Ex-Works

Ex-Works describes when a seller makes a product available at a specific location, and the buyer of the product must cover the transport costs.

When the goods are with the buyer’s agent or representative, the buyer is responsible for other risks, such like loading the goods onto trucks, transferring them to a ship or plane, and meeting customs regulations.

Free Carrier

For international trade, Free Carrier (FCA) could be used. It mandates the seller to clear the goods for export at the country of origin and make the goods available at a set location, with the risk of loss or damage during that operation clearly remaining with the seller.

Important Changes

  • DAT (Delivered at Terminal) changed to DPU (Delivered at Place Unloaded): This means the seller delivers the goods, and transfers the risk to the buyer.
  • Change of Insurance in CIP: In Incoterms 2020, CIP (Carriage and Insurance Paid to) has increased the insurance required to Clause A (Institute of Cargo Clauses), no change for CIF (Cost, Insurance and Freight).
  • FCA (Free Carrier) and Bills of Lading: In Incoterms 2020, FCA has been changed to allow the parties to agree for the buyer to direct the carrier to issue the on-board bill of lading to the seller.
  • Costs are Clarified: Incoterms 2020 clearly details the allocation of costs between seller and buyer, as a response to the increasing disputes about the allocation of costs, especially those in or around the port or place of delivery.
  • Security Requirements: Transport security requirements have become more prevalent, as they bring cost, and risk delay if not fulfilled. Incoterms 2020 makes security obligations more prominent.

Credit: Agility