Today I would like to write about the differences between another two frequently used incoterms: EXW and FCA.
Let me start with the definitions of these trade terms in question.
- EXW (Ex Works) means that the exporter delivers when it places the goods at the disposal of the buyer at the exporter’s premises or at another named place (i.e., works, factory, warehouse, etc.).
- FCA (Free Carrier) means that the exporter delivers the goods to the carrier or another person nominated by the buyer at the exporter’s premises or another named place.
- Under the Ex Works trade term, exporter has no obligation to make the export custom clearance of the goods. All custom operations, either export custom operations or import custom operations, must be handled by the importer under ex works deliveries.
- Under Free Carrier trade term, exporter has to cleared goods for export. As a result all export custom operations must be completed by the exporter under free carrier deliveries.
- Under the Ex Works trade term, exporter has no obligation to load the goods any collecting vehicle.
- Under Free Carrier trade term, if exporter delivers goods at his own premises, then exporter must load the goods to the means of transport provided by the importer. In any other case, exporter must make ready of the goods at the disposal of the carrier on the exporter’s means of transport ready for unloading.
- Ex Works delivery term is more suitable for domestic trade, or within an economic community like European Union, where no custom borders exist between member countries.
- Free Carrier delivery term is more suitable for international trade.