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The short version
- EXW (Ex Works): you collect the goods at the factory and pay for everything from there, including export customs in China.
- FOB (Free On Board): the supplier gets the goods cleared for export and loaded on the ship. You pay from the ship onward.
- An EXW price looks cheaper, but you pay the trucking, export paperwork and port fees on top. Compare total cost, not unit price.
- For most small importers buying by sea from China, FOB is the easier and safer choice.
FOB vs EXW: the difference in one picture
EXW
Ex Works · 出厂价 (factory price)
- Supplier makes the goods available at its premises
- You or your forwarder load, truck and clear export customs
- Risk is yours from the factory door
- Lowest quoted price, most extra costs
FOB
Free On Board · 离岸价 (FOB price)
- Supplier trucks the goods to the port and clears export customs
- Supplier pays origin port fees and loading
- Risk is yours once the goods are on board
- Slightly higher price, fewer surprises
What EXW means
Under EXW, the supplier's only job is to have the goods packed and ready at its factory or warehouse on the agreed date. Everything after that is yours: loading onto the truck, the trip to the port, export customs clearance in China, port charges, the ocean freight, and all the costs at your end.
The catch is export clearance. To export goods from China, the shipment needs an exporter with the right Chinese registration. As an overseas buyer you usually don't have one, so in practice your forwarder, or the supplier as a favor, has to arrange it. That's extra cost and extra coordination.
What FOB means
Under FOB, the supplier delivers the goods to the named port, clears them for export and loads them on board the ship your forwarder booked. The quote is written with the port, like FOB Shenzhen or FOB Ningbo. From the moment the goods are on board, the freight, insurance, import duties and delivery are yours, and so is the risk.
Ask every supplier to quote on the same Incoterm and port so you can compare them fairly. Our Bilingual RFQ Builder writes the request in English and Chinese for you.
See the RFQ BuilderIs EXW really cheaper? A worked example
These numbers are an illustrative example, not a quote. Real origin charges depend on the city, the port, the forwarder and the size of the shipment.
A supplier quotes you 1,000 units at $3.80 EXW or $4.05 FOB Shenzhen. EXW looks $250 cheaper. But with EXW, you also pay:
| Extra cost you pay under EXW (example) | Amount |
|---|---|
| Trucking from factory to port | $120 |
| Export declaration and customs broker in China | $85 |
| Origin port charges and loading | $95 |
| Total extra costs | $300 |
| EXW | FOB | |
|---|---|---|
| Goods | $3,800 | $4,050 |
| Origin costs you pay | $300 | $0 (in the price) |
| Cost up to the ship | $4,100 | $4,050 |
Illustrative example. Freight, insurance, duties and delivery after loading are the same under both terms, so they're left out.
In this example, the EXW deal ends up $50 more expensive, and you did more of the work. It won't always go this way, which is why you ask your forwarder to quote the origin charges before choosing.
When EXW makes sense
- Your forwarder collects from several suppliers in the same area and consolidates them into one shipment.
- Small express or air shipments where the courier picks up at the factory and handles export paperwork.
- The supplier is inland, far from a port, and your forwarder has a much better trucking rate.
If none of these apply, FOB is usually simpler. If you like EXW's pickup but not the export problem, ask for FCA at the supplier's premises: the supplier loads your truck and clears export, and risk passes at pickup.
Risk: where it becomes yours
Under EXW, the risk is yours from the factory. If the truck is in an accident on the way to the port, it's your loss, so arrange cargo insurance that starts at the factory, not at the port.
Under FOB, risk passes once the goods are loaded on board. Damage in the factory, on the truck or at the port before loading is the supplier's problem. For container shipments, the ICC notes that FCA fits better than FOB, since the container is usually handed over at a terminal before loading. Many Chinese suppliers still quote FOB, and most small importers use it without trouble.
How to choose: quick checklist
- Get quotes on the same term and the same port from every supplier.
- If a supplier quotes EXW, ask your forwarder for the origin charges and add them before comparing.
- Write the full term on your purchase order, for example "FOB Ningbo, Incoterms 2020".
- Make sure cargo insurance starts where your risk starts.
- Work out the landed cost per unit, including freight, duties and fees, before you order.
See what each unit really costs you
The Pricing & Landed Cost Calculator adds freight, duties, fees and currency conversion to your EXW or FOB price, and tells you the price you need for your target margin.
Frequently asked questions
What is the difference between FOB and EXW?
Under EXW, you collect the goods at the supplier's premises and pay for everything from there, including loading, trucking to the port and export customs. Under FOB, the supplier clears export customs and loads the goods on board the ship at the named port, and you pay from there.
Is EXW or FOB cheaper?
EXW unit prices are lower, but you pay the trucking, export clearance and origin port charges yourself. Once those are added, FOB is often the same or cheaper overall, and much easier to manage.
Who pays export customs under EXW?
The buyer. Under EXW, export clearance is the buyer's responsibility, which is awkward for overseas buyers because an exporter registered in China is normally needed. In practice, your forwarder or the supplier arranges it for a fee.
When does risk transfer under FOB?
When the goods are on board the ship at the named port of shipment. After that, loss or damage is the buyer's risk.
What does FOB Shenzhen mean?
The supplier delivers the goods, cleared for export, on board your ship at the port of Shenzhen. You pay the ocean freight, insurance, destination charges, duties and delivery.
Should I use FCA instead of FOB?
The ICC recommends FCA for container shipments, since containers are handed over at a terminal rather than loaded by the seller. FCA at the supplier's premises is also a good alternative to EXW, because the supplier handles export clearance.
Based on Incoterms 2020, the current ICC rules. Cost figures are illustrative examples, not quotes. This guide is general information, not legal or customs advice. SuanSupply is not affiliated with the International Chamber of Commerce.