Incoterms® Explained

EXW (Ex Works) – Ex Farm 

When you agree to the EXW Incoterm®, the buyer is responsible for all the expenses from:

  • Pick-up of goods from the seller’s silo or farm,
  • Moving the goods through any export procedures and paying any associated costs,
  • Delivering the goods to the appropriate terminal,

Some buyers choose EXW because it offers them the lowest cost from the seller.

FCA (Free Carrier)

The FCA Incoterm® may, however, offer buyers a distinct advantage over EXW. Unlike EXW, FCA requires the seller to deliver goods to a specified location, often a silo or mill. The buyer is then responsible for arranging all transportation from that point forward.

Although it seems like a minor difference, this one provision can often save buyers some money.

Under the EXW Incoterm®, the buyer must arrange for exclusive delivery. When a seller can consolidate several shipments into a single delivery- for example, if the seller often delivers goods to the silo/mill, the consolidated services will enable the seller to offer the buyer a lower price, thus reaping the benefits of the FCA Incoterm®.

However, once the goods get to the specified location, the buyer is responsible for everything past that point.

DAP (Delivered at Place)

The DAP Incoterm® dictates that the seller pays for all costs from the source to the destination terminal. The DAP Incoterm® also includes:

  • Loading the goods on a truck at the destination silo/mill.
  • Delivery to the final destination.

Additionally, the buyer must pay any customs import fees and taxes.

Although the DAP Incoterm® does not require insurance, the seller takes responsibility to ensure the goods reach the final destination.

It is ultimately the seller’s decision to opt for insurance coverage. If goods are lost or damaged in transit, the seller will be responsible for compensating the buyer.

Contact our offices on +27 (0)13 243 1166 to talk to one of our grain traders should you have any further questions regarding Incoterms®.