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EXW        EX Works (named place of delivery)

 

 

EXW is the Incoterm that represents the minimum obligations, costs and risks for the seller as he delivers the goods at his own premises (factory or warehouse) in his country. Not even the seller is responsible for loading the goods onto the first carrier (usually truck) that sends the buyer to pick them up. It is the only Incoterm in which the seller does not clear the goods for export, when such clearance is applicable.

On the contrary, with EXW, the seller offers the lowest service of all Incoterms and represents a loss of competitiveness in comparison with other companies that assume part of international logistics.

This term is suitable for exporting firms with little international experience and who make groupage operations (boxes, pallets) in which the buyer sends a truck to collect the goods at the seller's premises. When sending full containers, it is better to use FCA as usually the seller makes the loading of the container on the truck sent by the buyer to the seller's premises.

It is not advisable to use EXW regularly because when the seller delivers the goods in its own country, normally it is preferable to use FCA.

FAS: Free Alongside Ship (named place of delivery)

 

 

Incoterm FAS is used only for sea transport. The seller delivers the goods placing them alongside the ship named by the buyer at the agreed port of shipment. The export clearance is done by the seller.

This Incoterm is only used for certain commodities and materials that are not packed and cannot be individualized, such as grain, timber, minerals, steel products, etc.; delivery is done in those ports that have specialized terminals for this type of products. If the goods are carried in containers, Incoterm FCA should be used as containers are delivered at port terminals and not alongside ships.

The export clearance must be done by the seller. Usually, it is necessary to clear the goods before placing them alongside the ship.

When using FAS, the buyer is responsible for loading the goods on the ship. For this reason, the buyer must know very well the practices in the port of shipment because in the case of problems arise there.

FCA: Free Carrier (named place of delivery)

 

 

FCA is a very flexible Incoterm because it allows the delivery of the goods, both on the premises of the seller and at various points such as transports centers, ports, airports, container terminals, etc., which are located in the country of the seller. Therefore, when using this Incoterm, it is very important to specify clearly the place of delivery.

FCA can be used for any type of cargo (general cargo, full load, groupage) and with different means of payment (open account, bank transfer, letter of credit, etc.).

In the Incoterm FCA, the seller must complete and bear the costs of export clearance and, therefore, is responsible for obtaining the necessary documents for it. The import clearance formalities are performed by the buyer.

When the goods are transported in containers and the place of delivery is the port of shipment, Incoterms 2010 rules advised to use FCA instead of FOB, because the containers are delivered regularly in the port's container terminal and not loaded onto the ship.

FCA is one of the most used Incoterms in international trade and will probably replace EXW for the majority of sales where the seller delivers the goods in its own country and do not want to manage international logistics.

FOB: Free On Board (named place of delivery)

 

 

FOB is the oldest Incoterm and together with CIF the most widely used with sea transport. The seller delivers the goods by placing them on board the ship named by the buyer in the port of shipment. The terminal costs and export clearance are borne by the seller.

This Incoterm should be used preferably with bulk, heavy loads and general cargo. Also, in the case of complex goods (e.g. machinery) whose loading on board the ship may involve some risk so it is better that the seller assumes this risk till the loading has been completed and the goods delivered.

When the goods are transported in containers and the place of delivery is the port of shipment, Incoterms 2010 rules advised to use FCA instead of FOB, because the containers are delivered regularly in the port's container terminal and not loaded on board the ship.

Although FOB has traditionally been one of the most commonly used Incoterms the evolution of sea transport and the importance of logistics as a sales strategy have diminished the use of this Incoterm that is being gradually replaced by other terms like CFR or CIF.