EX Works vs. FOB: Understanding the Key Differences and Choosing the Right Shipping Term for Your Business
To summarize, it is vital to compare and distinguish between EX Works (EXW) and Free On Board (FOB) in order to understand the basic concepts of the international trade. These Incoterms describe when the title passes to the buyer or the seller makes the opposite and when the parties’ respective risks transfer or not.
The basic selling term has low complexity and a low level of selling responsibility, performed by the seller, which will be interesting for those buyers who are ready to take full responsibility for transportation and related costs starting with the pickup. On the other hand, FOB transfers the shipping responsibility off of the seller up to the point that the goods are aboard the vessel at the port of origin, which helps several buyers who are capable of organizing their international shipments and transportation and looking for ways to cut costs.
Should one choose between EXW and the FOB terms? Well, the answer majorly lies in logistics potential, risk management, and costs. Thus, having considered this criteria against the business interests, it becomes possible for a firm to take up the right shipping and trade term, that can enhance correct international transactions and further the interest of trade cooperation by providing proper guidance to the partners on how they can manage their trading shake well. It is equally important to understand such terms to avoid the development of bad strategies as it also helps to increase the realization of better profits in the global market.