EXW vs FOB vs CIF — when to use each

Three Incoterms dominate everyday trade conversations: EXW, FOB, and CIF. Understanding the practical differences will help you negotiate better and avoid unexpected costs.

EXW (Ex Works)

The seller makes goods available at their premises. The buyer arranges everything — pickup, export customs, freight, insurance, and import clearance. Best when the buyer has a strong logistics setup or a local freight forwarder near the factory.

FOB (Free on Board)

The seller delivers goods on board the vessel at the port of shipment. From that point, cost and risk shift to the buyer. FOB is the most popular term for sea freight because it clearly splits responsibilities at the ship's rail.

CIF (Cost, Insurance, and Freight)

The seller pays freight and minimum insurance to the destination port. Risk still transfers at the origin port, but the buyer receives goods at their port with transport costs pre-paid. CIF is convenient for buyers who want a single landed-port price.

Quick Comparison

Seller effort: EXW (least) → FOB (moderate) → CIF (most).

Buyer control over logistics: EXW (full) → FOB (from port onward) → CIF (from destination port onward).

On Faktorist, you can switch Incoterms at any stage of negotiation. The platform recalculates indicative cost breakdowns automatically.