Difference between ex works and FOB
Thursday, October 27, 2016     Category : For Beginners

 The information provided here is part of Import Export Training online


 

How to distinguish FOB and ex works. Let us find what is ex-works and what is FOB terms. 


In this article, I would like to explain about ex works and FOB.
 

What does Ex-works mean?  

Ex-factory price means, the selling cost of goods at seller's factory. All other expenses from the factory of seller to buyer's place have to be borne by the buyer. So the responsibility of getting goods from the seller’s factory is with the buyer. Here the buyer appoints a shipping and freight forwarding company to collect goods from the seller’s factory to the buyers place including insurance of goods.


Difference between ex works and FOB copy How Ex factory terms works.


I will explain Ex-factory terms of delivery with a simple example. You are a Machinery seller situated in a place near Mumbai, India. The buyer is situated in New York. You are the seller of goods and you have contracted with the buyer and agreed to sell the goods on ex-factory price of USD 5000. Here the selling cost of goods is USD 5000 ex-factory. As I have explained, all further cost to reach the goods to the buyers place has to be met by the buyer. As per the instruction given by the buyer, freight forwarder contact his counterpart in Mumbai and arranges to pick up goods from seller’s factory. Seller delivers goods to freight forwarder after confirming the authenticity of the freight forwarder through his buyer. All expenses of freight forwarder will be paid by the buyer. Buyer arrange to insure the goods and pay the cost of insurance.

 

What is FOB price and how FOB terms works? FOB means Freight on Board or Free On Board. If terms of delivery of a transaction is on FOB, the cost of movement of goods on board of Airlines or on board of ship is borne by the seller.


How FOB works.


I will explain FOB terms of delivery with a simple example. You are a Machinery seller situated near Mumbai, India. The buyer is situated in a place near New York. You are the seller of goods and you have contracted with the buyer and agreed to sell the goods on FOB, Mumbai price of USD 5300. Here the selling cost of goods is USD 5300 FOB Mumbai. So the seller meets all expenses to carry the goods to Mumbai port and meet all expenses including customs clearance in Mumbai to get the goods on board of Airlines or Ship. As I have explained, all further cost up to buyer's place has to be met by the buyer. The buyer nominates shipping company or airlines and seller ship the goods as per buyer's advice. The buyer pays the cost of freight to the shipping company or airlines. Buyer arrange to insure the goods and pay the cost of insurance.

Detailed articles about Inco Terms of Delivery under export and import of International business  have been mentioned in  separate category – INCO TERMS – in this web site.  You can click here to read.

 
In this article, I have explained about the  EX FACTORY price and FOB price in Import Export trade of International business.  I hope you could make clear about the difference between FOB price and EX FACTORY PRICE in export improt trade.  Do you wish to add more information about the difference between FOB and EX  WORKS of delivery terms in International trade?  Share below your  knowledge and experience below about EX WORKS and FOB in international business.

Comment below your thoughts and discuss about FOB and EX WORKS terms of delivery used in export import.

 


The above information is a part of Export Import Training online


Other post about import export cauching

 

Difference between DAP and DDP.

Difference between C&F/C&I/CIF.

Difference between DDU and DAP

Difference between DAP in payment terms and DAP in delivery terms.

What is CIF terms of delivery in Exports and Imports?

Is Airway bill a documents of title?

How to start Export Business?

How to get Export Orders?

What are the risks and solutions in Export Business?

Click here to know India Trade Classification(ITC)

Click here to know HS code of other product/commodity

Service Tax - Click here to read complete notification under Budget 2014

What is Bank post shipment credit to exporters?

