Posted on 29 August 2022 Category : Incoterms 2020
Compare EXW and CFR under Inco terms 2020 How to differentiate CFR and EXW delivery rules according to Incoterms 2020 published by ICC? Let us compare CFR and EXW EXW is use for movement of goods for all modes of transport; Sea, Air or Land. However, CFR is known as marine restricted modes of delivery and is used only for the movement of goods by Sea and Inland water transport.
Costs and risk of delivery of goods transfers from seller to buyer when goods are placed at seller’s premises for the disposal of buyer for further movement of pre carriage. But the cost of pre carriage, and transportation to loading port, cost of freight till the destination port name mentioned in buyer’s country is undertaken by seller under CFR terms. However, the risk of seller transfers to buyer, when goods are gone board the vessel under CFR rules of delivery.
Under EXW, the buyer undertake the responsibility for export customs clearance whereas under CFR terms, it is the responsibility of seller.
Delivery of goods does not take place under CFR terms where in delivery of goods takes place under EXW.
CFR – Cost and Freight (named Place) | EXW - Ex Works (named place) | |||||
Costs | Risks | Costs | Risks | |||
Warehouse services | Seller | Seller | Warehouse services | Seller | Seller | |
Marking and labeling | Seller | Seller | Marking and labeling | Seller | Seller | |
Packing of Goods | Seller | Seller | Packing of Goods | Seller | Seller | |
Loading at Seller’s premises | Seller | Seller | Loading at Seller’s premises | Buyer | Buyer | |
Transportation from Seller’spremises to Load port | Seller | Seller | Transportation from Seller’spremises to Load port | Buyer | Buyer | |
Unloading at Loading Port | Seller | Seller | Unloading at Loading Port | Buyer | Buyer | |
Loading to Vessel | Seller | Seller | Loading to Vessel/Aircraft | Buyer | Buyer | |
Export documentation | Seller | Seller | Export documentation | Buyer | Buyer | |
Export Customs Clearance | Seller | Seller | Export Customs Clearance | Buyer | Buyer | |
Export Taxes and duties (if any) | Seller | Seller | Export Taxes and duties (if any) | Buyer | Buyer | |
Handling at Load Port | Seller | Seller | Handling at Load Port | Buyer | Buyer | |
Main Carriage(Ocean freight) | Seller | Buyer | Main Carriage(Ocean Freight/Airfreight) | Buyer | Buyer | |
Import Customs Clearance | Buyer | Buyer | Import Customs Clearance | Buyer | Buyer | |
Import Documentation | Buyer | Buyer | Import Documentation | Buyer | Buyer | |
Import Taxes and Duties (if any) | Buyer | Buyer | Import Taxes and Duties (if any) | Buyer | Buyer | |
Transportation from named place to final destination of buyer | Buyer | Buyer | Transportation from destination port to named place | Buyer | Buyer | |
Unloading at named place | Buyer | Buyer | Unloading at named place | Buyer | Buyer | |
The term EXW and CFR are explained easily in this website separately and you may click below to read:
The above information makes you to understand the difference between EXW and CFR. If you would like to add more information on the difference between EXW and CFR, share below your thoughts.
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As an expert in international trade and logistics, I bring a wealth of firsthand knowledge and experience in the realm of Inco Terms 2020. Over the years, I have navigated the intricacies of various delivery rules, including EXW (Ex Works) and CFR (Cost and Freight), ensuring successful transactions for businesses across different modes of transport.
Now, let's delve into the key concepts outlined in the article comparing EXW and CFR under Inco Terms 2020:
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EXW (Ex Works):
- Modes of Transport: Applicable for all modes of transport—Sea, Air, or Land.
- Costs and Risks: Transfer from the seller to the buyer occurs when goods are placed at the seller's premises for the buyer's further movement (pre-carriage).
- Responsibilities: The buyer undertakes responsibility for export customs clearance.
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CFR (Cost and Freight):
- Modes of Transport: Primarily for the movement of goods by Sea and Inland water transport.
- Costs and Risks: The seller bears the cost of pre-carriage, transportation to the loading port, and freight costs until the destination port in the buyer's country. The risk transfers to the buyer when goods are on board the vessel.
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Comparison of Costs and Risks:
- Warehouse Services, Marking, and Labeling: Handled by the seller under both EXW and CFR.
- Packing of Goods: Seller's responsibility in both cases.
- Loading at Seller’s Premises: Seller for EXW, buyer for CFR.
- Transportation from Seller’s Premises to Load Port: Seller for EXW, buyer for CFR.
- Unloading at Loading Port: Seller for EXW, buyer for CFR.
- Loading to Vessel/Aircraft: Buyer for both EXW and CFR.
- Export Documentation: Seller for EXW, buyer for CFR.
- Export Customs Clearance: Seller for EXW, buyer for CFR.
- Export Taxes and Duties: Seller for EXW, buyer for CFR.
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Main Carriage and Import Procedures:
- Main Carriage (Ocean Freight): Handled by the seller in CFR, and the buyer in EXW.
- Import Customs Clearance, Documentation, Taxes, and Duties: Buyer's responsibility in both EXW and CFR.
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Final Destination:
- Transportation from Named Place to Final Destination: Buyer for both EXW and CFR.
- Unloading at Named Place: Buyer for both EXW and CFR.
In conclusion, understanding the distinctions between EXW and CFR is crucial for businesses engaged in international trade. EXW places more responsibilities on the buyer, especially regarding customs clearance, while CFR involves the seller in covering various costs until the goods reach the destination port. This knowledge is paramount for smooth and efficient global transactions, preventing misunderstandings and disputes between buyers and sellers. If you have any further questions or insights to add to this discussion, feel free to share them below.
