The core difference between EXW and FOB for machinery lies in the place of delivery and the allocation of costs. Under EXW (Ex Works), the buyer handles everything—domestic transport, customs declaration, and pickup from the factory. Under FOB (Free On Board), the seller is responsible for domestic transport and loading the goods onto the vessel. The price difference accounts for domestic freight, customs declaration, and port handling charges.
1. EXW (Ex Works)
EXW (Ex Works): The seller fulfills their obligation by making the goods available at the factory or warehouse.
The buyer is responsible for domestic transport, export customs clearance, loading onto the vessel, and all associated costs.
While the quoted price is the lowest, the buyer must have their own domestic freight forwarder or trucking fleet (otherwise, domestic logistics costs and risks are high). This option is suitable for buyers who already have a logistics network in China (Industry advice: Avoid EXW unless you have a strong freight forwarder).
2. FOB (Free On Board)
FOB (Free On Board): The seller is responsible for delivering the goods to the designated port and loading them onto the vessel (including factory-to-port trucking, warehousing, customs declaration, and port handling charges).
Risk transfers to the buyer once the goods are loaded onto the vessel. The buyer is responsible for ocean freight, insurance, and customs clearance at the destination port. This is the preferred choice for most machinery importers (offering transparent pricing and allowing the buyer to control ocean shipping and insurance arrangements).
III. Conversion Formulas and Price Differences
FOB = EXW + Factory-to-Port Freight + Container Loading Fees + Customs Declaration Fees + Port Miscellaneous Charges (Source: Hugo.cn / Xinhai Customs Brokerage) — Price difference reference: Logistics for a 20ft container from Yiwu to Ningbo costs approximately 600–1000 USD (hisourcing); for large machinery, trucking fees are calculated based on volumetric weight (approx. 80 RMB/m³). When requesting quotes, the price difference between EXW and FOB represents the domestic logistics costs.
IV.
Comparison of Risks and Responsibilities
1. Risk Transfer Point: EXW transfers upon delivery at the factory; FOB transfers upon loading onto the vessel (at the ship’s rail). 2. Export Customs Declaration: EXW is the buyer’s responsibility (requires Chinese export qualifications/freight forwarder); FOB is the seller’s responsibility (factory holds export rights). 3. Domestic Transport: EXW is arranged by the buyer (trucking/container trucks); FOB is arranged by the seller. 4. Documentation: FOB requires the seller to provide the customs declaration and Bill of Lading (necessary for L/C negotiation). 5. Price: EXW is the lowest, FOB is intermediate, and CIF is the highest (includes accumulated freight and insurance costs).
V.
How to Choose
Choose FOB: Suitable for most machinery buyers—avoids the hassle of domestic logistics, offers transparent pricing, and allows the buyer to control ocean freight. Choose EXW: Suitable if you already have a Chinese freight forwarder or use LCL (Less-than-Container Load) shipping (common for long-term cooperation with factories on small batches). Choose CIF: Suitable for beginners or small orders—the seller handles freight and insurance for convenience, though the freight cost includes a profit margin. For large-scale equipment, FOB combined with a buyer-designated shipping line is recommended (offering greater room to negotiate freight rates).
VI. Key Points for Price Inquiries
First, dual-basis quoting: Request both EXW and FOB prices simultaneously (to assess the reasonableness of domestic costs); second, port and miscellaneous fee breakdown: THC, documentation fees, and customs clearance fees (to avoid inflated bundled charges); third, packaging: Confirm whether export-grade wooden crating and anti-rust treatment are included in the FOB price; fourth, exchange rate: Specify the exchange rate and its validity period; fifth, payment terms: 30% deposit with the balance due after shipment. Industry experts advise: Under EXW, the buyer handles freight and customs clearance;
under FOB, the seller covers domestic transport and loading onto the vessel. The price difference equates to domestic freight plus customs clearance and port/miscellaneous fees. Most buyers prefer FOB;
therefore, it is best to use the dual-basis inquiry method and verify the breakdown of port/miscellaneous fees before finalizing the contract.
