|
Aspect of Comparison |
EXW (Ex Works) |
CIF (Cost, Insurance, Freight) |
|
Main Responsibility |
The seller only provides goods at their factory or warehouse, having no responsibility for transportation, insurance, or export formalities. |
The seller takes care of transporting the goods to the destination port, arranging insurance, paying freight and insurance costs, and bears the risk until the goods cross the ship's rail at the port of shipment. |
|
Transfer of Risk |
Risk passes to the buyer right after the goods are delivered at the factory or warehouse. |
Risk is transferred to the buyer once the goods cross the ship's rail at the port of shipment. |
|
Cost Liability |
The buyer is accountable for all costs, including transportation, insurance, export and import customs, and taxes. |
The seller covers: - International freight and insurance - Export taxes and loading fees The buyer is responsible for: - Import customs and taxes. |
|
Export Processes |
The seller is not required to handle export clearance; the buyer has to manage it. |
The seller must complete export customs procedures and supply relevant documents, such as the bill of lading and insurance policy. |
|
Transport Modes Applicable |
Can be used for any mode of transport, like road or air. |
Only suitable for sea or inland waterway transportation. |
|
Typical Situations |
It is suitable when the buyer is familiar with the exporter's country processes or wants to have full control over logistics, for example, in local sourcing. |
It is preferred when the buyer wants the seller to be fully responsible for transportation and insurance, such as for high - value goods or long - distance sea shipments. |
A Chinese manufacturer (seller) gives the goods to a US importer (buyer) at their Guangzhou factory. The buyer independently arranges truck transportation to Shenzhen port, pays for international freight and insurance, and assumes the risk of damage during transportation.
A Chinese exporter (seller) ships the goods to Shanghai port, loads them onto a ship, and pays freight, insurance, and export duties. If the goods are damaged by fire during transportation, the buyer bears the loss as the risk was transferred after the goods crossed the ship's rail.
