it is the core of the C rules. CPT, CIP, CFR and CIF all work that way. Anyone who wants the seller to bear the risk to the destination as well needs a D rule: DAP, DPU or DDP.
When do you use CPT?
CPT fits when the seller has better freight rates than the buyer and the buyer wants or has to bear the transport risk. That occurs with regular suppliers who have their own carriage contract, or with exporters who want to keep the loading plan themselves. The buyer gets a price including freight without having to book. For sea freight in containers CPT is usable; the sea-specific variant CFR puts the risk point at on-board and fits less well. CPT lets the risk pass at the first carrier, which for a container handed in at an inland terminal is the actual moment. CPT is less suitable if the buyer has no insurance and does not intend to take one out. They then stand exposed to damage on a voyage they did not book, with a carrier they did not choose. CIP forces the seller into a policy. DAP shifts the risk all the way to the destination.
What does CPT mean for the customs value?
The CPT price contains the freight to the named destination. If that destination lies in the EU, carriage to the external border is already in it and nothing has to be added. The declarant may deduct the cost of carriage inside the EU, but only if that appears separately from the invoice or the contract of carriage. A single amount without a build-up yields no deduction at an audit. Insurance is not included under CPT; if the buyer has taken out their own cover to the EU border, that premium does count in the customs value. Forget that premium and the declared value is too low. On the import declaration the named place is the destination, not the handover point. That differs from how the risk runs, and it is a standing source of confusion. The declaration follows the contract, not the risk point. CPT Amsterdam on a shipment from Shanghai therefore means a place in the EU, with a possible deduction of the inland leg.
How do you avoid misunderstandings under CPT?
The most common misunderstanding is that the seller bears risk to the destination named in the Incoterm. That is not so: they bear risk to the first carrier and only pay through to the end. Put both places in the contract, and say that the buyer bears the transport risk from handover. Also agree who insures the cargo, because under CPT nobody is obliged to and damage halfway through the voyage falls on the buyer. Anyone who wants to close that gap without changing the split chooses CIP instead of CPT. Since Incoterms 2020 the buyer under CIP gets the wide cover of Institute Cargo Clauses A as standard. Finally, record which documents the seller supplies and when. The buyer must be able to import on arrival, and for that they need the invoice, packing list and transport document before the shipment sits at the terminal. A CPT shipment that arrives without documents produces demurrage for the buyer while the seller finished their part long ago.
How does CPT appear on the import declaration?
On the import declaration you enter CPT as the delivery term, with the named destination. That destination usually lies in the country of import. Customs reads from that that the invoice price already contains the freight to that place, and that only the part after entry into the EU may be deducted if it can be shown separately. Ask the seller for a split of goods value and freight, and of freight to the EU border versus freight after that. Without that split the whole CPT amount stays in the customs value, including the stretch from Rotterdam to the warehouse in Venlo. On regular flows that is an amount you leave on the table with every shipment. Check that the destination on the invoice is the same as on the declaration. CPT warehouse buyer and CPT port of Rotterdam are different places, with a different inland leg. A mismatch produces at an audit the question of which amount is in it, and without a build-up that question cannot be answered.
Which documents and pitfalls belong with CPT?
The seller supplies the commercial invoice with CPT and the destination, the packing list, the export declaration and the transport document to the named place. An insurance certificate does not belong with it, because insuring is not mandatory. The buyer takes out a policy themselves if they want cover, and they file the import declaration on arrival. The first pitfall is the gap between cost and risk. A container that goes overboard has been paid for by the seller and is lost for the buyer. Without insurance that is a total loss. The second pitfall is naming only the destination, so the handover point stays unclear and a dispute over damage cannot be settled. The third pitfall is an unspecified invoice. Customs only allows the deduction of inland carriage if the amount appears separately. A CPT price in one line on the invoice is tidy for the seller and expensive for the importer, because they pay duty on carriage that took place inside the EU.