In the simplest terms, EXW (Ex Works) refers to just the product pricing while FOB (Free On Board) refers to shipping included in the pricing
"EXW" and "FOB" are international trade terms that specify the responsibilities and obligations of buyers and sellers in a transaction. Here's what each term means:
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EXW (Ex Works):
- In an EXW arrangement, the seller's responsibility is to make the goods available for pickup at their own premises or another named place (factory, warehouse, etc.).
- The buyer is responsible for all costs associated with transportation, including loading the goods onto a truck, customs clearance, and delivery to the final destination.
- EXW represents the least amount of responsibility for the seller and the highest level of responsibility for the buyer.
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FOB (Free On Board):
- In an FOB arrangement, the seller is responsible for the cost and risk of delivering the goods to a specified port of shipment.
- Once the goods are loaded onto the ship, the responsibility transfers to the buyer, who bears the cost and risk of transportation from the port to the final destination.
- FOB is commonly used in sea freight and is followed by the name of the port (e.g., FOB Shanghai).
EXW places more responsibility on the buyer for transportation and associated costs, as the seller's responsibility ends when the goods are made available.
FOB, on the other hand, indicates that the seller is responsible for delivering the goods to a specific port, after which the buyer assumes responsibility for further transportation.
The choice between EXW and FOB depends on factors such as shipping arrangements, costs, and the level of control each party wants over the transportation process.