CPT (Carriage Paid To) Explained
The seller pays the freight bill to a named destination, but risk transfers to the buyer much earlier — at the first carrier, not on arrival.
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Pays carriage to named destination
First carrier
Where risk actually transfers
No insurance requirement
Unlike CIP
Any mode
One of 7 Incoterms usable for air freight
Two different things happen at two different points
Under CPT (Carriage Paid To), the seller contracts and pays for carriage to a named destination — but risk transfers to the buyer earlier, at handover to the first carrier, not at arrival. Cost and risk split at different points in a CPT shipment, which is the single detail that trips up buyers who assume paid-to-destination freight means the seller is on the hook until the goods actually arrive.
CPT does not require the seller to insure the cargo at all. If the buyer wants coverage during the transit they're bearing risk for — which, under CPT, is most of the journey — they need to arrange their own cargo insurance, or negotiate CIP instead, which builds in a seller insurance obligation.
When to use it: CPT suits a seller willing to arrange and pay for the freight booking (useful if the seller has better freight rates or an existing carrier relationship) while the buyer accepts transit risk from an early point and handles their own insurance. It's a reasonable middle ground between FCA (buyer arranges and pays for main carriage) and DAP (seller bears risk all the way to destination).
Paid-For Isn't the Same as Risk-Covered
Under CPT, the seller pays the freight bill — but the buyer carries the risk for most of the trip
Risk transfers at handover to the first carrier, not on arrival at the named destination, even though the seller is paying for carriage the whole way there. If the buyer wants insurance coverage for that transit, they need to arrange it themselves — CPT doesn't include it.
CIP adds the insurance obligation CPT leaves out →Source: ICC Incoterms 2020 rules — CPT obligations (A2/A4/A5 vs B2/B5), risk transfer at first carrier distinct from cost obligation to named destination.
Worked example
CPT Toronto, seller pays freight, buyer carries the risk from KUL
The same corridor — Kuala Lumpur to Toronto on Emirates SkyCargo's KUL–DXB–YYZ routing — priced under CPT Toronto.
The seller books and pays for the AWB and the full KUL–DXB–YYZ carriage with Emirates SkyCargo, all the way to Toronto. But risk transfers to the buyer the moment the goods are handed to Emirates (or UAL, acting as the seller's nominated carrier) at KUL — not when the aircraft lands at Toronto Pearson two business days later. If the shipment is damaged in transit anywhere along that routing, that's the buyer's loss to absorb, even though the seller is the one who paid for the flight it was damaged on.
Because CPT includes no insurance obligation on the seller, the buyer in this scenario is bearing an uninsured transit risk unless they've separately arranged their own cargo cover — worth flagging explicitly to a buyer who assumes "seller pays for the freight" also means "seller is covering the risk."
What UAL handles for you
On a CPT booking, we confirm with both parties exactly where risk transfers relative to who's paying for carriage, and flag to the buyer's side when no cargo insurance is in place for a transit they're already bearing risk on.
Frequently asked questions
Because cost and risk are two separate obligations under Incoterms, and CPT deliberately splits them: the seller's payment obligation runs to the named destination, but the risk-transfer point is earlier, at handover to the first carrier.
Related
FCA (Free Carrier)
Read more →
CIP (Carriage and Insurance Paid To)
Read more →
Incoterms for Air Freight
Read more →
Incoterms 2020 rules, CPT obligations A1–A10/B1–B10: International Chamber of Commerce (ICC), Incoterms 2020. Last verified: August 2026.
Air Freight Fundamentals
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