EXW, FOB, and CIF are three Incoterms® 2020 rules frequently seen in China quotations. They do not simply mean “cheap freight,” “supplier handles export,” or “delivered to my port.” Each rule defines a delivery point, allocation of specified costs, and point at which risk transfers from seller to buyer.
The International Chamber of Commerce (ICC) publishes the rules. The U.S. International Trade Administration also provides an official buyer overview. Always write the rule, named place or port, and version—for example, FOB Shanghai, Incoterms® 2020.
Quick comparison
| Question | EXW | FOB | CIF |
|---|---|---|---|
| Named point | Seller’s premises or another named place | Named port of shipment | Named port of destination |
| Seller clears export? | Generally no | Yes | Yes |
| Seller loads buyer’s collecting vehicle at its premises? | Generally no obligation | Not the rule’s delivery model | Not the rule’s delivery model |
| Main carriage arranged by | Buyer | Buyer | Seller |
| Risk transfers | When goods are placed at buyer’s disposal at named place, not loaded | When goods are on board vessel at shipment port | When goods are on board vessel at shipment port |
| Seller-procured cargo insurance | No | No | Yes, at the rule’s required minimum cover unless contract changes it |
This table is a planning summary, not a replacement for the official rule text or a contract review.
EXW: maximum buyer-side logistics responsibility
Under EXW (Ex Works), the seller delivers by placing goods at the buyer’s disposal at the named place, commonly the factory or warehouse. The seller is generally not responsible for loading the buyer’s collecting vehicle or clearing the goods for export.
EXW may look inexpensive because the quotation excludes many origin tasks. The buyer must arrange or control pickup, loading responsibility, origin transport, export handling, main carriage, insurance, destination clearance, duties, and final delivery as applicable.
For an overseas buyer, the important operational question is whether the buyer or its logistics provider can legally and practically complete export formalities in China. If not, another rule may fit the transaction better. The ICC commonly notes FCA as an alternative when goods need export clearance by the seller.
Ask an EXW supplier:
- What exact address and collection hours apply?
- Are goods delivered packed and labeled for export?
- Who loads, and who bears damage risk during loading?
- What documents will the seller provide?
- Can the seller support export clearance if the rule is changed to FCA?
- Which origin charges will the nominated forwarder bill separately?
FOB: seller delivers on board at the shipment port
FOB (Free on Board) is for sea or inland-waterway transport. The seller clears the goods for export and delivers when the goods are on board the vessel nominated by the buyer at the named port of shipment. Risk transfers at that on-board point.
The buyer arranges the main ocean carriage and normally controls freight selection after delivery. The seller handles the agreed origin movement and export process necessary to deliver on board.
FOB needs precise coordination: vessel nomination, cut-off dates, terminal procedures, documentation, and charges must be communicated between buyer, forwarder, and supplier.
For containerized cargo handed to a carrier before loading on the vessel, the ICC guidance often points users toward FCA because the physical handover occurs at a container terminal or carrier location before the on-board FOB delivery point. Discuss the actual chain with your forwarder and contract adviser rather than choosing a term from habit.
Ask on an FOB quotation:
- Which named port and terminal assumptions apply?
- Which local charges are included?
- Are trucking, export declaration, terminal handling, documentation, and any container-related charges included?
- Who pays charges caused by late documents or missed cut-off?
- Is the cargo containerized, consolidated, or breakbulk, and does FOB match the handover?
CIF: seller pays freight and minimum insurance, but risk transfers earlier
CIF (Cost, Insurance and Freight) is also for sea or inland-waterway transport. The seller contracts and pays for carriage to the named destination port and obtains the insurance cover required by the rule.
The detail buyers often miss is that risk transfers when the goods are on board at the port of shipment, not when the vessel reaches the destination. Cost allocation and risk transfer occur at different points.
Under CIF, the seller’s required insurance is minimum cover under the Incoterms rule. A buyer shipping fragile, theft-sensitive, high-value, or consequential-loss goods may need broader cover or a separate policy. Review exclusions, insured value, claims procedure, geographic scope, and who is named on the document.
A CIF price also does not mean the shipment is delivered to your warehouse. Destination terminal charges, unloading arrangements, customs clearance, duties, taxes, inspections, storage, demurrage, and inland delivery may remain for the buyer, subject to the rule and contract.
Ask a CIF supplier:
- Which destination port is named?
- Which carrier, service, route, and transit assumptions apply?
- Is the shipment direct or transshipped?
- What destination charges are excluded?
- What exact insurance coverage and insured value will be provided?
- When and how will the buyer receive the transport and insurance documents?
Compare total landed cost, not the quoted label
To compare EXW, FOB, and CIF offers, normalize them to the same endpoint. Add every cost needed to bring the goods to the chosen destination:
- product and export packaging;
- origin pickup and handling;
- export formalities;
- main freight and fuel or security surcharges;
- cargo insurance;
- destination terminal and document fees;
- customs broker;
- duty, tax, and other government charges;
- examinations, storage, demurrage, or detention exposure;
- inland delivery;
- financing and expected loss allowance.
Request written origin and destination charge schedules from logistics providers. A very low freight quote can be paired with high destination charges.
What Incoterms do not decide
Incoterms rules do not by themselves determine product specification, price-payment timing, title transfer, warranty, intellectual-property ownership, governing law, sanctions compliance, or remedies for breach. These belong in the sales contract and related documents.
They also do not replace customs classification, valuation, importer-of-record duties, or destination-market compliance.
Selection questions
Before selecting a rule, decide:
- Who has reliable origin and destination logistics capability?
- Who can complete export and import formalities?
- At what point can each party control loss or damage?
- Does the rule match the transport mode and physical handover?
- Who should select the carrier and insurance?
- Which charges must be included to compare offers fairly?
- What named place or port removes ambiguity?
The best rule is the one that matches the real movement, each party’s capability, and the written contract—not necessarily the term printed on the supplier’s first quotation.
Continue the sourcing workflow
- Compare like-for-like logistics scope with the freight forwarder quote guide.
- Model the full commercial effect in the China landed-cost guide.
- Record the selected rule and named place in the China purchase order checklist.
Incoterms and customs obligations have legal and financial consequences. Confirm the current official rule text and obtain advice for your shipment and jurisdiction.