In the international trade of the chemical industry, delivery terms are one of the key factors determining the success of a transaction. Different delivery terms affect cost allocation, risk sharing, and the actual delivery of goods. This article will conduct an in-depth analysis of three common delivery terms—EXW, FOB, and CIF—to help practitioners in the chemical industry better understand and apply these terms.
EXW: Seller Responsible for Transportation (Seller’s Delivery)
EXW (Ex Works) refers to "Seller Responsible for Transportation" (Seller undertakes Delivery), meaning the seller is responsible for transporting the goods to the location specified in the contract and completing the delivery. The EXW term usually appears in contracts for imported goods, especially chemical products, as they typically involve overseas transportation.
Features:
The seller is responsible for transporting the goods to the designated location and completing delivery.
The seller must ensure the goods are loaded onto the vessel or handed over to the carrier.
The seller must provide all relevant documents, including packing lists, receipts, etc.
Applicable Scenarios:
Petrochemical products (e.g., petroleum, natural gas)
Pharmaceuticals and chemical raw materials
Electronic products and precision instruments (some fields involving chemicals)
Potential Risks:
The goods may be lost or damaged during transportation by the seller.
The seller fails to notify the buyer of the goods’ status in a timely manner, leading the buyer to mistakenly believe the goods have arrived.
How to Choose the EXW Term:
Negotiate with the seller on the packaging and transportation details of the goods.
Ensure the seller has the capability and resources to bear transportation risks.
Conduct regular cargo tracking and confirmation of goods arrival.
FOB: Buyer Bears Freight Costs (Buyer Responsible for Freight)
FOB (Free on Board) means "Buyer Bears Freight Costs" (Buyer is responsible for freight), i.e., the buyer is responsible for transporting the goods to the location specified in the contract. The FOB term is common in export contracts, particularly for chemical products, as export costs are usually borne by the buyer.
Features:
The buyer is responsible for transporting the goods to the designated location.
The seller is responsible for loading the goods onto the vessel and delivering them to the carrier.
The seller must provide the packing list and relevant documents.
Applicable Scenarios:
Export of petroleum and natural gas
Export of textiles and chemical raw materials
Export of high-tech products (some involving chemical components)
Potential Risks:
The goods may be lost or damaged during transportation by the buyer.
The seller’s uncertain transportation time affects the delivery cycle.
How to Choose the FOB Term:
Confirm whether the buyer has sufficient resources and capabilities to bear transportation risks.
Ensure the seller can complete the shipment on time.
Maintain close communication with the buyer to avoid transportation delays.
CIF: Comprehensive Transportation (Consignment Insurance Forwarding) (Insurance Coverage)
CIF (Cost, Insurance, Freight) refers to "Comprehensive Transportation with Insurance Cost Coverage" (Insurance premium borne by the buyer), which is a delivery term where both the buyer and the seller jointly bear transportation risks. The CIF term is commonly used for the transportation of highly hazardous goods, such as chemicals and electronic components.
Features:
The seller is responsible for transporting the goods to the loading port and handing them over to the buyer.
The seller must bear all risks of the goods during transportation (including loss, damage, theft, etc.).
The buyer must pay the insurance premium to cover the risks.
Applicable Scenarios:
Transportation of hazardous chemicals (e.g., explosives, corrosive substances)
Electronic components and precision instruments
Special materials and equipment (e.g., glassware, metal materials)
Potential Risks:
The goods may be lost or damaged during transportation by the seller.
The seller may not be able to fully cover the goods’ risks, requiring the buyer to bear part of the responsibility.
How to Choose the CIF Term:
Confirm whether the seller has sufficient resources and capabilities to bear transportation risks.
Ensure the buyer has sufficient funds to pay the insurance premium.
Negotiate with the seller on the specific scope and content of insurance liability.
How to Choose the Appropriate Delivery Term
Hazardous chemicals: Prioritize the CIF term, as their transportation involves high risks.
Lightweight goods: The FOB term has lower costs and is suitable for exports.
Critical goods: The EXW term involves lower risks and is suitable for importing key chemicals.
FOB term: Lower costs, suitable for buyers with limited budgets.
EXW term: Higher costs, suitable for customers where the seller has sufficient resources to bear transportation risks.
CIF term: Highest costs, suitable for high-risk goods and buyers with sufficient funds to bear insurance liabilities.
EXW term: Seller is responsible for transportation, suitable for importing key chemicals.
FOB term: Buyer is responsible for transportation, suitable for lightweight goods.
CIF term: Both buyer and seller jointly bear risks, suitable for highly hazardous goods.
Before signing the contract, communicate fully with the seller and buyer to clarify the delivery terms and attribution of responsibility.
Ensure all responsibilities and obligations are clearly defined to avoid future disputes.
Precautions in Practical Operations
Choose a Reliable Transporter:
Ensure the transporter has sufficient experience in handling chemical products.
Ensure the transporter has appropriate insurance and risk coverage capabilities.
Clarify Documents and Certificates:
Ensure the documents and certificates provided by the seller are clear and complete.
Ensure the goods received by the buyer are consistent with the contract requirements.
Track the Status of Goods Regularly:
Use a logistics tracking system to monitor the status of goods in real time.
Ensure the buyer receives the goods in a timely manner and confirms receipt.
Insurance and Guarantees:
Under the CIF term, the buyer must pay an appropriate insurance premium.
During the transportation of hazardous chemicals, the buyer may need to provide guarantees or other forms of risk protection.
By gaining an in-depth understanding of the EXW, FOB, and CIF delivery terms, practitioners in the chemical industry can better manage delivery risks, plan costs rationally, and ensure the smooth progress of transactions. Choosing the appropriate delivery term requires a comprehensive consideration of factors such as the nature of the goods, cost, and risk sharing. The ultimate goal is to achieve efficient transactions and maximize the interests of both parties.
Post time: Sep-22-2025
