Professional Documents
Culture Documents
1)EXW ex-works
1. Carriage has to arranged by the buyer or either by the seller on the behalf or the buyer.
2. Risk transfer from the vendor to the buyer when the goods have been delivered to the carrier at
the named place.
3. Cost transfer from the seller to the buyer when the goods have been delivered to the carrier at the
named place.
1. Risk transfer from the seller to the buyer when the goods pass the ship’s rail.
2. Cost transfer at the port of destination buyer , paying such costs as are not for the sellers account
under the carriage contract.
Ex-Works or EXW
In this arrangement, the buyer is in control. They are responsible for arranging everything after picking
up the goods from the seller’s location. Documentation, export licenses, and local charges at origin are
all paid by the buyer, as well as transportation costs for the truck to move from origin to the port, the
ocean freight, and all other charges at destination. The seller is only responsible for packing and having
the cargo ready at the agreed location.
The seller is responsible to deliver the cargo at POL, clear customs, and load the goods on board the
vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the
vessel (this rule is new!) The buyer is responsible for any other cost until the delivery at destination.
FOB is the most misused incoterm, since it was never intended for combined inland and ocean
transportation in containers (see Incoterms 2010, ICC publication 715), but only inland waterway and
maritime transport. The correct rule should be FCA.
The seller is responsible for all costs, including the freight up until the cargo reaches the port of
destination. The risk, however, is transferred to the buyer, once the cargo is loaded onto the vessel (this
rule is new!) The only cost not covered by the seller up until POD is maritime insurance, which is the
only difference with our next incoterm rule, CIF.
As already mentioned, this is exactly the same as CFR, but maritime insurance is also covered by the
buyer.
INCOTERMS WERE CREATED SO THAT THERE ARE NO MISUNDERSTANDINGS BETWEEN
TRADERS ALL THE WORLD.
They are a universal language for global commerce that every party in the chain of transport needs to
speak. The buyer, the seller, the customs officer, the customs broker, the freight forwarder, the carrier’s
employees, the warehouse manager, and even the trucker in many cases – just to name the most
common ones.
Each option has its own benefits and risks for both the buyer and the seller.
BENEFITS
Freight Control – Working on tight time frames or stock control it is essential to know where your
freight is the majority time
o Buyer – EXW, FOB, CFR/CIF Seller – DAT, DAP, DDP
Cost Control – Knowing the cost of the freight will help you work out the true cost of your products
o Buyer – EXW, FOB, CFR/CIF Seller – DAT, DAP, DDP
RISKS