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Lesson 3 / 11 · any mode of transport

CPT Carriage Paid To

The seller books and pays the transport to the named destination, but the risk passes much earlier — when the goods are handed to the first carrier. Two different points: one for cost, one for risk.

Reviewed by: pending — expert review by TermVisa's editor (retired VP, international transport) in progress · Last updated

Scenario

Circuit boards flown from Guadalajara to Tokyo (air, airport-to-airport)

CPT Tokyo Narita Airport Incoterms® 2020

Seller
Electronics manufacturer, Guadalajara, Mexico
Buyer
Electronics distributor, Tokyo, Japan
Transport
Air — airport-to-airport, Guadalajara (GDL) → Tokyo Narita (NRT)

The seller, an electronics manufacturer in Guadalajara, Mexico, sells 40 cartons of circuit boards to the buyer, an electronics distributor in Tokyo, Japan, under CPT Tokyo Narita Airport Incoterms® 2020. Transport is by air. The seller's air forwarder collects the cartons at the plant with its truck, takes them to Guadalajara airport (GDL) and flies them to Narita (NRT). The buyer clears them in Japan and collects them at the airport. The contract names no other delivery point.

Illustrative scenario: companies are generic, and real contracts, carriers and countries add their own conditions.

The journey, stage by stage

Top bar: who pays for each stage. Bottom bar: who bears the risk of loss or damage. The red line marks where risk passes.

▶ Seller: Guadalajara, Mexico Buyer: Tokyo, Japan ■ 1 Loading at theseller's premises Seller 2 Export clearance Seller 3 Pre-carriage tothe departureterminal Seller 4 Departureterminal handlingand loading Seller 5 Main carriage(air) Seller 6 Arrival terminal:unloading andhandling Depends 7 Import clearance,duties and taxes Buyer 8 On-carriage tothe named place Buyer SellerBuyerBuyerBuyerBuyerBuyerBuyerBuyer Who pays Who bears the risk ⚠ Risk passes to the buyer here ▶ Seller: Guadalajara, Mexico Pays Risk 1 Loading at theseller's premises Seller 2 Export clearance Seller 3 Pre-carriage to thedeparture terminal Seller 4 Departure terminalhandling and loading Seller 5 Main carriage (air) Seller 6 Arrival terminal:unloading andhandling Depends 7 Import clearance,duties and taxes Buyer 8 On-carriage to thenamed place Buyer SellerBuyerBuyerBuyerBuyerBuyerBuyerBuyer ⚠ Risk passes here ■ Buyer: Tokyo, Japan
  • Seller
  • Buyer
  • Depends on contract / carrier or port practice
  • Point where risk passes

⚠ Risk passes when the cartons are handed to the first carrier — here, loaded on the forwarder's truck at the Guadalajara plant — even though the seller keeps paying all the way to Narita.

  1. Loading at the seller's premises — Seller: Cartons loaded on the forwarder's truck at the plant
  2. Export clearance — Seller: Seller files the export declaration in Mexico
  3. Pre-carriage to the departure terminal — Seller: Truck to the GDL air cargo terminal
  4. Departure terminal handling and loading — Seller: Security screening and airline handling at GDL
  5. Main carriage — Seller: Air freight GDL → NRT
  6. Arrival terminal: unloading and handling — Depends: Arrival handling at Narita: seller's only if included in its carriage contract
  7. Import clearance, duties and taxes — Buyer: Japanese import clearance, duties and import taxes
  8. On-carriage to the named place — Buyer: Pick-up from the airport

Who does what in this scenario

PartyWhat they arrange / doWho pays (them / what they pay)Risk they carryKey documents
Seller / exporter Packs, books the air forwarder for the whole trip to Narita, gets the export declared and notifies the buyer of dispatch. Packing, export formalities, pick-up, origin handling and air freight to Narita. Only until the cartons are handed to the first carrier at the plant. Commercial invoice, packing list, proof of export, air waybill (copy to the buyer).
Buyer / importer Insures its risk from the plant (recommended), clears the goods in Japan and collects them. Arrival charges not in the seller's freight, Japanese duties and import taxes, local delivery. From hand-over to the first carrier in Guadalajara — including the flight it did not book. Air waybill (as consignee), import declaration, cargo insurance certificate.
Origin freight forwarder The seller's forwarder collects, books the airline, gets screening done and issues its own house air waybill. Seller. Often acts as contracting carrier, liable within air-convention limits. House air waybill.
Destination freight forwarder Its Tokyo agent notifies arrival and releases the goods to the consignee. Seller for what is in the freight; buyer for local charges. Its own handling. Arrival notice, release.
Air carrier (airline) Flies the cargo GDL → NRT (often via a hub). Contracted by the seller's forwarder; seller pays. Liable per kilogram within the applicable air-convention limits — often far below the value of electronics. Master air waybill.
Cargo insurer No insurance obligation under CPT. The buyer carries the risk from the plant and should insure from there. Buyer for its cover; seller for any contingency cover. Per policy. Buyer's certificate.
Customs broker (export) Files the export declaration in Mexico for the seller. Most countries require one; value thresholds, exceptions and export-control checks vary — ask the broker. Seller. Answers to its client for filing errors; the exporter stays responsible to customs. Export declaration and release (proof of export).
Customs broker (import) Classifies the goods, files the import declaration in Japan for the buyer as importer, pays duties and import taxes on its account and obtains release. Buyer. The buyer remains responsible to customs as importer; the broker answers to it for its own errors. Import declaration, duty and tax receipts, release.
Banks (letters of credit) An air waybill is not a document of title: the airline releases to the named consignee. In documentary-credit deals the waybill is often consigned to the issuing bank so the buyer cannot take the goods before paying. As negotiated. Documentary risk. Documentary credit, air waybill.
Terminals and ports Airline handling agents at GDL and NRT accept, store and release the cargo; storage after the free period is billed at arrival. Origin: seller. Arrival: depends on the freight terms; delays caused by the buyer: buyer. Their own handling. Acceptance and release records.

✗ Common mistakes

  • Buyer assuming that because the seller pays the freight, the seller also carries the risk in transit.
  • Nobody insuring the goods: CPT obliges neither party to buy cover.
  • Naming only a country or city instead of the precise destination (airport, terminal or address).
  • Seller not notifying dispatch, so the buyer cannot insure or plan clearance.

? What to ask before you sign

  • Your freight forwarder (Seller) Which destination charges are included in your price, and which will be billed to the consignee?
  • Your cargo insurer (Buyer) Can my cover start at the seller's plant, from hand-over to the first carrier?
  • The carrier (Both) What is the liability limit per kilogram, compared with the value of this shipment?
  • Your customs broker (Seller) Does any item need an export licence or permit?

Self-check: 3 quick questions

No sign-up, nothing is saved or sent. Pick an answer to see the explanation.

1. In this scenario, where does risk pass to the buyer?
2. Who pays the air freight to Narita?
3. The cartons are crushed in flight. Who bears the loss under CPT, absent other terms?

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