Ex Works shipping, meaning, advantages and risks for the importer. Difference between FOB and CIF shipments

EX Works means ‘at the factory’ or ‘at the point of origin’. The seller fulfils their obligation by making the goods available to the buyer at their own premises.

All costs, risks and formalities are borne by the importer.

The advantage for the seller is that their liability is minimised, as they only have to make the goods available to the buyer. They do not have to arrange transport, insurance or customs clearance.

The risk and disadvantages for the importer are that they assume all costs and risks as soon as the goods leave the seller's premises. They must coordinate loading, internal transport, freight, insurance and customs.

Among the advantages for the importer is that they can choose the transport company and negotiate costs.

An example would be this: an American company sells to a Spanish supplier under EX WORKS SPAIN conditions. The American seller leaves the goods ready at the factory and it is the Spanish importer who must pay the freight, insurance, US taxes and coordinate all the logistics.

Difference between EX WORK and FOB (Free On Board) and CIF (Cost, Insurance & Freight)

.- Place of delivery. EXWORK is at the factory, FOB when the goods are loaded onto the ship at the port of origin. CIF is the same as FOB, but includes insurance costs to the port of destination

.- Who pays for transport? EXWORK and FOB buyer. CIF seller.

.- Who pays for insurance? EXWORK and FOB buyer. CIF seller.

.- Export formalities. EXWORK buyer. FOB and CF seller.