EXW vs FOB: where the factory hands over, and what that costs

The two rules side by side

The difference is the stretch between the factory gate and the ship's rail: trucking to the port, export paperwork, terminal handling and loading. Under FOB those are in the price. Under EXW they are yours to arrange and pay, in a country where the seller is based and you usually are not.

Why EXW is awkward for an overseas order

Export clearance under EXW is the buyer's job, and that is where it goes wrong. An ICC Academy guide to the rules notes that a seller may be considered an exporter of record if a buyer is not also established in the seller's country^[1], which creates complications for both sides. Its advice is plain: traders are strongly encouraged to consider using FCA instead of EXW where the goods are crossing a border^[1]. In practice an EXW order works only if your freight forwarder has people at origin who can collect the goods, file the export declaration and deliver to the port.

The FOB catch: the ship is yours to book

FOB leaves the main voyage to you, and with it the timing. If your nominated vessel is late, closes early or you give the factory the wrong details, the buyer assumes all risks and costs, even if the goods have not been loaded on board^[2]. The seller's side is fixed: it is responsible for completing the export clearance at the port of shipment^[2]. So an FOB order needs a forwarder who books space in time and confirms the vessel to the factory.

FOB is also a sea rule only. If your goods ship by air, or are handed to the carrier before they go on board, such as at a container terminal or an inland depot, the rule that fits is FCA, not FOB.

How US customs values each price

The US starts from the price you pay, and the two rules put different things in it.

• EXW price. When the price is ex-factory, the foreign inland freight you pay separately is not part of the value: those charges will not be added to the price^[3].
• FOB price. The trucking and handling to the port are inside the price, and as a general rule that charge is part of the transaction value to the extent included in the price^[3]. Those inland charges can come off only if they are identified separately and they occur after the merchandise has been sold for export to the United States and placed with a carrier for through shipment^[3], shown with a through bill of lading.

So an FOB quote can carry slightly more dutiable value than the same goods bought EXW. On most orders the difference is small next to the origin costs EXW leaves you to arrange.

Example: one factory, two prices

EXW and FOB quotes for the same order, landed in the US

Line	EXW quote	FOB quote
Price for 3,000 units	$12,000	$12,540
Pickup, trucking to the port, export clearance and loading, through your forwarder	$620	$0
Ocean freight and insurance to the US port	$1,300	$1,300
Value for US duty	$12,000	$12,540
Duty at 8% (assumed)	$960	$1,003.20
Port, customs fees, broker and delivery at destination	$650	$650
Landed cost	$15,530	$15,493.20
Landed cost per unit	$5.18	$5.16

The EXW price is $540 lower, but the origin work costs $620 through a forwarder, and the FOB order lands slightly cheaper even after the extra duty on the inland leg. The result flips if your forwarder can do the origin work for less than the price gap plus the extra duty the FOB price carries, here about $583.

Illustrative figures, not a quote. Real prices depend on the spec, quantity and factory.

Which to ask for

• You have a forwarder with an office near the factory: get both prices and compare them landed, as above.
• Otherwise, and for most first orders by sea: ask for FOB if the goods are loaded directly on board, or FCA if they are handed to the carrier before loading, such as at a container terminal or an inland depot.
• Always: name the place with the rule, such as the port for FOB, and ask every manufacturer that quotes you to state both.