FCA, CPT and CIP at a glance FCA, CPT and CIP are Incoterms® 2020 rules by the International Chamber of Commerce (ICC) for any mode, including container and multimodal transport. Under FCA (Free Carrier), buyer pays for main carriage; risk passes at agreed point. Under CPT (Carriage Paid To), seller pays to named destination, but risk passes on handover to its contracted carrier. CIP (Carriage and Insurance Paid To) follows CPT and adds Institute Cargo Clauses (A) or equivalent cover of at least 110% of contract value.
The central distinction is therefore:
- FCA: the buyer normally controls the main carriage.
- CPT: the seller pays for carriage, but the buyer bears transit risk after delivery to the carrier.
- CIP: the seller pays for carriage and obtains insurance covering the buyer’s transit risk, subject to the policy’s terms and exclusions.
Important: Incoterms® 2020 determine delivery, transfer of risk, selected costs, carriage, insurance and customs responsibilities. They do not by themselves determine transfer of ownership, payment terms, product conformity, sanctions compliance, governing law or dispute resolution. These matters must be addressed separately in the sale contract.
FCA vs CPT vs CIP in Shipping Terms: comparison
Question | FCA | CPT | CIP |
Full name | Free Carrier | Carriage Paid To | Carriage and Insurance Paid To |
Who arranges the main carriage? | Normally the buyer | Seller | Seller |
Who pays for the main carriage? | Normally the buyer | Seller | Seller |
Named place of delivery | Must be stated precisely in the FCA citation | Should be agreed separately from the destination | Should be agreed separately from the destination |
Named place of destination | Not part of the FCA rule | Must be stated in the CPT citation | Must be stated in the CIP citation |
When does risk transfer? | At the precisely agreed FCA delivery point | When the goods are delivered to the seller’s contracted carrier at the agreed delivery point | At the same point as under CPT |
Who arranges cargo insurance? | No party is required to insure under the rule | No party is required to insure; the buyer commonly protects its transit risk | Seller |
Default insurance level | None required | None required | Institute Cargo Clauses (A) or equivalent, normally for at least 110% of the contract value |
Export clearance | Seller | Seller | Seller |
Import clearance | Buyer | Buyer | Buyer |
Unloading at destination | Normally buyer’s responsibility | Depends on whether unloading is included in the seller’s contract of carriage | Depends on whether unloading is included in the seller’s contract of carriage |
Recommended use | The buyer wants control over the carrier and freight arrangements | The seller can arrange carriage, while the buyer arranges its own insurance | The seller provides both carriage and broad cargo insurance |
The ICC emphasizes that the named destination in CPT and CIP is not necessarily the place where delivery and risk transfer occur. The seller pays for transportation to the destination, while the buyer may already bear the risk during that transportation. See the ICC Academy guidance on CPT and CIP and the distinction between the place of delivery and risk transfer.
What is FCA under Incoterms® 2020?
FCA, or Free Carrier, requires the seller to deliver the goods at a named place to the carrier or another person nominated by the buyer. The exact delivery procedure—and therefore the point at which risk transfers—depends on the named place.
The contract should use a precise formulation such as:
FCA Seller’s Warehouse, Loading Bay 4, Hamburg, Germany, Incoterms® 2020
or:
FCA Container Terminal B, Port of Hamburg, Germany, Incoterms® 2020
Using only “FCA Hamburg” may be insufficient because it does not identify the exact warehouse, terminal, gate or other point at which delivery is completed.
FCA delivery at the seller’s premises
When the named place is the seller’s warehouse, factory or other premises, delivery generally occurs after the seller has loaded the goods onto the collecting vehicle arranged by the buyer.
Risk transfers to the buyer when the loading required under FCA has been completed at that agreed point.
FCA delivery at another named place
When delivery is agreed at another location—such as an inland depot, airport cargo terminal or container terminal—the seller transports the goods to that place.
Delivery generally occurs when the goods:
- have reached the named place on the seller’s means of transport;
- are ready for unloading; and
- are placed at the disposal of the carrier or another person nominated by the buyer.
This distinction is why FCA should not be summarized simply as “risk transfers when the goods are handed to the carrier.” The precise named place and the applicable FCA delivery scenario must also be identified.
The ICC’s official guidance explains both FCA delivery scenarios in its comparison of FCA and FOB.
Who pays for transportation under FCA?
The seller bears the costs and risks required to bring the goods to the named FCA delivery point and completes export clearance.
The buyer normally:
- nominates the carrier;
- contracts and pays for the main carriage;
- bears the risk after FCA delivery;
- arranges insurance when required;
- completes import clearance.
The seller may assist with contracting carriage if the parties agree, but this does not change the underlying FCA allocation unless the contract expressly provides otherwise.
When is FCA a good choice?