Types of export containers
Measurement of export containers
Exim Policy of India 2015-20
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

Difference between standard dry container and Open Top Container
How to import Prepared vegetables, Prepared fruits, Prepared nuts           
Guidelines to importers of Prepared Cereals, Prepared Flour, Prepared starch and Prepared Milk           
Import processes of Cocoa and Cocoa products     
Trade Facilitation Agreement ( TFA) and India         
Period of post shipment credit to exporters   
How does a Running bond work?
How does CENVAT Credit work? 
Import General Manifest (IGM)
Importance of Bill of Lading 
Procedure to Import Ships and Floating Structures  
How to Import Musical Instruments, Parts and Accessories
Procedures to Import Clocks, Watches        
How to import Optical, Photographic, Medical Instruments and Accessories          
Types of Export Containers   
Dimension of Cargo Containers



Comments

 
Mohamed Bakr- Egypt Says :
Monday, April 22, 2013
Thank you very much. Very good Article, which rich with important information for me.
vijay Says :
Friday, June 21, 2013
very useful information
jon Says :
Saturday, September 21, 2013
Dear sir, My name is jon and your website is very helpful to many students. As a beginner in study "HOW TO EXPORT AND IMPORT PROCEDURE" , please tell me who decide or determine the freight charges terms (freight collect or prepaid) in MBL and HBL in case of export and import awaiting for you reply with thanks in advance Rgds jon
MOHAMMED INAYATH Says :
Tuesday, November 26, 2013
Dear sir, this is very help full for us, I want some clarification for tomato export from icd Bangalore, what documents riqvd to tomato export from icd Bangalore, we have 1 tomato shipment, so please you conform me, regards inayath
Den Hamuntanga Says :
Wednesday, December 04, 2013
Very useful imformation.and i would like to learn more as a student in Clearing and Forwarding.
David Obaseki Says :
Friday, December 13, 2013
Very insightful and simple in explanation. Thanks
Jalal Jafri Says :
Saturday, January 04, 2014
Your site is well done and has been very helpful. Appreciate it very much. I will recommend it to my associates. Thanks.
Rajab F. Haji Says :
Saturday, February 08, 2014
very useful site
muhammed kaleemullah Says :
Wednesday, February 19, 2014
This site is knowledge provider and helpful very integently
Edward O. Says :
Tuesday, February 25, 2014
This is very useful. I liked the simple example used to explain FOB. Thanks
Surendran Kollerath Says :
Saturday, March 08, 2014
Hi Mohammed Inayath, You can contact a consultant specialized in Agricultural Perishable goods, if you would like to export raw tomato. If processed tomato, you can approach APEDA office also.
Baliarsingh Ayodhyanath Says :
Wednesday, September 10, 2014
A nice website ,It just works as a knowledge health capsul for each new entreprinuer/student /professional .I have sugested most of coligues to get a bussiness term daily early morning mail. Thanks the site .
R.Yakoob Ahmed Says :
Thursday, October 30, 2014
Your site is well done and has been very helpful.Thanks the site .
J.NAGARAJAN Says :
Friday, November 07, 2014
Dear Sir, I have a question to ask. In the case of Ex Mill export in Foreign Currency when the sale is accounted for and against which document we can treat the sale of goods as completed. Please reply asap Thanks,
David Says :
Tuesday, March 03, 2015
Hello, thank you for the very useful article. I am reviewing an interesting case. I have some sales that are nominally (written on the paper) under EX Works terms. The freight company BILLS to the CUSTOMER. However the freight company is actually APPOINTED and RECEIVES INSTRUCTIONS FROM THE SELLER (when, where to deliver and, in case the buyer does not pay even to ship back the goods to the seller). Is it an EX Work or something else?
Udaya Says :
Friday, March 27, 2015
On ex-work basis if export duty is involved who will have to bear it. Theoretically the buyer will have to pay. Isn't it? But would there be a possibility or technical point to convince seller to bear export duties?
john moses Says :
Monday, April 13, 2015
Could explain this FOB and EXW in swahili Language
fatima Says :
Wednesday, April 15, 2015
Hello sir I am first time to import business. your article is best but I don't understand insurance pay to buyer. yesterday factory pi Bill. it's have title EX work,covered by the buyer. please explain me this line. thank you sir. reply me.. best regards..
Phan Nhat Quang Says :
Saturday, April 18, 2015
Thanks, I find your information very helful.
Mike Says :
Wednesday, August 26, 2015
Very professional - excellent at par
Mukkesh Says :
Monday, October 12, 2015
Since duty is levied on CIF (FOB+Freight+Insurance) In case of Ex-Works Invoice - do u need to add actual freight & insurance for calculating duty OR the transportation,loading/unloading, customs clearance charges... etc are also added to arrive at FOB Value.
Joseph Says :
Wednesday, January 13, 2016
Very incisive, very helpful. Thank you.
Bow Says :
Friday, February 19, 2016
we can identify the place to get the goods in term of ex work or have only ex work at factory of seller? example: Ex work at the airport
Mickey Tramo Says :
Wednesday, May 04, 2016
For domestic US buyers, F.O.B. means the buyer will be paying for the full cost of delivery from the factory. This includes all relevant freight and insurance charges. Colloquially it's known as "Freight on Buyer" although that's not the literal meaning.
Virgie Canlapan Says :
Wednesday, August 03, 2016
In inporting goods , what is the best to use in terms of payment , the FOB , CIF , or EXW. Please help me
Jessica Multiturbo Says :
Tuesday, August 09, 2016
I would like to bring some of Holland products here in Brazil. What do I need to send so they can make the price of shipping? I'm having trouble to bring by airlines such as DHL, as the freight is absurdly high.
Yashesh Parekh Says :
Thursday, August 18, 2016
I am Yashesh Parekh If a physical broker is to assist in valuing product, what key information will they need in order to give you an indicative FOB number? Kindly help me with this question.
Abdu Says :
Wednesday, October 12, 2016
Thank you a lot its enough to get better understand about Ex-work and FOB.
Nithya.A Says :
Tuesday, November 22, 2016
Very Informative.
SHRUTHI Says :
Wednesday, February 08, 2017
Thanks for your good Information
 

