What’s the difference between Ex Works (EXW) & Free On Board (FOB) ?

Actually, Ex works (EXW) and free on board (FOB) are both international trade terms. It indicate the responsibilities of buyers and sellers to cover all costs and arrangements for the shipping of goods.

In EXW, the seller is not responsible to load the goods on the buyer’s designated method of transport. Instead, the seller makes goods available at their premises and the buyer must incur transportation costs. With FOB, the seller have to load the goods on the buyer’s method of transport at the shipping point and may be responsible for them throughout the trip and to the final destination. Actually, Free on board means the seller retains ownership and responsibility for the goods until they are loaded ‘on board’ a shipping vessel.

Ex Works

Ex works (EXW) is a shipping agreement in which a seller makes a product available at a specific location. In other words, the buyer of the product must load the goods onto trucks, custom clearance, transferring them to a ship or plane. After all, This is the best choice for seller but not good choice for buyer. Once sellers hand over goods to the buyers, they are responsible for other risks, such as loading the goods onto trucks, transferring them to a ship or plane, and customs clearance. Ex works (EXW) is one of the 11 Incoterms of standardized international trade terms. This rules are published by the International Chamber of Commerce (ICC).

Free On Board

Free On Board (FOB) is a shipment term. We use this term to indicate whether the seller or the buyer is liable for damaged or destroyed goods in transit. We will discuss “FOB origin” and “FOB destination”. The most common international trade terms are Incoterms, which publishes International Chamber of Commerce (ICC).

Actually, “FOB origin” means the buyer pays the shipping cost from the factory or warehouse and will be ownership of the goods as soon as it leaves its point of origin. In other words, “FOB destination” means the seller retains the risk of loss until the goods reach to the buyer location.