FCA is often appropriate when:
- the buyer has preferred freight forwarders or carrier contracts;
- the buyer wants to control routing, consolidation and freight rates;
- delivery takes place at a warehouse, inland depot or container terminal;
- containerized cargo is transferred before it is loaded onto the vessel; or
- the shipment combines road, rail, sea or air transport.
For container shipments, FCA is frequently more operationally appropriate than FOB because the seller normally transfers the container at a terminal before the container is loaded onto a specific vessel.
What is CPT under Incoterms® 2020?
CPT, or Carriage Paid To, requires the seller to contract and pay for transportation to a named place of destination.
A CPT citation may look like:
CPT Buyer’s Distribution Centre, Warsaw, Poland, Incoterms® 2020
However, the named place of destination does not automatically identify the place where risk transfers.
Under CPT, two separate geographical points should be considered:
- The place of delivery: where the seller delivers the goods to its contracted carrier and risk transfers to the buyer.
- The named place of destination: the place to which the seller contracts and pays for carriage.
For example, a sale contract may state CPT Warsaw, while the seller delivers the goods to its contracted carrier in Hamburg. Risk can transfer in Hamburg even though the seller continues paying transportation costs to Warsaw.
The parties should therefore identify the delivery point separately and as precisely as possible in the sale contract or related shipping instructions.
Who bears transit risk under CPT?
The buyer bears the risk after the goods have been delivered to the seller’s contracted carrier at the agreed delivery point.
Where several carriers are used, risk normally transfers upon delivery to the first carrier in the contracted transport chain, unless the parties have agreed on a specific delivery point consistent with the rule.
This separation of cost and risk is one of the most important features of CPT:
- the seller pays the freight to the named destination;
- the buyer bears the risk during the main carriage after the delivery point.
The seller paying for transportation does not mean the seller retains the risk until the goods arrive.
Is insurance included under CPT?
No. CPT does not require either party to obtain cargo insurance.
Because the buyer bears transit risk after delivery to the carrier, the buyer will commonly arrange insurance covering the journey from the delivery point to the final destination.
The parties should confirm that the buyer’s policy begins no later than the agreed CPT delivery point. Otherwise, an uninsured gap may arise between risk transfer and the start of insurance coverage.
When is CPT a good choice?
CPT may be suitable when:
- the seller can obtain favorable freight rates;
- the seller is prepared to contract the main carriage;
- the buyer prefers to arrange its own cargo insurance;
- the shipment uses containerized or multimodal transport; or
- the parties understand that risk transfers before arrival at the named destination.
What is CIP under Incoterms® 2020?
CIP, or Carriage and Insurance Paid To, follows the same basic delivery, cost and risk structure as CPT.
The seller:
- delivers the goods to its contracted carrier at the agreed delivery point;
- transfers risk to the buyer at that point;
- contracts and pays for carriage to the named destination; and
- obtains the cargo insurance required by CIP.
A CIP citation may look like:
CIP Charles de Gaulle Airport Cargo Terminal 2, Paris, France, Incoterms® 2020
As with CPT, the parties should separately identify the earlier place of delivery to the carrier whenever possible.
What insurance does CIP require?
Under Incoterms® 2020, the seller must normally obtain:
- insurance complying with Institute Cargo Clauses (A) or equivalent coverage;
- coverage for at least 110% of the contract value;
- insurance extending to the agreed named destination; and
- a policy or insurance certificate enabling the buyer or another named party with an insurable interest to claim from the insurer.
The parties may agree to a different level of insurance coverage, but the change should be stated clearly in the sale contract.
The detailed requirements are explained in the ICC Academy comparison of CPT and CIP under Incoterms® 2020.
Does CIP insure every possible loss?
No. Institute Cargo Clauses (A) provide broad “all risks” cover, but “all risks” does not mean that every event or type of loss is insured.
Coverage remains subject to:
- policy exclusions;
- deductibles;
- limits;
- notification and claims requirements;
- packaging and compliance conditions;
- the insured period; and
- any additional clauses or endorsements.
Depending on the shipment, separate coverage may be needed for war risks, strikes, delay-related losses, temperature deviations, inadequate packing or other exposures.
It is therefore more accurate to say that the seller arranges the required insurance to the named destination—not that CIP guarantees compensation for every event throughout the route.
When is CIP a good choice?
CIP may be appropriate when:
- the seller is responsible for arranging carriage;
- the buyer wants seller-provided cargo insurance;
- the goods are high-value, sensitive or commercially important;
- several modes of transport are used; or
- the parties want broader default insurance than the minimum cover associated with CIF.
CPT vs CIP: what is the main difference?
The primary difference between CPT and CIP is the seller’s insurance obligation.
