Quickly understand the difference between FOB & EXW & CIF

By justchinait
 / 
January 9, 2021
 / 

EXW =Ex Works

EXW means that when the seller delivers the goods to the buyer at its location or other designated locations (such as a factory or warehouse) to complete the delivery, the seller doesn’t go through the customs clearance procedures for export or load the goods onto any means of transportation.

Delivery place: factory or warehouse in exporting country;

Transport: the buyer is responsible

Insurance: the buyer is responsible

Export procedures: the buyer is responsible

Import procedures: the buyer is responsible

Risk transfer: place of delivery

Ownership transfer: transfer with the sale

FOB =Free on Board

The buyer is responsible for arranging a ship to pick up the goods. The seller shall load the goods on the vessel designated by the buyer at the named port of shipment and within the required time, and notify the buyer in time.

Place of delivery: port of shipment;

Transport: the buyer is responsible

Insurance: the buyer is responsible

Export procedures: the seller is responsible

Import procedures: the buyer is responsible

Risk transfer: ship’s side at the port of shipment

Transfer of ownership: transfer with the bill of lading

CFR =Cost+Freight

CFR refers to the delivery on the ship at the port of shipment, and the seller must pay the cost of transporting the goods to the named destination port. But the risk of the cargo is transferred when it is delivered on board the port of shipment.

Place of delivery: port of shipment

Transportation: the seller is responsible

Insurance: the buyer is responsible

Export procedures: the seller is responsible

Import procedures: the buyer is responsible

Risk transfer: ship’s side at the port of shipment

Transfer of ownership: transfer with the bill of lading

CIF =Cost+Insurance+Freight

It means “cost and freight and insurance”. According to this term, the transaction price includes the freight from the port of shipment to the named destination port and the agreed insurance. Therefore, the seller has the same obligations as the CFR term, the buyer must also cover cargo insurance.

Place of delivery: port of shipment

Transportation: the seller is responsible

Insurance: Seller is responsible

Export procedures: the seller is responsible

Import procedures: the seller is responsible

Risk transfer: ship’s side at the port of shipment

Transfer of ownership: transfer with the bill of lading

The common points of CFR, FOB, CIF these three trade terms:

01, the seller is responsible for loading the goods and fully informed, the buyer is responsible for receiving the goods;

02. The seller handles export procedures and provides certificates, and the buyer handles import procedures and provides certificates;

03. the seller submits the bill, the buyer receives the bill and pays;

04. Delivery at the port of shipment, with the same risk and expense divisions, with the ship’s rail as the boundary;

05. the nature of the delivery is the same, all are delivery by voucher, payment by voucher;

06. all suitable for ocean transportation and inland water transportation;

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