What is the difference between EXW, FOB, and FCA?

Navigating the complexities of shipping incoterms

Incoterms like EXW, FOB, and FCA are essential for defining who is responsible for costs and risks during the shipping process. However, understanding the differences between these terms can be challenging. To avoid unexpected issues, it’s crucial to know how they work and to choose the most suitable incoterm when negotiating with your supplier.

Key differences between EXW, FOB, and FCA

While EXW, FOB, and FCA can be used for various modes of transport, their responsibilities differ significantly. Here’s an explanation of each incoterm and where responsibilities lie.

1. Ex Works (EXW)

• Seller’s Responsibility:‍
  • The seller makes the goods available at an agreed location, such as a factory or warehouse. From this point, the buyer assumes all risks and costs, including transportation to the port and export formalities.

• Buyer’s Responsibility:‍
  • The buyer handles everything from loading the goods to arranging export documentation and bearing transport risks and costs.

• Advantages:
  • EXW is often the cheapest option for the seller.
• Disadvantages:
  • The buyer bears the full logistical burden and must have experience with export procedures.

2. Free On Board (FOB)

• Seller’s Responsibility:
  • The seller is responsible for delivering the goods to the port, loading them onto the ship, and handling export clearance.
• Buyer’s Responsibility:
  • Once the goods are on board, the buyer takes responsibility for transport costs, insurance, and risks, including delivery to the final destination.
• Advantages:
  • FOB allows the buyer to control the transport from the departure port onward. The seller manages export formalities, which is beneficial for the buyer.
• Disadvantages:
  • Uninsured damage or loss during transit can be a risk if the buyer does not arrange proper insurance.

3. Free Carrier (FCA)

• Seller’s Responsibility:
  • The seller delivers the goods to a carrier or warehouse specified by the buyer. The seller also handles export documentation.
• Buyer’s Responsibility:
  • Once the goods are delivered to the carrier, the buyer assumes all costs and risks for further transportation.
• Advantages:
  • FCA offers flexibility and control to the buyer while reducing the seller’s responsibilities. It’s suitable for multimodal transport.
• Disadvantages:
  • FCA is less common than FOB, and sellers may lack familiarity with its processes, leading to potential misunderstandings.

Our advice

EXW

Choose EXW if you want full control over the shipping process and are experienced with export documentation and logistics. While cost-effective, it places significant responsibility on the buyer.

FOB

FOB is ideal if you prefer the seller to handle responsibilities until the goods are loaded onto the ship. It’s a popular choice for sea freight due to its clear division of responsibilities.

FCA

Consider FCA if you need flexibility in choosing your carrier and transport method. It’s especially useful for multimodal transport but requires clear communication with the seller to avoid misunderstandings.

Get expert guidance on choosing the right Incoterm

Selecting the right Incoterm can significantly impact your shipping costs and responsibilities. Whether you're shipping under EXW, FOB, or FCA, understanding the full cost breakdown is essential. Have questions or need expert advice? Our team is here to help with all your logistics needs. Compare shipping costs and get a transparent quote for your shipment—Compare Rates Now!

Want to learn more about incoterms and how they impact your shipping costs? Or are you curious about why your shipping costs might exceed your expectations? Explore more here!