Under both rules:
- the seller contracts and pays for carriage to the named destination;
- delivery occurs earlier, when the goods are handed to the seller’s contracted carrier at the agreed delivery point;
- risk transfers to the buyer at that delivery point;
- the seller completes export clearance; and
- the buyer completes import clearance.
Under CPT, the seller is not required to insure the goods.
Under CIP, the seller must obtain the insurance required by the rule for the buyer’s risk.
CIP does not keep transit risk with the seller. The risk still transfers at the same point as under CPT; the seller simply obtains insurance intended to protect the buyer or another party with an insurable interest.
FCA vs CPT: what changes?
The main difference is responsibility for the main carriage.
Under FCA:
- the buyer normally nominates the carrier;
- the buyer normally contracts and pays for main carriage; and
- risk transfers at the agreed FCA delivery point.
Under CPT:
- the seller nominates and contracts the carrier;
- the seller pays for carriage to the named destination; but
- risk transfers when the seller delivers the goods to the carrier at the earlier delivery point.
FCA is generally more suitable when the buyer wants control over transportation. CPT may be preferable when the seller has better access to freight rates or is expected to include transportation in the commercial offer.
Practical examples
FCA example: buyer controls freight
A US importer purchases garments from a supplier in Vietnam and appoints its own freight forwarder.
The parties agree:
FCA Supplier’s Warehouse, Gate 2, Ho Chi Minh City, Vietnam, Incoterms® 2020
The seller clears the goods for export and loads them onto the forwarder’s collecting vehicle at the named warehouse gate. Delivery and risk transfer occur after the required loading has been completed.
The buyer’s forwarder then manages consolidation, port handling, ocean freight and onward delivery.
CPT example: seller pays freight, buyer bears transit risk
A German machinery manufacturer sells equipment to a buyer in Poland.
The parties agree:
CPT Buyer’s Facility, Warsaw, Poland, Incoterms® 2020
They separately identify the seller’s logistics depot in Hamburg as the delivery point.
The seller delivers the machinery to its contracted carrier in Hamburg and pays for transportation to Warsaw. Risk transfers to the buyer in Hamburg, not when the machinery arrives in Warsaw.
The buyer should ensure that its insurance begins at the Hamburg delivery point.
CIP example: seller provides freight and insurance
A South Korean supplier sells medical devices to a buyer in France using truck, sea and road transportation.
The parties agree:
CIP Buyer’s Distribution Centre, Lyon, France, Incoterms® 2020
The sale contract separately identifies the freight forwarder’s Seoul facility as the delivery point.
Risk transfers when the devices are delivered to the contracted carrier in Seoul. The seller pays for carriage to Lyon and obtains the insurance required by CIP to the named destination.
The policy is intended to cover the buyer’s risk during the insured journey, but any claim remains subject to the policy’s exclusions and conditions.
Choosing FCA, CPT or CIP for container shipping
All three rules can be used for containers and multimodal transportation.
Choose FCA when:
- the buyer wants to select the forwarder or shipping line;
- the buyer controls freight negotiations;
- the seller’s responsibility should end at a precisely identified origin point; or
- the container is transferred at a warehouse or terminal before vessel loading.
Choose CPT when:
- the seller can arrange transportation efficiently;
- the seller should include freight in the selling price;
- the buyer wants to arrange its own insurance; and
- both parties understand that risk transfers before arrival.
Choose CIP when:
- the seller should arrange both transportation and cargo insurance;
- the shipment is high-value or sensitive;
- broad default insurance is commercially appropriate; and
- the buyer accepts that risk transfers at the earlier delivery point.
In every case, specify the place or point as precisely as possible. Avoid broad formulations such as “FCA China,” “CPT Europe” or “CIP New York.”
The official ICC rules and guidance should be consulted before incorporating a rule into a contract. The ICC warns that inaccurate unofficial summaries can lead to contractual mistakes and disputes.
Once transportation begins, businesses can use TimeToCargo container tracking to consolidate carrier events, planned and actual dates, container statuses and route updates. Companies integrating shipment data into internal systems can also use the TimeToCargo tracking API and webhooks.
What Incoterms® do not cover
Incoterms® are not a complete sale contract.
They help allocate:
- the place of delivery;
- transfer of risk for loss of or damage to the goods;
- selected transportation costs;
- responsibility for arranging carriage;
- cargo insurance obligations under CIP and CIF;
- export and import clearance responsibilities; and
- certain documentation, packaging and security obligations.
They do not by themselves determine:
- when ownership or title transfers;
- when or how the buyer must pay;
- whether the goods conform to the contract;
- remedies for breach of contract;
- sanctions or export-control compliance;
- force majeure;
- governing law;
- jurisdiction or arbitration; or
- how disputes must be resolved.
These matters should be covered by the sale contract and reviewed by qualified legal, insurance and trade professionals. ICC Academy provides further guidance on what Incoterms® rules cannot replace.
