Two quotations for the same polo shirt, one labeled FOB and one EXW, cannot be compared by unit price alone. The trade term decides who books the container, where risk transfers, and who answers when cargo is delayed.
EXW — Ex Works
The seller’s responsibility ends at the factory door. The buyer (or their forwarder) arranges pickup, export declaration, origin port handling, main freight, insurance, import clearance and delivery. The unit price looks lowest because it contains the least logistics.
FOB — Free On Board
The seller carries the goods through export handling and onto the named vessel at the named port; risk transfers when goods are loaded. The buyer controls main carriage and onward freight. FOB is the most common comparison point for China apparel exports because origin-side friction stays with the party that knows the local system.
Where responsibility transfers
| Stage | EXW | FOB (named port) |
|---|---|---|
| Production & export packing | Seller | Seller |
| Inland trucking to port | Buyer | Seller |
| Export customs declaration | Buyer (arranges) | Seller |
| Origin port charges / loading | Buyer | Seller |
| Main sea/air freight | Buyer | Buyer |
| Insurance in transit | Buyer’s choice | Buyer’s choice |
| Import clearance & duties | Buyer | Buyer |
| Risk transfer point | Factory premises | Goods loaded on vessel |
Why experienced apparel buyers often prefer FOB
- The factory manages Chinese inland transport and export documentation — the part most opaque to overseas buyers.
- Quotes from different factories become comparable on the same named-port basis.
- The buyer still controls main freight: forwarder choice, sailing selection and consolidation across suppliers.
- Origin-side delays are the seller’s problem until loading.
When EXW makes sense
- You already operate a China-side logistics setup with pickup and export handling.
- You are consolidating multiple factories into one shipment and control the trucks.
- You need complete freight visibility for a large sourcing program.
For first-time importers, EXW usually converts a small apparent saving into coordination risk at origin.
How to normalize two quotes
- Ask every factory to quote FOB the same named port (or EXW — but not a mix).
- Add your forwarder’s origin-side estimate to EXW quotes before comparing.
- Confirm who bears export documentation and any local port surcharges.
- Add main freight, insurance and destination costs to reach landed cost.
- Remember carton cube: gift packing raises freight per piece even at identical FOB price.
Timing connection
Trade terms interact with the schedule: under FOB the factory’s calendar commitment ends at vessel cutoff, under EXW it ends at factory handover. Build the order timeline backward from your in-warehouse date using the lead time guide, and book freight before production finishes — sailing-space risk belongs to whoever controls carriage. Cost structure context: manufacturing cost breakdown.
Questions to put on the PI
- Exact Incoterms version and named port/place
- Carton count, total CBM and gross/nett weight
- Who books the vessel and by what cutoff
- Which party holds the export documentation