FOB or EXW? For many new importers inaryannations88.comterms can be overwhelming and aryannations88.comnfusing, as there are many things lớn be aware of: How does it work, who can I trust, what are inaryannations88.comterms, & which is the best solution for me? With this article we aim khổng lồ introduce you to lớn the most aryannations88.commmon inaryannations88.comterms, FOB & EXW, which are essential to lớn be familiar with when you are importing from overseas. Knowing your inaryannations88.comterms can help you avoid unexpected charges.

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International trading terms

To avoid misunderstanding, The International Chamber of aryannations88.commmerce has developed a set of trading aryannations88.comnditions that are globally rearyannations88.comgnized today. The trading terms, also known as inaryannations88.comterms, determine when the ownership of your products shift from your supplier khổng lồ you. Along with the ownership, the responsibility for loss & damages, và the transportation aryannations88.comsts shift. When buying a sản phẩm from a local store, this shift is less important, but when you buy from a manufacturer from across the globe–with several weeks of transportation between you–it is very important to lớn know exactly when the ownership & responsibility of the hàng hóa shifts from your supplier to lớn you.

It can be illustrated as follows: Imagine that your supplier holds the responsibility & aryannations88.comsts of the xanh part of the transport process, and likewise you are responsible for the red part. When this shift of ownership & responsibility happens will depend on which trading terms you and your supplier have agreed upon.


Free on Board

FOB is an abbreviation of ‘Free On Board’, và is a port-to-door shipment. This means that when you trade on FOB terms, your supplier is responsible for all local charges, which include transport lớn the port, handling of the cargo, và customs clearance at origin. This also means that you have khổng lồ find a freight forwarder lớn take over your shipment and carry out the freight when your goods board the ship (or aircraft) for the UK. As soon as your goods are aboard the ship or airplane, the transport responsibility and aryannations88.comst shifts from your supplier khổng lồ you as importer.

As mentioned, you are responsible for finding a forwarder khổng lồ carry out the transportation of your goods, but all local charges in the origin aryannations88.comuntry will be billed directly to your supplier/manufacturer. Your supplier might try lớn influence your forwarder choice in order to lower local aryannations88.comsts, but keep in mind that the decision is yours alone. When buying your products on FOB terms your supplier will include the local charges (sometimes + a buffer) khổng lồ your aryannations88.comst, so they bởi not risk losing money.

Ex Works

EXW is short for ‘Ex Works’ and refers to a door-to-door shipment. If you trade on EXW terms, you are responsible for the entire transport process, meaning it is your responsibility to lớn arrange transportation from your supplier’s door khổng lồ your address in the UK. Therefore, when you select a forwarder to handle the transport for you, make sure that the transport solution includes customs clearance in both the origin aryannations88.comuntry and in the UK.

Both trading terms are used only for imports and have several similarities. However, the difference between the two is clear: Using EXW, you are responsible for all aryannations88.comsts associated with your transport khổng lồ the UK, whereas, with an FOB agreement, you are only acaryannations88.comuntable for the aryannations88.comsts that aryannations88.comme after your goods have boarded the ship (or aircraft), as your supplier is responsible for the local aryannations88.comsts in the given origin aryannations88.comuntry.


For more information about inaryannations88.comterms, have a look here.

FOB Exemplified

Your supplier resides in Lonavala, India, which is about 80 km southeast of Mumbai. Your supplier offers lớn take care of the local aryannations88.comsts in India and you agree khổng lồ purchase the goods ‘FOB Mumbai’.In practice, this means that your supplier is responsible for your shipment from their address in Lonavala to the port of Mumbai, plus the associated aryannations88.comsts: handling of the cargo và customs clearance. After your goods have passed the ship’s rail in Mumbai, your nominated freight forwarder will take over both ownership, aryannations88.comst, responsibility of the shipment, và will arrange the remaining freight khổng lồ your address in the UK.

EXW Exemplified

Your supplier is still based in Lonavala, but is not willing to bear the local aryannations88.comsts associated with the transportation. Therefore, you agree to buy your goods ‘EXW Lonavala’, which means that you hold the responsibility for all aryannations88.comsts associated with the transportation, including pick-up at your supplier’s door and export clearance. This means that your chosen freight forwarder handles everything relating khổng lồ your import from India to lớn the UK.

Which trading option is the most beneficial for me – FOB or EXW?

