FOB vs EXW: Which Incoterm to Use
EXW leaves export and loading to the buyer; FOB adds seller export clearance and loading on board at the port.
Structured trade knowledge covering terms, processes, regulations, and practice.
EXW leaves export and loading to the buyer; FOB adds seller export clearance and loading on board at the port.
CFR seller pays freight only; CIF seller pays freight plus minimum insurance to destination port.
FOB price equals product cost plus all seller-side charges up to loading on board at the named port.
Under FOB, loss or damage risk passes to the buyer when goods are on board the vessel at the named port of shipment.
Clear answers to the questions importers and exporters ask most about Incoterms® 2020.
A practical checklist covering mode, control, insurance, duties, documents, and contract wording.
Copy-ready clause language that cites version, place, and optional insurance upgrades.
Polite, precise Business English emails for term negotiation and confirmation.
Quick definitions for the 11 rules and supporting vocabulary used in contracts and emails.
Learn from export/import scenarios that show how term choice hits margin and risk.
Practical guide to What is DAP? (Delivered at Place) with compliance checklist and common mistakes for import/export managers.
FOB (Free on Board) under Incoterms® 2020: seller delivers when goods are on board the vessel at the named port. Risk and onward freight shift to the buyer at loading — write the port name, not just “FOB”.
CIF means the seller pays cost, minimum insurance, and freight to the named destination port — but risk still transfers on board at origin. Do not confuse paid freight with risk.
First shipments should prioritize clarity over cleverness: FOB/FCA for experienced buyers who control freight; CIF/CIP when the seller must bundle carriage carefully.
EXW (Ex Works) means the seller makes goods available at their premises; the buyer handles export clearance, pickup, and main carriage. Use it only when the buyer truly controls the origin logistics chain.
FCA (Free Carrier) lets the seller clear export and deliver to the buyer’s nominated carrier at a named place. It is usually safer than EXW for containerized and multimodal shipments.
CFR (Cost and Freight) is sea/inland waterway only: seller pays freight to the named port of destination, but risk passes when goods are on board at origin. Always add insurance separately.
CPT (Carriage Paid To) works for any mode: seller pays carriage to the named place of destination, but risk transfers when goods are handed to the first carrier. Pair it with your own insurance.
CIP (Carriage and Insurance Paid To) adds seller-arranged insurance to CPT for any transport mode. Under Incoterms® 2020 the default cover is Institute Cargo Clauses (A) unless parties agree otherwise — still verify sum insured.
DAP (Delivered at Place) means the seller brings goods to the named place ready for unloading; import clearance, duties, and taxes remain the buyer’s job unless you switch to DDP.
DPU (Delivered at Place Unloaded) is the only Incoterm® that requires the seller to unload at the named place. Import clearance still sits with the buyer — plan terminal capability before you promise DPU.
DDP (Delivered Duty Paid) puts maximum obligation on the seller: deliver to the named place with import clearance and duties paid. Quote DDP only with a real importer-of-record plan and duty cash model.
Incoterms® 2020 are ICC trade terms that allocate delivery, risk, and cost — not payment terms or title transfer. Choose by transport mode and who can actually clear export/import.
FOB keeps ocean freight and insurance with the buyer after onboard delivery; CIF bundles freight plus minimum insurance in the seller’s price. Compare landed cost and control — not just unit price.
FAS (Free Alongside Ship) is a sea/inland waterway term: the seller delivers when goods are placed alongside the vessel at the named port. Loading and ocean freight remain the buyer’s concern.
Most Incoterms failures are preventable: missing named places, wrong mode rules, silent destination charges, and treating delivery terms as payment terms. Fix the PI language before you fight the claim.
Pick Incoterms by who can clear export/import, which mode you actually ship, and who should control freight. Start from capability — not from whatever the factory typed on the last quote.