FOB vs CIF vs EXW Explained: Which Incoterm Should You Choose?
Confused between FOB, CIF, and EXW? Learn the differences, responsibilities, and how to choose the right shipping term.
Introduction
Incoterms define who is responsible for shipping, cost, and risk in an international shipment.
Choosing the wrong Incoterm can lead to:
What are Incoterms?
Incoterms are international trade terms that define the responsibilities of buyers and sellers in shipping goods, including cost, risk, and logistics handling.
EXW (Ex Works)
Seller: Prepares goods
Buyer: Handles entire shipment
Maximum responsibility for buyer.
FOB (Free on Board)
Seller: Handles until goods are loaded
Buyer: Takes over after shipment
Most commonly used term.
CIF (Cost, Insurance, Freight)
Seller: Pays shipping and insurance
Buyer: Receives goods at destination
Convenient but less control.
How to Choose the Right Incoterm
Common Mistakes
Use Transfreight Before Deciding
Before finalizing Incoterms, check shipping schedules and freight rates. This gives you better control and negotiation power.