An Incoterm decides where the seller's responsibility ends and yours begins, and with it who books the truck, who lodges the export declaration, who pays the terminal, and who carries the risk if the goods are damaged on the way to the port. Most China purchases are made on one of three: FOB, EXW or FCA. Buyers usually choose between them on price. The better question is which one leaves you in control of the shipment, because the price difference is mostly a redistribution of origin costs you will pay one way or the other.
Under FOB the seller delivers the goods on board the vessel at the named Chinese port, export-cleared, and you take over from there. You have the right to nominate the carrier and the forwarder, and that right is the whole value of the term. Where FOB goes wrong is when it is not exercised: the factory hands the goods to its own forwarder, the origin leg is run for the factory's convenience, and the origin fees that were quoted low or not at all come back to you at destination as collect charges on the delivery order. You learn about a rolled sailing after it has happened, because the forwarder's customer is the factory.
Under EXW everything from the factory door is yours: collection, export clearance, origin handling, carriage, risk. It is the term that gives the most control and demands the most from the buyer, and it has one feature that catches importers out. A foreign company cannot lodge a Chinese export declaration in its own name. EXW only works with a China-registered agent acting for you, which in practice means a China-side forwarder who collects, clears and books. Without one the cargo stops at the first port gate.
FCA is the clean middle. The seller delivers the goods, export-cleared, to your nominated carrier at a named place, which can be its own factory or a warehouse or terminal near the port. The seller lodges the export declaration in its own name, which in China it is generally best placed to do, and you control everything from the handover point. Many importers who ask for EXW because they want control actually want FCA, because it keeps the declaration with the party that can file it and gives you the rest.
On cost, compare landed price rather than unit price. An EXW price is the lowest number on the quotation and it excludes every origin charge; an FOB price includes origin charges the seller controls and marks up as it sees fit; an FCA price sits between them depending on the named place. When we quote, the origin charges are itemised on the same page as the freight, whatever the term, so the comparison across suppliers and across terms is on the same basis.
What we do differs by term. Under FOB we book the carriage on your account, chase the supplier's delivery to the port against the cut-off, and check that its export declaration matches the invoice you will import on. Under EXW we collect from the factory, lodge the declaration as your agent, handle origin terminal charges and consolidate across suppliers. Under FCA we receive at the named place, confirm the declaration is lodged and run everything from there. In every case the aim is the same: you stay in control of your China shipments without needing your own logistics team in China.
If you are unsure which term is on your purchase orders, or your suppliers are on a mix of them, send us the orders. We will tell you which origin costs are yours, which are the seller's, and where a change of term would give you more control for the same money, within one business day.
