FCA and EXW form part of Incoterms® 2020. Both these terms are very similar. Both of these terms can be used for any mode of transport. However, there are some important differences between FCA vs EXW. Let’s look at them closer to understand them better.
Free Carrier (FCA):
In FCA terms, delivery is made at the seller’s side. Delivery is made in the seller’s warehouse or any other agreed upon location. When delivery is made in the seller’s warehouse, it is only complete when the cargo is loaded onto the collecting vehicle. Regardless of where delivery is made, the seller will still be required to act as the exporter of record. If both the seller and buyer agree, the seller can arrange for transport at normal rates. The buyer must still pay for transport.
EXW is a well known Incoterm, as it places the least amount of responsibility on the seller. In this tern, the seller simply has to make the cargo available and ready for collection at his/her premises on the stipulated date and time. The seller does not have to act the exporter of record. The buyer will have full liability for carriage. This is not a good choice for buyers who are not familiar with acting as the exporter of record from the seller’s country.
A final word:
Inexperienced buyers may not realize the full value of a shipment if they do not check on the Incoterms properly. This may lead to nasty surprises. For example, if the seller is quoting you on EXW terms, the cost of the shipment will be different from FCA terms. This is because under EXW terms, the price does not include any charges for port clearance or inland transportation. Hence, even if you have discussed the price with the seller it is best to always double check the quotation details carefully to ensure that the correct Incoterm information is indicated. Managing import declaration is also important. Some countries will accept EXW value for import declaration however the basis for import declaration in many countries is Cost Insurance Freight (CIF). If the sale is made on EXW or FCA, this means that the invoice value cannot be simply used for the lodgment. You will have to ensure that the Customs declarant managing your import is able to build up the value for the declaration correctly.