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For years I've been using "FOB our office" to signify that the buyer pays for all shipping door-to-door, insurance, import duties, etc. In other words, we hand the package to the FedEx guy and that's it.

Today someone pointed out that "FOB" means something entirely different. Here's the breakdown (see table towards the end of the article):

http://en.wikipedia.org/wiki/Incoterms

I can read between the lines and understand that, if you eliminate ships and ports "FOB" probably works. This particular customer wanted it spelled out. The problem is that I don't really see a designation that embodies the "hand it to FedEx and that's it" model. The closest I can get is somewhere between "EXW" (ex-works) and "FCA".

I am leaning towards using "EXW" from now on. At the very least it means (to me) that we charge the customer for the entire shipping process, including our delivery to FedEx.

I'd appreciate clarification on this.

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3 Answers

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The EXW might work if you expect all your clients to understand it or at least most of them.

Often on ebay it is in clear text such as "Shipping to Sweden USD 5 (including trip to post office and packing materials). Import duties, taxes and charges are not included in the item price or shipping charges. These charges are the buyer's responsibility."

This is to make sure the buyer fully understands what the customer is expected to pay for - and since you have gotten one question about it, you might need to spell it out, but IMHO it depends on who your "normal" customer is and what they will know.

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Basically what you are looking for is EXW. With this term, your obligation as the seller is simply to pack the item for export and make it available for pick up at your premises.

There is a lot of confusion around these terms since sometimes U.S. sellers use UCC terms (which are similar) and international buyers use ICC Incoterms. For example, in the U.S., under UCC, a seller can use FOB Company Location, but under ICC Incoterms, this would not be valid (FOB should be used with a port).

Hope that helps!

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up vote 0 down vote

Incoterms are not just about who pays for the shipping an insurance, they're also about where, amongst other things, the change of risk and ownership occurs.

On the basis that you wish to have your customer pay all the costs, you're right that EXW or FCA are likely the right way to go, but you should compare both side by side and understand the subtle differences, choosing the right one for your situation.

In either case, the correct term will be EXW (named place) or FCA (named place) - the named place being important - it could be your own premises, or the first point of delivery, for example, the FedEx office/depot.

If you can't figure it out, call FedEx, one of their reps should be able to help you work through the details. Getting it wrong could lead to legal liability issues, loss of product and your inability to charge the customer.

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