What are the differences between ex-factory (EXW) and free on Board (FOB)?


Ex works (EXW) and free on Board (FOB) – international trade terms (Incoterms) that define the responsibilities of sellers and buyers. International trade is a trade on the terms of EXW contract, if the seller is not obliged to load the goods on the designated method of transport to the buyer. On the other hand, international trade is a trade on the terms of FOB contract if the seller must deliver the goods to the buyer method of transport to the shipping point, and – depending on the specific type of keychain – can be responsible for them for the entire trip to its final destination.

EXW specifies that the seller is responsible for making products available for pickup in the place where he conducts business for the buyer. However, the seller is not responsible for transportation costs and risks; the buyer assumes responsibility for these arrangements. The term EXW trade agreement is beneficial to seller because the buyer is responsible if something goes during transport of goods such as the goods get lost in transit. Keychain favors buyer.

For example, a seller of electronic products located in San Francisco, California. The buyer is in new York, new York. Buyer and seller agree on a price for these products and sign ex-factory trade agreements. The buyer wants to pick up the products within two weeks, and the seller should have the product ready for transportation. However, the buyer is responsible for all additional costs associated with delivery of the goods to new York. Buyer pays all shipping costs, and if the products get lost on the way, the seller is not responsible.

Conversely, when the buyer and seller enters a trade agreement on FOB terms, the seller is obliged to deliver the cargo at the destination for transmission to the carrier appointed by the buyer. Marking the location in the agreement trade FOB is the point at which ownership passes from the seller to the buyer. The responsibility often goes to the place of destination; the seller is responsible for transportation of the goods up to this point, and the buyer may or may not be responsible for all organizational transportation from this point on its location, depending on the terms of the contract.

For example, suppose that the buyer, located in Los Angeles, California, wants to buy computers from a vendor located in Chicago, Illinois. Buyer and seller signed a trade agreement FOB. The buyer indicates that the computers will be delivered by plane and the seller for transportation costs associated with the transportation of the computers in the airport of Los Angeles. At this point, shift the responsibility and the buyer is responsible for all additional costs associated with the transportation of PCs to final destination. The buyer is also responsible for any damages that may occur during this phase of the delivery process.

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