To the purchaser:

One of the major advantages of utilizing EXW has been that buyers receive an exact understanding of their total cost since most of the burden falls on them. Because the buyer is in control of the entire procedure and is in control of the entire process, the risk of any additional costs or fraud is virtually zero. But, the downside for the buyer is the burden of handling the clearance of exports in the country of origin. It is not always the case that buyers have the documents required or the know-how to handle the procedure on their own.

What is cheaper for Sellers

If you are comparing EXW vs FOB the EXW shipping conditions are less expensive for the seller since their sole responsibility is to ensure that the items are in a container and ready for loading outside their premises within the country of the source. In general, EXW is the cheapest choice for sellers since it comes with the least obligations.

Insurance is not required for either side for shipping that is under EXW. In FOB the seller isn’t legally required to purchase insurance, but must provide the necessary information in the event that the buyer wants to purchase it. In the majority of cases the seller is covered for the cargo till the point at which it is loaded, then the buyer will take over the insurance from then from that point.

To the vendor:

EXW is an excellent alternative if your business is local only and they don’t have the license or expertise dealing with exporting products. If they have a client from outside the country and sell their goods under EXW this means that the buyer has to be able to handle all documentation and procedures for export and the transaction will be straightforward for sellers.

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Advantages of shipping FOB

for the consumer:

It is an option to consider if you don’t have any experience in shipping and exports within the country of origin since the seller will be accountable for clearing the goods and organizing the transport within the country. FOB is generally considered to be the cost-effective option specifically because you benefit from the local logistics network, instead of having to manage it on your own. The greatest risk for a buyer is having to deal with novice or unprofessional sellers/freight forwarders, which could lead to losses.

To the vendor:

Sellers should only accept to ship FOB only the point they actually have the necessary experience to organize the entire process of export and transportation themselves. If sellers aren’t experienced with exporting goods, it could be due to a lack of experience and knowledge.

Customs procedures using Ex Works vs FOB: a duty on export and import

Another difference in one compares Ex Works vs FOB is who pays the duty on export and import.

  • In the case of FOB conditions, sellers must ship the cleared goods for export to the vessel of choice. This means that the seller is responsible the export clearance fee and pays all duties, taxes, and documents in the country of.
  • In the context of EXW, the seller is solely responsible to make the products available to buyers at their specified place. This is typically the location of a warehouse or pickup point that is not on the premises of the seller So all export processes are the responsibility of the buyer.
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