Discussion Forum


You can also share your thoughts about this article.
Any one can answer on question posted by Readers



  Your Name - required  
  Email ID will not be published - Required  
   
(Enter above code)  


 

   
Track Your Air Shipment Here 
Track Your Sea Shipment Here 
   
   
   
   
   
 
Most Recent Articles
» Service Tax changes, Government notification,Indian Budget 2017-18
» Notification on excise tax tariff rate changes under Budget 2017-18 India
» Notification on Import Customs duty rate changes India Budget 2017-18
» Hike in rate of duty for cigarettes, Indian Budget 2017-18
» Difference between Personal Income Tax rates 2016-17 and 2017-18 in India
» Income Tax Act Section 56 as per Budget 2017-18
» Goods And Services Tax, Indian Budget 2017-18
» Personal Income-Tax, Indian Budget 2017-18
» Scheme for Ease Of Doing Business, Indian Budget 2017-18
» Scheme for Transparency In Electoral Funding, Indian Budget 2017-18
  Import  |
  Export  |
  For Beginners  |
  Track Your Shipment  |
  Abbreviations  |
  Inco Terms  |
  Export India  |
  Import India  |
  Import US  |
  Export Import Terms  |
  Export incentives and benefits  |
  FAQ  |
  Bill of Lading  |
  Foreign Trade Policy 2015-20  |
  Start your own Export Import Business  |
  HS code  |
  Indian Budget 2014-15  |
  Banking (India)  |
  India Trade Classification (ITC)  |
  How to Import  |
  Containers  |
  Indian Budget 2015-16  |
  Income Tax  |
  Forms  |
  How to export  |
  Foreign Trade Policy 2014-19  |
  Freight forwarding Terms  |
  Business Terms  |
  Terms in Banking  |
  Shipping Terms  |
  Import Terms  |
  Export Terms  |
  Customs Terms  |
  Excise Terms  |
  International Business Terms  |
  Notifications  |
  GST  |
  SVB  |
  Indian Budget 2016-17  |
  Income Tax  |
  HS Codes  |
  GST Law  |
  GST,FAQ  |
  HSN Codes for GST  |
  SAC for GST  |
  Indian Budget 2017-18  |
  Service Tax 2017  |
  Me  |  Privacy policy  |  Terms and conditions  
Designed and Hosted by Adsin Media