Ex Works (EXW)

Ex Works (sometimes shown as EXW or ExWorks) is a widely used international shipping term or Incoterm. 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.

 

"Ex Works" means that the seller has delivered the goods when he places the goods at the disposal of the buyer at his (seller's) premises or at another named place (i.e., works, factory, warehouse, etc.). Under an Ex Works contract of sale, the seller does not need to load the goods on any collecting vehicle, nor does he need to clear the goods for export, where such clearance is applicable.

 

Free on Board (FOB)

Free on Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. "FOB shipping point" or "FOB origin" means the buyer is at risk once the seller ships the product. The purchaser pays the shipping cost from the factory and is responsible if the goods are damaged while in transit. "FOB destination" means the seller retains the risk of loss until the goods reach the buyer.

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Cost and Freight (CNF)

CNF is the short form for cost and freight and it is also known as CFR and C&F. It refers to a contract between a shipper (mostly a seller) and a consignee (commonly a buyer) regarding shipment charges.

This terminology is only used for sea freight. Seller pays to deliver the goods to the port that is nearest to the buyer and buyer bears all the shipment expense from that point onward.

Please note that the 3 terms CNF, C&F and CRF means the same and there is no difference between them while operating. C&F and CFR are usually used in terms of delivery in a domestic or international trade. Some also use CNF.

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Cost, Insurance, and Freight (CIF)

Cost, insurance, and freight (CIF) is an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer's order while the cargo is in transit. Cost, insurance, and freight only applies to goods transported via a waterway, sea, or ocean.

The goods are exported to the buyer's port named in the sales contract. Until the goods are delivered to the buyer's destination port, the seller bears the costs of any loss or damage to the product. Further, if the product requires additional customs duties, export paperwork, or inspections or rerouting, the seller must cover these expenses.

However, once the goods have reached the buyer's port of destination, the buyer assumes responsibility for any fees or charges for unloading and delivering the shipment to the final destination. CIF is similar to carriage and insurance paid to (CIP), but CIF is used for only sea and waterway shipments, while CIP can be used for any mode of transport, such as by truck.

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