Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms. Incoterms are adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions. They facilitate the conduct of international business by defining the responsibilities of the involved participants.
This is the fourth article in our series investigating the basic meaning of all 11 Incoterms. (Read about the first three Incoterms here: FCA, DAP, and DDP.) The Incoterm we’re discussing today is Carriage Paid To, also known as CPT.
To learn more about which trade term is the best for your export,
check out this chart of responsibilities.
What Does the Carriage Paid To (CPT) Trade Term Mean?
CPT means “the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.”
When Can CPT Be Used?
CPT can be used for any transport mode—air, courier, truck, rail, vessel or multi-modal.
Benefits and Considerations of CPT
- Unlike other terms, CPT divides the responsibilities for transportation and risk for goods between two points.
- If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. (Source)
- Pay attention to “Terminal Handling Charges” (THC) when using this trade term. THC are made by the terminal operator, and they may or may not be included by the carrier in their freight rates. Buyers should enquire whether the CPT price includes THC so as to avoid surprises. (Source)
Learn More about Incoterms and CPT
Looking for more information about Incoterms? Check out the archive of Incoterms-related articles on our International Trade Blog.
To get you started, we’ve chosen several of our most popular articles along with other industry resources:
- The Beginner's Introduction to Incoterms
- An Introduction to Incoterms—Part 2: Why Do Incoterms Matter?
- A Behind the Scenes Look at Incoterms
- Incoterms 2010 Freight and Associated Charges
- From EXW to DDP: Incoterms 2010 Plain and Simple
- Incoterms Lesson: The Danger of Using Ex Works for Your Exports
- Incoterms 2010 and the UCC: A Guide to International and Domestic Terms of Sale
- Incoterms 2010 English Edition
Shipping Solutions export software can help you streamline the process of recording which Incoterms version you’re using and make sure your documentation is correct throughout the transaction. You can try it for free today!