Difference between CFR and EXW under delivery rules (2024)

FAQs

What is CFR and EXW? ›

EXW (Ex Works) FCA (Free Carrier) FOB (Free On Board) CIF (Cost, Insurance, and Freight) CFR (Cost and Freight)

CIF (Cost, Insurance, and Freight): The seller is responsible for the cost of the goods, the freight, and the insurance to cover the goods during transit until they arrive at the port of destination. EXW (Ex Works): The seller makes the goods available to the buyer at their premises or another named location.

What Do EXW and FOB Stand for? EXW stands for Ex Works, an Incoterm whereby the buyer of a shipped product pays for the goods when they are delivered to a specified location. FOB, or Free on Board, instead shifts the responsibility of the goods to the buyer as soon as they are loaded onboard the ship.

EXW – Ex Works (showing the place of delivery) FCA – Free Carrier (showing the place of delivery) CPT – Carriage Paid to (showing destination)

Cost and freight (CFR) is a legal term used in foreign trade contracts. In a contract specifying that a sale is cost and freight, the seller is required to arrange for the carriage of goods by sea to a port of destination and provide the buyer with the documents necessary to obtain them from the carrier.

EXW, short for “Ex Works,” places most responsibility with the buyer. The seller is expected to have the goods ready for collection at the agreed place of delivery (commonly the seller's factory, mill, plant or warehouse).

One major disadvantage of EXW to buyers is related to customs clearance. According to the EXW terms, sellers are required to facilitate the paperwork for export clearance. If sellers' information is inaccurate, the buyers are still responsible for the additional cost and results of delays.

Key Takeaways. Ex Works (EXW) is a shipping arrangement in which a seller makes a product available at a specific location, but the buyer has to pay the transport costs.

EXW stands for Ex Works and is one of the 11 Incoterms® rules. It places minimum responsibility on the seller, who makes the goods available at a location, usually the seller's premises or another named place such as a factory or warehouse.

Example of EX Works

For instance, suppose Business A has 100 generators to export to Business B. A charges $400 per generator plus shipping charges, whereas B offers $300 without shipping costs. If the importer can find a cheaper shipping cost deal than what A is offering, they mostly opt to handle it by themselves.

What is the key difference between EXW and FCA? ›

It is a versatile incoterm whose use is becoming more and more widespread among exporters. Mainly, the only big difference with the EXW incoterm is that under FCA conditions the seller must carry out the export clearance.

EXW (Ex-works), in which the buyer assumes responsibility at the seller's warehouse and takes care of everything including transportation and insurance. CIP (Carriage and insurance), which puts responsibility for insurance on the seller.

What is the difference between CPT and CFR Incoterms? Cost and Freight (CFR) is only applicable for goods that are being transported by ocean, while CPT applies to all goods irrespective of the mode of transportation.

In addition, CIF holds the seller responsible for all risks and expenses — including insurance — until the goods are loaded onto the freight vessel. In contrast, CPT covers any mode of transport, and the seller assumes all responsibility of expenses and risks of the shipping until the goods are delivered to a carrier.

In a CPT transaction, the seller must clear the goods for export and deliver them to a carrier or appointed person at a mutually agreed-upon (between the seller and buyer) destination. Also, the seller pays the freight charges to transport the goods to the specified destination.

Under a cost and freight (CFR) agreement, the seller has a weightier responsibility for arranging and paying for transportation the ordered products. For goods shipped CFR, the shipper is responsible for organizing and paying for the shipping of the products by sea to the destination port, as specified by the receiver.

Ex Works (EXW) is a shipping arrangement in which a seller makes a product available at a specific location, but the buyer has to pay the transport costs.

EXW stands for Ex Works and is one of the 11 Incoterms® rules. It places minimum responsibility on the seller, who makes the goods available at a location, usually the seller's premises or another named place such as a factory or warehouse. The seller does not need to load goods or clear them for export.

A healthy OKR practice requires CFRs: Conversation, Feedback, and Recognition. Discover why using OKRs with CFRs can transform your goal-setting performance from “set them and forget them” to moving from idea to execution.