International cargo trade involves a number of delivery terms which may seem complicated. This post discusses the difference between important International commerce (Inco) terms like Ex Works and FCA.
Ex Works (EXW) Delivery
Here, the seller is responsible for delivering the goods to the buyer. These goods are delivered at the seller’s premises such as an office or warehouse.
The transportation is arranged by the buyer as well as the overall costs of carrying the cargo from the seller’s premises to the buyer’s final destination. This means that the seller doesn’t have to worry about customs duty and overseas transport.
As far as the carriage of goods to the buyer’s destination is concerned, the seller may help in loading/unloading the goods to the buyer’s carrier. The buyer, however, arranges the transport insurance according to the Ex Works terms and conditions.
When it comes to this type of delivery arrangement, the seller is responsible for delivering the goods to the carrier. These goods have to be cleared for export and be delivered at the designated destination mentioned in the FCA contract.
Once the cargo reaches this location, the seller is no longer under any obligation. From that point on, the buyer is responsible for the goods, as mentioned in the contract.
Usually, the buyer requests the seller’s assistance to deliver goods at the designated location. The delivery costs are borne by the buyer and they take responsibility for all risks.
In case the location for the goods delivery isn’t specified in the FCA contract, the buyer and seller could mutually agree to have the goods delivered to the buyer’s carrier.
When Are These Delivery Terms Used?
If both parties reach a mutual decision, the cargo may be delivered ay the seller’s premises instead of the buyer’s carrier. Ex Works terms are used in such transactions.
When goods are transported via container shipment and Ro-Ro movement, FCA delivery might be used. FCA terms are also used in business transactions where the buyer does not complete the export formalities.
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