CPT Incoterms — Everything You Need to Know About Delivery Terms

Article content: 

1. CPT Delivery Terms.
2. Who Benefits from CPT Shipping.
3. CPT Incoterms 2020: Key Changes in the New Edition.
4. CPT Delivery Terms — Potential Problems and Their Solutions.
5. How to Avoid Risks: Choose the Right Terms.

We continue our series of articles for those who want to learn more about Incoterms — the rules that govern delivery terms in international trade. Today, we will explain in detail what CPT means, who pays for delivery, and when risks transfer from one party to another.

CPT Delivery Terms

What is CPT: the abbreviation stands for Carriage Paid To. This means that the seller (supplier) covers the transportation costs to the final destination point. However, the risks transfer to the buyer when the goods are handed over to the first carrier (there may be several during transit).

A company from Germany sells electronics to Canada. According to the contract, the delivery terms are CPT Toronto. The German supplier pays for the delivery to Toronto, but responsibility is transferred when the cargo is handed over to the carrier in Germany. This means the Canadian client decides on insurance and shares the risks with the carrier.

Delivery under CPT terms includes the following seller obligations:

• Processing and packaging of goods according to the contract.
• Payment for transportation (freight) to the final destination.
• Making the goods available to the first carrier. Sometimes, suppliers offer loading at their warehouse.
• Customs procedures and export documents.
• Providing documents (invoice, bill of lading, CMR).
• Loading onto the transport vehicle.
• Notification of cargo transfer.

The buyer’s obligations include:

• Payment for the goods according to the contract.
• Payment for insurance at their discretion (insurance is not the seller’s responsibility).
• Finding a carrier.
• Handling customs clearance for import and paying duties in the destination country.
• Receiving the goods at the delivery point and unloading.

It’s important to distinguish between CPT and DAP. In the first case, the buyer assumes the risks, pays for insurance and any additional costs that may arise during transportation, such as reloading or demurrage. Under DAP, the supplier is responsible for the goods up to the final delivery point. The buyer receives them at the agreed location without dealing with logistics details.

Who Benefits from CPT Shipping

These terms are advantageous when the supplier wants to control transport costs but avoid risks after dispatch. This option is convenient:

• For exporters who want to simplify logistics and transfer risks at an early stage.
• For international shipments where the buyer is experienced in customs clearance in their own country. They don’t want to pay a seller’s margin for additional services, whether insurance or customs brokers.
• For buyers who want to manage the delivery process themselves, working with reliable carriers and insurers.

However, this model is not beneficial if the buyer is unfamiliar with the nuances; in that case, it’s better to outsource international logistics services to a third party that handles shipping and documentation.

Customs brokerage services

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This will be cheaper than other Incoterms models with more seller responsibility. Logistics companies usually offer favorable rates, but the buyer must find a reliable one.

CPT Incoterms 2020: Key Changes in the New Edition

The CPT Incoterms 2020 terms clarified the following points:

• Moment of risk transfer: It is now explicitly stated that responsibility transfers upon delivery of the goods to the first carrier.
• Clarification on insurance: unlike CIF (Cost, Insurance, and Freight), CPT does not require the supplier to insure the cargo.
• Clarification of documentation obligations — more attention is now given to digital documents, which are equivalent to paper forms.

The 2020 edition complements and clarifies the 2010 and 2000 versions.

CPT Delivery Terms — Potential Problems and Their Solutions

Although the method is convenient, it may create issues for both sellers and buyers. Main difficulties:

• Damage to cargo after handover

The supplier is obliged to ship goods of specified quality and quantity but bears no responsibility afterward. That’s why it's important to inspect products before loading.

Solution: the buyer may hire a third party for independent inspection and cover expert service costs themselves.

• Issues with customs clearance

The buyer is responsible for import customs clearance. The process is regulated by local laws and includes many payments and nuances.

Solution: to ensure proper and fast clearance, customs broker services can be ordered.

• The seller is not required to insure the cargo

If goods are damaged or lost after the risk transfer, the supplier cannot be held liable. 

Solution: the buyer insures the goods independently or negotiates the inclusion of insurance in the agreement.

If you are considering the Carriage Paid To Incoterm, DiFFreight will help you understand all the nuances.

How to Avoid Risks: Choose the Right Terms

DiFFreight experts share recommendations:

• Clearly specify the destination point in the contract to avoid misunderstandings.
• Choose reliable carriers with proven reputations.
• Obtain an insurance policy.
• Study customs aspects at terminals.

If you are not ready to bear the risks, consider alternative options like CIP (Carriage and Insurance Paid To), where insurance is included. Or choose a different Incoterm, such as DAP. Although the rates will be higher, you won’t have to deal with formalities, insurance, and customs clearance.

DiFFreight is an international logistics company with many years of experience. We will help you select the optimal Incoterms conditions for your cargo and organize fast delivery from China, the USA, and Europe. We tailor supply models individually: book a consultation with our experts!