CIF (Cost, Insurance, and Freight) is another Incoterm, and it’s a step further than FOB because the seller takes on more responsibility. It’s also only for sea or inland waterway transport.
What CIF means
The seller must:
Deliver the goods onto the ship at the named port of shipment.
Pay for transport (freight) to the port of destination.
Provide insurance covering the goods during the sea voyage (minimum coverage, usually standard).
Handle export customs clearance.
CIF gives the seller more control over logistics, enabling them to choose their preferred carrier and insurance provider. FOB, on the other hand, gives the buyer more control over logistics. With FOB the buyer can opt for the carrier and insurance cover of their choice once the goods are loaded onto the ship.
FOB (Free On Board) is an Incoterm used mainly for sea or inland waterway transport.
It defines what the seller and buyer must do when shipping goods by ship.
What FOB means
The seller must:
1. Deliver the goods onto the ship
At the named port of shipment (example: “FOB Shanghai”).
The seller is responsible until the goods are loaded onto the vessel.
2. Handle export customs clearance
The seller clears the goods for export.
When does risk transfer?
Risk transfers from seller to buyer once the goods are on board the ship.
After that, the buyer takes responsibility for:
Sea freight costs
Insurance (if they want it)
Import customs clearance
Inland transport to the final destination
In short:
FOB = Seller loads goods onto the ship; buyer handles everything after that.
FCA (Free Carrier) is another Incoterm, and it gives more responsibility to the seller than EXW, but still less than some others.
What FCA means
The seller must:
1. Deliver the goods to a carrier chosen by the buyer
This can be:
The seller’s location (factory, warehouse), or
Another named place (like a freight terminal, port, airport).
2. Handle export customs clearance
This is a big difference from EXW.
Two main scenarios
A) FCA – Seller’s premises
Seller loads the goods onto the buyer’s transport.
Seller clears the goods for export.
Risk transfers once the goods are loaded.
B) FCA – Another named place
Seller transports the goods to that place.
Seller unloads only if agreed.
Risk transfers when the goods are handed over to the carrier.
2. Handle export customs clearance
This is a big difference from EXW.
Two main scenarios
A) FCA – Seller’s premises
Seller loads the goods onto the buyer’s transport.
Seller clears the goods for export.
Risk transfers once the goods are loaded.
B) FCA – Another named place
Seller transports the goods to that place.
Seller unloads only if agreed.
Risk transfers when the goods are handed over to the carrier.
EXW (Ex Works) is one of the Incoterms used in international trade.
Here’s the simple explanation:
What EXW means
The seller’s responsibility is minimal.
The seller only needs to make the goods available at their location (factory, warehouse, etc.).
The buyer does almost everything else, including:
Loading the goods onto a truck
Export customs clearance
Transportation to the destination
Import customs and duties
Final delivery
Example
A seller in Germany agrees on EXW with a buyer in Spain.
The seller simply places the goods ready for pickup at their warehouse.
The buyer sends a truck, handles export documents, and takes the goods from there.