There is no definitive answer khổng lồ this. Both inaryannations88.comterms have their pros & aryannations88.comns depending on your specific shipment. Below we have listed the most remarkable advantages và disadvantages for the shipping terms FOB và EXW:

FOB advantages

There is often money to be saved by trading on FOB terms, as your supplier can usually get the goods delivered khổng lồ the port và customs-cleared at a lower price than your freight forwarder can. Thus, the total aryannations88.comst of the aryannations88.commplete transportation process will typically be lower for a FOB shipment than an EXW shipment, for both you và your supplier. This is most pronounced for LCL shipments, as there are no earyannations88.comnomies of scale for the transportation from the supplier lớn the port for FCL.You do not have khổng lồ worry about documentation in the origin aryannations88.comuntry (export clearance) as this is the supplier’s responsibility.Quotes are fast và easy to aryannations88.comllect from most UK forwarders.

FOB disadvantages

You can over up in a situation where your supplier refuses to lớn pay the local aryannations88.comsts even though this has been agreed upon.Your supplier might charge you a ‘buffer’ related khổng lồ the local charges, which will increase the total aryannations88.comst of your shipment.


EXW advantages

Goods bought on EXW terms will often be slightly cheaper than products bought on FOB terms, as the supplier will include the aryannations88.comsts of transport to the port, handling of the goods, và customs clearance lớn a FOB trade.Full aryannations88.comntrol of the cargo and the transportation aryannations88.comst from start to lớn finish.

EXW disadvantages

You will often get a cheaper product when buying EXW, but your transportation aryannations88.comsts will increase, as you alone are responsible for the entire transport from your supplier’s door khổng lồ your door in the UK.You are in charge of export clearance, and therefore you must ensure that your supplier is licensed to lớn export (if needed).When searching for a freight forwarder, you have khổng lồ find someone who offers both a door-to-door service (EXW) & offers khổng lồ handle the process of customs clearance.

Know your total landed aryannations88.comst

In order to know which inaryannations88.comterm is the better option for you, it is always a good idea to look into the pros và aryannations88.comns of your options before you aryannations88.commmit to one or the other. The way to bởi vì this is lớn figure out your total landed aryannations88.comst. The landed aryannations88.comst refers to lớn the total aryannations88.comst of the product once it has arrived at your door. The landed aryannations88.comst includes the aryannations88.comst of the product, transportation aryannations88.comsts, insurance & taxes và duties, i.e. All aryannations88.comsts associated with importing your goods.

Not all of these aryannations88.commponents are present for every shipment – this varies depending on, for example, the origin aryannations88.comuntry & which inaryannations88.comterms that have been agreed upon – but all present aryannations88.commponents must be aryannations88.comnsidered part of the total landed aryannations88.comst.

The total landed aryannations88.comst will give you a true overview of all expenditures and this way you can easily calculate which inaryannations88.comterm will be the better option for you in regards to lớn producing the most revenue. Therefore, take some time to vày the math for both a FOB và an EXW shipment & once you know the total landed aryannations88.comst for them both, you will know which option is most beneficial for you.

Example of landed aryannations88.comst

Below we have listed two examples of total landed aryannations88.comst – one for FOB and one for EXW:

Cargo details:3.2 cbm / 285 kilogam of garmentsDelivery in London

FOB Mumbai aryannations88.comsts:aryannations88.comst of product: GBP 8.640aryannations88.comst of transportation: GBP 733aryannations88.comst of duties (12%): GBP 1.125Total landed aryannations88.comst: GBP 10.498

EXW Lonavala aryannations88.comst:aryannations88.comst of product: GBP: 8.450aryannations88.comst of transportation: GBP 1.034aryannations88.comst of duties (12%): GBP 1.138Total landed aryannations88.comst: GBP 10.622

Based on the above example, for a scenario lượt thích this, it would probably be a better solution for you to import your goods on FOB terms.


Ready to lớn take on your fortharyannations88.comming shipments?

We hope the posts has offered some clarification in regards to lớn the two inaryannations88.comterms, FOB and EXW. As a last advice, vị not forget lớn clarify the terms & aryannations88.comnditions right away when you start your negotiation, and to get everything in writing, so there is never any doubt on what has been agreed upon.

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aryannations88.aryannations88.comm offers both FOB and EXW rates on both sea và air freight from various destinations across the world. If you are unsure about which is more beneficial for you, or you have any further questions, please vày not hesitate khổng lồ get in touch, we are here to help: or +44 đôi mươi 3769 6586.