EXW vs CIP – who pays for what?
EXW is Ex Works and CIP is Carriage and Insurance Paid To. We compare who pays for transport, customs clearance and duty, and where risk passes to the buyer.
Key differences
Under CIP, the seller also covers export clearance, transport to the port or terminal, loading for main carriage, the main freight and insurance. Under EXW, the buyer pays for this instead – except for insurance, which is not compulsory under EXW. The two rules also differ in the point at which risk passes to the buyer.
- Export clearance
- EXWBuyerCIPSeller
- Transport to the port or terminal
- EXWBuyerCIPSeller
- Loading for main carriage
- EXWBuyerCIPSeller
- Main carriage (freight)
- EXWBuyerCIPSeller
- Insurance
- EXWNo obligationCIPSeller
- Risk passes
- EXWAt the seller’s premises, before loadingCIPOn handover to the carrier in the country of dispatch
Full cost breakdown
| Cost | EXW | CIP |
|---|---|---|
| Export clearance | Buyer | Seller |
| Transport to the port or terminal | Buyer | Seller |
| Loading for main carriage | Buyer | Seller |
| Main carriage (freight) | Buyer | Seller |
| Insurance | No obligation | Seller |
| Unloading at destination | Buyer | Buyer |
| Import clearance | Buyer | Buyer |
| Import duty and VAT | Buyer | Buyer |
| Risk passes | At the seller’s premises (or another agreed place), when the goods are ready for collection – before loading. | When the seller hands the goods over to the first carrier – even though the seller pays for transport and insurance. |
| Mode of transport | Any mode of transport (sea, rail, air, road) | Any mode of transport (sea, rail, air, road) |
Notes
- EXW – export clearance: formally the buyer’s responsibility. In practice, the export declaration in China is filed by the supplier or a Chinese customs broker, because a foreign buyer is not registered with customs there.
- Unloading at destination: if unloading costs are included in the contract of carriage concluded by the seller, the seller pays them and cannot charge them to the buyer afterwards.
- Insurance: only the seller is obliged to insure, and only under CIF (at least Institute Cargo Clauses (C), 110% of the value) and CIP (Institute Cargo Clauses (A), 110% of the value). Under the other rules, nobody has to insure the goods – but once risk has passed, any loss is borne by the buyer.
What to watch for when importing from China
EXW Ex Works
Once the goods are ready for collection, everything else is your responsibility – including loading and export clearance. In China, the export declaration is filed by a company registered with Chinese customs – usually the supplier or a Chinese customs broker – so you will need their help anyway. Agree in writing who loads the goods and who handles export clearance. If the goods are damaged during loading, the loss is yours.
More about EXW →CIP Carriage and Insurance Paid To
In Incoterms 2020, CIP requires broader insurance than CIF: Institute Cargo Clauses (A) – “all risks” – at 110% of the value of the goods. Even so, the risk passes to you in China, when the goods are handed over to the carrier. The policy protects you, but the supplier takes it out – ask for a copy before shipment.
More about CIP →When to use EXW and when to use CIP?
- EXW – when you want to control transport right from the factory, and your freight forwarder arranges collection of the goods and export clearance in China.
- CIP – for any mode of transport, when the supplier arranges carriage and broad insurance cover (Clauses (A)), while you handle customs clearance in Poland.
Buying on EXW terms? You choose the forwarder
We organise transport from China – by rail, sea or air – together with customs clearance in Poland and cargo insurance. Send us your cargo details and we will prepare a quote tailored to your shipment.
Request a quoteFAQ
What is the main difference between EXW and CIP?
Under CIP, the seller also covers export clearance, transport to the port or terminal, loading for main carriage, the main freight and insurance. Under EXW, the buyer pays for this instead – except for insurance, which is not compulsory under EXW. The two rules also differ in the point at which risk passes to the buyer.
Where does risk pass to the buyer under EXW?
At the seller’s premises (or another agreed place), when the goods are ready for collection – before loading.
Where does risk pass to the buyer under CIP?
When the seller hands the goods over to the first carrier – even though the seller pays for transport and insurance.
Can EXW and CIP be used for rail freight from China?
Yes. EXW and CIP can be used with any mode of transport: sea (including containers), rail, air and road.
Compare other pairs
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). This page is an independent, simplified summary of how costs and risks are divided – it is not affiliated with or approved by the ICC. When drafting contracts, use the official text of the Incoterms® 2020 rules published by the ICC.