Many partners who are trying to do business for the first time often wonder why we add EXW, FOB and so on in front of the price when quoting.
What do words like EXW, FOB mean?
Below is a detailed explanation of them. If you find that the text explanation is not clear, you can skip to the end of the article, there is a picture can make you easier to understand what they mean.
Transport Obligations, costs and risks
TERMS FOR ALL TRANSPORT MODE
EXW - Ex Works
FCA - Free Carrier
CPT - Carriage Paid To
CIP - Carriage and Insurance Paid To
DAT - Delivered At Terminal
DAP - Delivered At Place
DDP - Delivered Duty Paid
FAS - Free Alongside Ship
FOB - Free On Board
CFR - Cost & Freight
CIF - Cost & Insurance & Freight
TERMS FOR ALL TRANSPORT MODE
EXW - Ex Works -- is a shipping arrangement in which a seller makes a product available at a specific location, but the buyer has to pay the transport costs.
The buyer needs to ask the forwarder to pick up the goods at the seller's factory and be responsible for all the process from the place of shipment to the place of receipt.
If the buyer does not have a forwarder in China, buyer can pay extra freight to the seller. Then the seller will contact the logistics company to transport the goods.
FCA - Free Carrier -- means that the seller delivers the goods to a forwarder or another person nominated by the buyer, at the seller's premises or another named place. Buyer has to pay the transport costs.
CPT - Carriage Paid To -- means that the cost of goods includes the cost of manufacturing and the cost of transport. The seller needs to transport the goods to the agreed port of import and pay for the transportation costs until the goods arrive at the port.
CIP - Carriage and Insurance Paid To -- means that the cost of goods includes the cost of manufacturing and the cost of transport. The seller needs to transport the goods to the agreed destination and pay for the transportation costs until the goods arrive at the destination.
DAT - Delivered At Terminal -- means that the cost of goods includes the cost of manufacturing and the cost of transport. The seller has to unload the goods from the ship at the agreed port of import. The buyer is responsible for subsequent import clearance and transportation to the final destination.
DAP - Delivered At Place -- means that the cost of goods includes the cost of manufacturing and the cost of transport. The seller needs to transport the goods to the agreed destination and pay for the transportation costs until the goods arrive at the destination.
DDP - Delivered Duty Paid -- means that the cost of goods includes the cost of manufacturing and the cost of transport. The seller needs to transport the goods to the agreed destination, and is responsible for export and import customs clearance procedures and paying taxes.
TERMS FOR SEA/INLAND WATERWAY TRANSPORT ONLY
FAS - Free Alongside Ship -- Buyer has to pay the transport costs. The seller needs to transport the goods to the agreed port of export. The buyer is responsible for arranging the transportation of the goods, handling the import customs clearance procedures and paying the taxes.
FOB - Free On Board -- means that the cost of goods includes the cost of manufacturing and the cost of transport.
The seller needs to load the goods on the vessel appointed by the buyer at the agreed port of export and within the agreed time, then notify the buyer in time. After loading the goods on the vessel, the buyer is responsible for the subsequent transportation of the goods and import customs clearance and taxes.
CFR - Cost & Freight -- means that the cost of goods includes the cost of manufacturing and the cost of transport. The seller needs to transport the goods to the agreed port of import and pay for the transportation costs until the goods arrive at the port.
CIF - Cost & Insurance & Freight -- means that the cost of goods includes the cost of manufacturing and the cost of transport.
The seller needs to transport the goods to the agreed port of import and bear the transportation cost before the goods arrive at the port. 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.
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