What is the Difference Between EXW vs FOB?

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Industry Encyclopedia

Time of issue：

2023-07-06 17:41

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What is the Difference Between EXW vs FOB?

Ex works vs fob(Exw vs Fob) these two terms are related to Freight service. Both Exw vs Fob are Incoterms to refer to international shipments. It is a key factor for these clients who needs this service for better and reliable transportation of goods. You will first need to understand the difference between the EXW vs FOB to fully understand the appropriate usage of these terms and what they encompass.

EXW vs FOB In FOB,

the responsibility of loading the package on your desired ship falls on the seller, and only after that does the responsibility of goods passes on to you. On the other hand, an EXW arrangement means that the responsibility of collecting, loading, and transporting falls on you. The seller only has to let you the pick-up location.

Incoterms, also known as Trade Terms, are essentially international contractual terms applied when making sales. The most common incoterms are EXW and FOB.

Let us look at the above recognizable terms as outlined in the incoterms newest.

1. FOB. That is delivery at the terminal in China.

FOB=value of goods + domestic freight If it is agreed to deliver at Shanghai port, it is called FOB SHANGHAI. Under these conditions, except for the value of goods themselves, the freight, customs declaration, export procedures for transporting the goods to the Shanghai terminal are also added to the FOB. This is also part of the cost.

2. C&F. That is delivery at a buyer terminal.

C&F = FOB + ocean freight. If it is agreed to deliver at New York port, it is called CNF NEW YORK. This condition is the FOB price plus the ocean freight charges for shipping the goods to New York, USA.

3. CIF. It is agreed to deliver at a buyer terminal. CIF = FOB + ocean freight + insurance. Or CIF = CNF + insurance premium. Because the type of goods and the place of delivery are different, the insurance premium is also slightly different. The insurance company determines the insurance company’s amount, and there are several types of insurance, but we usually use all risks: no matter what happens, the insurance company will carry it for you. The insurance premium is not high. Buy it for safety first. In CIF terms, chartering and booking space and insurance are recognized.

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