diff --git a/go.mod b/go.mod
index 3f2595812..e2161e183 100644
--- a/go.mod
+++ b/go.mod
@@ -17,7 +17,7 @@ require (
 	github.com/awslabs/goformation/v4 v4.15.6
 	github.com/buger/goterm v1.0.0
 	github.com/cnabio/cnab-to-oci v0.3.1-beta1
-	github.com/compose-spec/compose-go v0.0.0-20210426122519-7739b749b02f
+	github.com/compose-spec/compose-go v0.0.0-20210427143821-6d1c5982084f
 	github.com/containerd/console v1.0.1
 	github.com/containerd/containerd v1.4.3
 	github.com/containerd/continuity v0.0.0-20200928162600-f2cc35102c2a // indirect
diff --git a/go.sum b/go.sum
index 5461e91a7..f096947ed 100644
--- a/go.sum
+++ b/go.sum
@@ -308,8 +308,8 @@ github.com/cncf/udpa/go v0.0.0-20191209042840-269d4d468f6f/go.mod h1:M8M6+tZqaGX
 github.com/cockroachdb/datadriven v0.0.0-20190809214429-80d97fb3cbaa/go.mod h1:zn76sxSg3SzpJ0PPJaLDCu+Bu0Lg3sKTORVIj19EIF8=
 github.com/codahale/hdrhistogram v0.0.0-20160425231609-f8ad88b59a58/go.mod h1:sE/e/2PUdi/liOCUjSTXgM1o87ZssimdTWN964YiIeI=
 github.com/codahale/hdrhistogram v0.0.0-20161010025455-3a0bb77429bd/go.mod h1:sE/e/2PUdi/liOCUjSTXgM1o87ZssimdTWN964YiIeI=
-github.com/compose-spec/compose-go v0.0.0-20210426122519-7739b749b02f h1:t52ow0GxFOfxOwtEEiZKOd5B3yrdz2VuSuP/4xMb06k=
-github.com/compose-spec/compose-go v0.0.0-20210426122519-7739b749b02f/go.mod h1:6eIT9U2OgdHmkRD6szmqatCrWWEEUSwl/j2iJYH4jLo=
+github.com/compose-spec/compose-go v0.0.0-20210427143821-6d1c5982084f h1:EJu2tLPcjRTAdFDJZOQj57ehBo+m71Iz6sUf1Q8/BOY=
+github.com/compose-spec/compose-go v0.0.0-20210427143821-6d1c5982084f/go.mod h1:6eIT9U2OgdHmkRD6szmqatCrWWEEUSwl/j2iJYH4jLo=
 github.com/containerd/cgroups v0.0.0-20190919134610-bf292b21730f/go.mod h1:OApqhQ4XNSNC13gXIwDjhOQxjWa/NxkwZXJ1EvqT0ko=
 github.com/containerd/cgroups v0.0.0-20200531161412-0dbf7f05ba59/go.mod h1:pA0z1pT8KYB3TCXK/ocprsh7MAkoW8bZVzPdih9snmM=
 github.com/containerd/cgroups v0.0.0-20200710171044-318312a37340 h1:9atoWyI9RtXFwf7UDbme/6M8Ud0rFrx+Q3ZWgSnsxtw=
diff --git a/local/compose/create.go b/local/compose/create.go
index 996c4ff3a..56b8adad9 100644
--- a/local/compose/create.go
+++ b/local/compose/create.go
@@ -574,22 +574,25 @@ func (s *composeService) buildContainerVolumes(ctx context.Context, p types.Proj
 		return nil, nil, nil, err
 	}
 
-	// filter binds and volumes mount targets
 	volumeMounts := map[string]struct{}{}
 	binds := []string{}
+MOUNTS:
 	for _, m := range mountOptions {
-
-		if m.Type == mount.TypeVolume {
-			volumeMounts[m.Target] = struct{}{}
-			if m.Source != "" {
-				binds = append(binds, fmt.Sprintf("%s:%s:rw", m.Source, m.Target))
+		volumeMounts[m.Target] = struct{}{}
+		// `Bind` API is used when host path need to be created if missing, `Mount` is preferred otherwise
+		if m.Type == mount.TypeBind {
+			for _, v := range service.Volumes {
+				if v.Target == m.Target && v.Bind != nil && v.Bind.CreateHostPath {
+					mode := "rw"
+					if m.ReadOnly {
+						mode = "ro"
+					}
+					binds = append(binds, fmt.Sprintf("%s:%s:%s", m.Source, m.Target, mode))
+					continue MOUNTS
+				}
 			}
 		}
-	}
-	for _, m := range mountOptions {
-		if m.Type == mount.TypeBind || m.Type == mount.TypeTmpfs {
-			mounts = append(mounts, m)
-		}
+		mounts = append(mounts, m)
 	}
 	return volumeMounts, binds, mounts, nil
 }
@@ -623,7 +626,6 @@ func buildContainerMountOptions(p types.Project, s types.ServiceConfig, img moby
 				return nil, err
 			}
 			mounts[k] = m
-
 		}
 	}
 
@@ -758,7 +760,6 @@ func buildMount(project types.Project, volume types.ServiceVolumeConfig) (mount.
 	}
 	if volume.Type == types.VolumeTypeVolume {
 		if volume.Source != "" {
-
 			pVolume, ok := project.Volumes[volume.Source]
 			if ok {
 				source = pVolume.Name
diff --git a/local/e2e/compose/volumes_test.go b/local/e2e/compose/volumes_test.go
index 1078b6a32..ecf0bfd81 100644
--- a/local/e2e/compose/volumes_test.go
+++ b/local/e2e/compose/volumes_test.go
@@ -49,7 +49,7 @@ func TestLocalComposeVolume(t *testing.T) {
 		res := c.RunDockerCmd("inspect", "compose-e2e-volume_nginx2_1", "--format", "{{ json .Mounts }}")
 		output := res.Stdout()
 		// nolint
-		assert.Assert(t, strings.Contains(output, `"Destination":"/usr/src/app/node_modules","Driver":"local","Mode":"","RW":true,"Propagation":""`), output)
+		assert.Assert(t, strings.Contains(output, `"Destination":"/usr/src/app/node_modules","Driver":"local","Mode":"z","RW":true,"Propagation":""`), output)
 		assert.Assert(t, strings.Contains(output, `"Destination":"/myconfig","Mode":"","RW":false,"Propagation":"rprivate"`), output)
 	})
 
@@ -64,11 +64,11 @@ func TestLocalComposeVolume(t *testing.T) {
 	})
 
 	t.Run("check container bind-mounts specs", func(t *testing.T) {
-		res := c.RunDockerCmd("inspect", "compose-e2e-volume_nginx_1", "--format", "{{ json .HostConfig.Mounts }}")
+		res := c.RunDockerCmd("inspect", "compose-e2e-volume_nginx_1", "--format", "{{ json .Mounts }}")
 		output := res.Stdout()
 		// nolint
 		assert.Assert(t, strings.Contains(output, `"Type":"bind"`))
-		assert.Assert(t, strings.Contains(output, `"Target":"/usr/share/nginx/html"`))
+		assert.Assert(t, strings.Contains(output, `"Destination":"/usr/share/nginx/html"`))
 	})
 
 	t.Run("cleanup volume project", func(t *testing.T) {