What is the difference between ex works and fob

All costs and liabilities are with the buyer. The terms allocate the division of responsibility between the Shipper usually the supplier and the Consignee usually the buyer in the process of shipping the goods from one to the other. Under Ex Works shipping terms the only responsibility for a seller during the whole transportation process is to ensure that the goods they are selling are made available for collection at their premises. When using these terms all of the costs and risks of shipping the goods lie with the buyer alone.

Apart from when the goods are with customs, the buyer is in control of the entire shipment. Information from the supplier is used when arranging the customs clearance in the country of origin.

If this information is incorrect the buyer will still be liable for any additional costs that can occur as a result. Another disadvantage is the uncertainty over export licences. Beware of Exworks terms if you travel overseas to source goods from multiple local traders or shops. They are safe terms as buyers have visibility of all the foreseeable costs.

When importing goods to the UK on EXW shipping terms, outlining your responsibilities as an importer is pretty simple. You are responsible for all costs, arrangements and liability. All there is to look into now is the Duty and VAT and you can work that out here. Both of these terms have their benefits and can be used successfully when importing cargo from Asia. FOB shipping terms stand for Free on Board and are the most commonly used. The buyer pays the cost of freight to the shipping company or airlines.

You can click here to read. Is Airway bill a documents of title? How to start Export Business? What are the risks and solutions in Export Business?

Service Tax - Click here to read complete notification under Budget What is Bank post shipment credit to exporters? How is IGST rate on imports treated? Very good Article, which rich with important information for me. David Obaseki: On 13 December Very insightful and simple in explanation. Appreciate it very much. I will recommend it to my associates. Rajab F. Haji: On 08 February very useful site muhammed kaleemullah: On 19 February This site is knowledge provider and helpful very integently Edward O.

I liked the simple example used to explain FOB. I have sugested most of coligues to get a bussiness term daily early morning mail. Thanks the site. Yakoob Ahmed: On 30 October Your site is well done and has been very helpful. In the case of Ex Mill export in Foreign Currency when the sale is accounted for and against which document we can treat the sale of goods as completed. I am reviewing an interesting case. I have some sales that are nominally written on the paper under EX Works terms.

Is it an EX Work or something else? Udaya: On 27 March On ex-work basis if export duty is involved who will have to bear it. Theoretically the buyer will have to pay. Research tools which lean on public U. Here is an example of a quote I received for EXW shipping terms for a couple of pallets of goods from Fujian province in China to Vancouver. Just like in Canada or any other country, overland freight is expensive in China.

Most of the other fees are associated with preparing various documents such as the Bill of Lading. Read more about international sea freight in our step by step guide. A big reason why the costs above are so high is that the shipping terms were EXW Fuzhou. As mentioned above, what this means is basically that the factory will manufacture all of the goods and I have to come to their place to pick it up.

Now contrast the term people are more familiar with, FOB xyz Port. For an FOB shipment, say FOB Ningbo a major port in China the supplier will drive the goods from their factory to the local port, load it on the ship, and pay all of the document fees.

As profit margins in China are being driven down, more and more suppliers are quoting prices with EXW shipment terms. If you are comparing prices from suppliers, ensure that you are always comparing similar shipment terms. However, they will charge you more or less money depending on what your shipment terms are. Do you have any questions regarding incoterms? If so, feel free to share and comment below.

Dave Bryant has been importing from China for over 10 years and has started numerous product brands. He sold his multi-million dollar ecommerce business in and create another 7-figure business within 18 months. Above is an infographic showing the critical aspects of shipping a container from China.