EXW vs FOB – who pays for what?
EXW is Ex Works and FOB is Free On Board. We compare who pays for transport, customs clearance and duty, and where risk passes to the buyer.
Key differences
Under FOB, the seller also covers export clearance, transport to the port or terminal and loading for main carriage. Under EXW, the buyer pays for this instead. The two rules also differ in the point at which risk passes to the buyer and in the mode of transport. FOB applies only to sea and inland waterway transport.
- Export clearance
- EXWBuyerFOBSeller
- Transport to the port or terminal
- EXWBuyerFOBSeller
- Loading for main carriage
- EXWBuyerFOBSeller
- Risk passes
- EXWAt the seller’s premises, before loadingFOBOn board the vessel at the port of loading
- Mode of transport
- EXWAnyFOBSea only
Full cost breakdown
| Cost | EXW | FOB |
|---|---|---|
| Export clearance | Buyer | Seller |
| Transport to the port or terminal | Buyer | Seller |
| Loading for main carriage | Buyer | Seller |
| Main carriage (freight) | Buyer | Buyer |
| Insurance | No obligation | No obligation |
| 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. | At the port of loading, when the goods are on board the vessel. |
| Mode of transport | Any mode of transport (sea, rail, air, road) | Sea and inland waterway transport only |
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.
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 →FOB Free On Board
A common mistake: FOB for rail or air freight. FOB applies only to sea and inland waterway transport. For rail freight from China, the right rule is FCA with the name of the terminal (e.g. “FCA Xi’an, rail terminal”), and for air freight, FCA with the name of the airport. Under FOB, the supplier pays for export clearance and the charges at the port of loading – check that they are not added to the invoice separately.
More about FOB →When to use EXW and when to use FOB?
- 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.
- FOB – for sea freight, when the supplier delivers the goods to a port in China and handles export clearance, while your freight forwarder arranges the freight to Europe.
Buying on EXW or FOB 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 FOB?
Under FOB, the seller also covers export clearance, transport to the port or terminal and loading for main carriage. Under EXW, the buyer pays for this instead. The two rules also differ in the point at which risk passes to the buyer and in the mode of transport. FOB applies only to sea and inland waterway transport.
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 FOB?
At the port of loading, when the goods are on board the vessel.
Can EXW and FOB be used for rail freight from China?
Only EXW. EXW works with any mode of transport, while FOB applies only to sea and inland waterway transport. That is why FOB is not used for rail freight from China.
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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.