Compare CIP and EXW under Inco terms

Inco terms 2020 - Difference between EXW and CIP

CIP – Carriage and Insurance Paid to a named place and Ex Works (EXW)

CIP and EXW delivery terms rules are used for any modes of transport – Air, Sea or Land.  However there are some difference between CIP and EXW.  Let us discuss the differences between both.

 The liability on costs involved for an exporter under EXW ends at exporter’s country, where as under CIP terms, the responsibility of cost transfers from exporter to importer at importer’s country. 

Under CIP terms, the seller delivers goods to the named place or the carrier nominated by the buyer at buyer’s country, whereas the seller’s responsibility on costs and risks under EXW ends when placing goods at his premises or named place.

The costs and risks involved for loading of goods at seller’s premises is with the Seller under CIP terms, where as it are at the buyer’s in case of EXW.

Under EXW terms pre carriage is done by Buyer with his costs and risks, whereas under CIP terms, the seller is responsible for cost and risk involved under pre carriage. 

Under EXW, the buyer is responsible for main carriage where as the seller is responsible for main carriage under an Export Import Trade.

Export documentation and export customs clearance is undertaken by the importer under EXW terms, but export customs clearance and documentation is done by exporter under CIP terms.

In an export import trade, the exporter undertakes the cost of main carriage under CIP terms of delivery whereas the costs and risks of main carriage is the responsibility of importer under EXW.

Importer takes care of Insurance under EXW, but it is the responsibility of Exporter to arrange insurance under CIP terms.

Import documentation and customs clearance at importing country is undertaken by the buyer under EXW terms, but   the same responsibility is on the shoulder of exporter under CIP terms.

On carriage to named placed contracted is paid by the seller under CIP terms whereas the on carriage risks and costs is undertaken by importer under EXW delivery rules under Incoterms 2020.

Under EXW the delivery to named place takes place at buyer’s premises or specific location named.  However, under CIP terms the delivery takes place at the time of goods gone on board the vessel or aircraft (main carriage) however the costs shared up to the named location at importers country.   Means, under CIP terms, the risks transfers from buyer to seller at the time of goods gone onboard the vessel or aircraft but cost shared up to the named place reached. 

If  the seller is not familiar with the local transportation and risk involved in pre carriage, main carriage and on carriage of  movement of goods with export customs clearance process  and does  want to take minimum risks and costs involved in movement of goods, he opts EXW terms.  However, under CIP terms, the seller is aware of the costs and risk involved in pre carriage, the costs involved under main carriage and the expenses involved at on carriage at destination country.

You may read our  detailed article about CIP terms and EXW terms of delivery according to Inco Terms 2020 published by International Chamber of Commerce.

Click here to read EXW Ex Works delivery rules under Inco terms 2020

Read here to know more about CIP terms of delivery under Inco Terms 2020

The information provided above clearly explains the difference between CIP and EXW  under movement of goods rules explained  by ICC as per Inco terms 2020.

Click here to read other delivery rules under Inco terms  

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