FOB and EXW are two of the different Incoterms that can be used for international shipments. To decide whether FOB or EXW is the most appropriate Incoterm to use and to ensure that you understand what is covered by them, you first need to know the difference between FOB and EXW and what these terms mean.
If you use the FOB Incoterm, the seller or originator has to get your goods loaded onto your chosen ship before responsibility for the shipment passes to you. If you use the EXW Incoterm, all the seller or originator has to do is provide you with a pickup location, and make the goods available for you to collect, load and transport yourself.
FOB stands for “Free on Board,” and this Incoterm makes the seller of the goods responsible for all associated costs and risks up until the point that the goods are loaded onto the ship. When the goods are then appropriated to the contract or clearly set aside or otherwise identified as the contract goods, the seller’s responsibilities end.
This places the responsibility on the seller of the goods to get them onto the buyer’s ship in accordance with the departure port’s normal procedures, and to arrange clearance for export.
When that is done, responsibility for the shipment falls to the buyer – including the bill of lading fees, insurance, shipment and onward transport costs, export clearance, unloading, and everything else after that point.
EXW stands for “Ex Works” and this Incoterm requires the originator or seller of the goods to make them available to their buyer at a named place – like the seller’s own warehouse or factory.
The buyer then has to arrange their collection and onwards transit. This Incoterm places the minimum responsibility on the seller of the goods, and the maximum responsibility on the buyer.
If you’re not sure which Incoterm is the most appropriate or cost-effective for you, let us know and we’ll provide you with the advice you need to make the right decision.