Chemical Delivery Terms: Understanding EXW, FOB and CIF

Essential knowledge of chemical industry: EXW, FOB and CIF delivery terms are fully analyzed.

In international trade in the chemical industry, the terms of delivery are one of the key factors in the success of the transaction. Different delivery terms will affect the cost, risk sharing and the actual delivery of the goods. This article will provide an in-depth analysis of the three common delivery terms of EXW, FOB and CIF to help chemical industry practitioners better understand and apply these terms.

1. EXW: Seller is responsible for transportation (Seller DELIVERY)

EXW(Ex Works) is short for "the seller is responsible for carriage" (the Sellers is responsible for Delivery), which means that the seller is responsible for transporting the goods to the place specified in the contract and completing delivery. EXW clauses are commonly found in contracts for the import of goods, especially chemical products, as they often involve overseas shipments.

Features:

1. the seller is responsible for transporting the goods to the designated place and completing the delivery.
2. The seller needs to ensure that the goods have been loaded or delivered to the carrier.
3. Seller shall provide all relevant documents including packing list, receipt, etc.

Applicable scene:

• petrochemicals (e. g. oil, natural gas)
• pharmaceutical and chemical raw materials
• electronic products and precision instruments (some fields involve chemical industry)

potential risks:

• the seller may lose or damage the goods during transportation.
• The seller did not inform the buyer of the condition of the goods in time, causing the buyer to mistakenly believe that the goods had arrived.

How to choose EXW terms:

• negotiate with the seller the packing and shipping details of the goods.
• Ensure that the seller has the ability and resources to bear the risk of transportation.
• Fixed futures tracking and cargo arrival confirmation.

2. FOB: freight own (freight own)(buyers are responsible for freight)

FOB(Free on Board) means "freight own", I .e. the buyer is responsible for transporting the goods to the place specified in the contract. FOB clauses are common in export contracts, especially in chemical products, because the export cost is usually borne by the buyer.

Features:

1. the buyer is responsible for transporting the goods to the designated place.
2. The seller is responsible for loading and delivering the goods to the carrier.
3. The Seller shall provide the packing list and relevant documents.

Applicable scene:

• oil and gas exports
• textile and chemical raw material export
• exports of high-tech products (partly related to chemical components)

potential risks:

• the buyer may lose or damage the goods during transportation.
• The seller's shipping time is uncertain, affecting the delivery cycle.

How to choose FOB terms:

• determine whether the buyer has sufficient resources and capacity to bear the transportation risk.
• Ensure that the seller is able to complete the shipment on time.
• Keep close communication with buyer to avoid shipping delay.

3. CIF: Package Transportation (Consignment Insurance Forwarding)(Safety Rotation)

CIF(Cost Insurance Freight) is "package transport, insurance premium burden" (package transport, insurance premium borne by the buyer), is a delivery clause in which the buyer and seller share the risk of transportation. CIF provisions are commonly used in the transport of highly dangerous goods, such as chemicals and electronic components.

Features:

1. the seller is responsible for transporting the goods to the port of loading and handing them over to the buyer.
2. The seller bears all the risks of the goods in transit (including loss, damage, theft, etc.).
3. The buyer is required to pay a premium to cover the risk.

Applicable scene:

• transport of hazardous chemicals (e. g. explosives, corrosives)
• electronic components and precision instruments
• special materials and equipment (e. g. glassware, metal materials)

potential risks:

• the seller may lose or damage the goods during transportation.
• The seller may not be able to fully cover the risk of the goods and the buyer is partially liable.

How to choose CIF terms:

• determine whether the seller has sufficient resources and capacity to bear the transportation risk.
• Ensure that the buyer has sufficient funds to pay the insurance premium.
• Negotiate with the seller the specific scope and content of the insurance liability.

4. how to choose the right delivery terms.

In the international trade of chemical industry, it is very important to choose the right delivery terms. The following are recommendations when choosing delivery terms:

1. assess cargo properties:

• hazardous chemicals: CIF clause is preferred because of its higher transportation risk.
• Light cargo: FOB terms are low cost and suitable for export.
• Important goods: EXW terms are low risk and suitable for importing key chemicals.

1. Consider costs and risks:

• FOB terms are low cost and suitable for buyers with limited budgets.
• The EXW clause is costly and suitable for customers where the seller has sufficient resources to bear the transportation risk.
• The CIF clause has the highest cost and is suitable for buyers of high-risk goods and buyers who have sufficient funds to assume insurance liability.

1. Clarify the attribution of responsibility for goods:

• EXW clause: Seller is responsible for transportation, suitable for import of key chemicals.
• FOB terms: The buyer is responsible for transportation, suitable for light goods.
• CIF clause: Buyer and seller share the risk, suitable for highly dangerous goods.

1. Negotiate with suppliers and customers:

• before signing the contract, fully communicate with the seller and the buyer to clarify the terms of delivery and responsibility.
• Ensure that all responsibilities and obligations are clear to avoid future disputes.

Precautions in the actual operation of the 5.

1. Choose a reliable carrier:

• ensure that transporters have sufficient experience in handling chemical products.
• Ensure that transporters have appropriate insurance and risk coverage capabilities.

1. Clear documents and documents:

• ensure that documents and documents provided by the seller are clear and complete.
• Ensure that the goods received by the buyer are in accordance with the contract requirements.

1. Regular tracking of cargo status:

• use a logistics tracking system to monitor the status of goods in real time.
• Ensure timely receipt of goods by buyer and confirmation of receipt.

1. Insurance and guarantee:

• under CIF terms, the buyer is required to pay the appropriate premium.
• In the transport of hazardous chemicals, the buyer may be required to provide guarantees or other forms of risk protection.

Through a deep understanding of EXW, FOB and CIF delivery terms, chemical industry practitioners can better manage delivery risks, reasonably plan costs, and ensure smooth transactions. Choosing the right delivery terms requires a comprehensive consideration of the attributes of the goods, cost and risk sharing, and ultimately goal is to achieve the efficiency of the transaction and maximize the interests of both parties.