FOB, CIF, EXW: which one is right for you?
In hardware shipments the choice of delivery term determines freight, insurance and risk transfer together. The real cost impact of three common Incoterms.
The delivery term defines not the physical journey of the goods but where responsibility changes hands.
The most common mistake when comparing quotes is placing two prices side by side as if they shared a delivery term. An EXW price looks lower than a FOB price — because it contains none of the costs up to the port.
What separates the three?
The difference is the point at which cost and risk pass to the buyer. Under EXW the goods are handed over at the factory gate; loading, inland transport, customs and freight are the buyer's. Under FOB the seller brings the goods to the vessel. Under CIF, freight and insurance are the seller's as well.
A delivery term is not a line item but a boundary of responsibility. You can only compare prices at the same boundary.
| Item | EXW | FOB | CIF |
|---|---|---|---|
| Inland transport | Buyer | Seller | Seller |
| Export customs | Buyer | Seller | Seller |
| Freight | Buyer | Buyer | Seller |
| Insurance | Buyer | Buyer | Seller |
Which one, when?
Buyers with their own forwarder and consolidation line usually ask for FOB, drawing freight at their contracted rate. In new markets and at small volumes, CIF gives the buyer predictability. EXW only makes sense if the buyer has an operation in Türkiye.
- Does the buyer have a forwarder?
- Is the volume enough to fill a container?
- Whose policy prices the insurance more cheaply?
- Which delivery term do the letter-of-credit conditions require?
How to reflect it in the quote
State the delivery term together with the port of loading and discharge on the proforma. If you are offering the buyer two alternatives, show both on the same line — that is the only way they can see the difference.
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