Hello Shippers, do you know some terms in international trade such as FOB and EXW? If you don't already know, we will tell you what is meant by FOB and Exw.

What is FOB?

FOB stands for "Free On Board." This is a term used in international trade to regulate shipping terms and responsibilities between sellers and buyers. In the FOB context, the seller has the responsibility to deliver the goods to the port specified by the buyer, and the costs of shipping the goods to that port are the responsibility of the seller.

What is EXW?

EXW stands for "Ex Works." This is a term used in international trade to regulate shipping terms and responsibilities between sellers and buyers. In an EXW context, the seller has the responsibility to make the goods available at their factory location or facility, and the buyer must pick up the goods from there.

Difference

The are differences between FOB (Free On Board) and EXW (Ex Works) are as follows:

• Delivery Responsibilities:

In FOB, the seller is responsible for delivering the goods to the port specified by the buyer. This means the seller has to take care of transporting the goods to the port and pay the shipping costs there. Whereas In EXW, the seller is only obliged to make the goods available at their factory location or facility. All responsibilities and costs associated with shipping and transportation from the seller's location are the responsibility of the buyer.

• Risk Transfer:

In FOB Risk in goods usually passes from the seller to the buyer once the goods are placed on board the ship at the port of origin. This means that if the goods are damaged during delivery to the port or on the ship, the risk is borne by the buyer. Whereas in EXW, Risk in the goods passes to the buyer as soon as the goods are prepared at the seller's location. In other words, the buyer takes the risk from the start, even before the goods leave the seller's location.

• Costs and Logistics:

In FOB, the seller has to pay shipping costs to the port, loading and unloading costs at the port, and freight insurance up to the port point. The buyer is responsible for transportation costs from the port to the final destination, as well as additional insurance if required. Whereas In EXW, transportation costs, loading and unloading costs and insurance costs are completely the responsibility of the buyer. Sellers only need to prepare the goods at their factory location or facility.

That is the difference between Free On Board (FOB) and Ex Works. Now you know the differences between the two in international trade activities.

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