The four terms differ mainly in how far the seller takes the goods and whether the seller must insure. EXW and FCA work for any transport mode, while FOB and CIF are for sea and inland waterway only. Under CIF the seller arranges insurance and freight to the destination port, but risk still passes to the buyer once goods are on board at the origin port. Because details vary slightly between guides, confirm each obligation against the official ICC Incoterms 2020 text.
Not legal, customs or tax advice. General information only; check duties, documents and contract terms with your customs broker or adviser.
Four rules side by side
| Term | Transport modes | Who clears export | Who pays main carriage | Who insures | Where risk transfers | Import side |
|---|---|---|---|---|---|---|
| EXW (Ex Works) | Any mode | Buyer; the seller has no duty to clear export | Buyer | No insurance duty in the rule | At the named place of delivery, which may or may not be the seller's premises | Import duty is the buyer's |
| FCA (Free Carrier) | Any mode | Seller | Buyer; seller's cost ends at the named handover point | No insurance duty in the rule | At delivery: on loading onto the buyer's vehicle, or on arrival at the named place ready for unloading; at handover to the named carrier or place | Buyer bears customs clearance costs in the country of transit and import |
| FOB (Free on Board) | Sea and inland waterway only | Seller | Buyer pays ocean freight from the vessel | No insurance duty in the rule; risk is the buyer's from loading, so the buyer normally arranges own cover | When goods are loaded on board the vessel at the named port of shipment | Import duty is the buyer's |
| CIF (Cost, Insurance and Freight) | Sea and inland waterway only; reserved for maritime trade | Seller | Seller pays freight to the destination port | Seller, at least Institute Cargo Clauses C | When goods are on board the vessel at the port of shipment | Import duty is the buyer's |
EXW, FCA, FOB and CIF (Incoterms 2020) as described in the guides
Steps to settle the rule before you order
- Decide the transport mode. Sea only points to FOB or CIF; air, road or mixed transport points to EXW or FCA or another any-mode term. [1, 2, 4]
- Decide how far the seller takes the goods. EXW leaves nearly everything to the buyer, FCA and FOB end the seller's job at a handover point, and CIF extends to freight and insurance to the destination port. [1, 2]
- Settle insurance. Under FOB the rule sets no insurance duty and risk is the buyer's from loading, so plan your own cover; under CIF the seller insures at minimum cover. Decide whether that minimum is enough. [2, 3, 6]
- Mark where risk passes. Note the point from the table and make sure your own insurance and inspection timing match it. [1, 2]
- Write the term into the order. Quote the term, the named place and the edition, and keep import clearance and duties in your own plan. [2, 4]
Checklist before you name a rule in a contract
- [ ] Choose FOB or CIF only for port-to-port sea freight [1, 2, 3, 4]
- [ ] Use FCA or another any-mode term for air freight or when goods are handed over inland [1, 2, 4]
- [ ] Name the exact place or port after the term, for example the named port of shipment [1, 2]
- [ ] Write the term with the edition, for example Incoterms 2020, in the purchase order (general practice)
- [ ] Confirm who handles export clearance before agreeing EXW [2, 5]
- [ ] Under CIF, check the insurance cover level, which defaults to Institute Cargo Clauses C [1, 2, 3]
- [ ] Under FOB the rule sets no insurance duty: arrange your own cover and the ocean freight [2, 6]
- [ ] Remember risk passes on board the vessel at origin under both FOB and CIF [1, 2]
- [ ] Do not rely on Incoterms to settle when ownership passes; state it in the contract [4]
- [ ] Plan import duty and import customs clearance on your side [1, 2]
- [ ] Read the official ICC Incoterms 2020 text for full obligations [1, 3]
Cautions
- The guides differ slightly on some cells; the ICC rules are the authority.
- Incoterms do not decide when ownership of the goods passes.
- General information, not legal advice.
Where this site goes deeper
| Page on this site | What it holds |
|---|---|
| Incoterms 2020 for sourcing from India: EXW, FCA, FOB, CIF and DAP compared | Longer walk through the same rules |
| EXW Noida explained for buyers: what you arrange and what the factory does | EXW applied to a Noida pick-up |
| Exporting frames and boards from India: documents, packing and payment | Documents that travel with an export |
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Further reading: Incoterms 2020, Incoterms 2020 explained, Incoterms 2020 (ICC), Know Your Incoterms, Rules for any mode or modes of transport (Incoterms 2020), Rules for Sea and Inland Waterway Transport (Incoterms 2020). General information, not legal, customs or tax advice.