When buying goods from China, the supplier’s product price is only one part of the total cost.
The Incoterm agreed with the supplier determines where their transport responsibilities end and where yours begin, which can have a significant effect on your freight costs.
For UK businesses importing from China, Barrington Freight strongly recommends considering FOB (Free On Board) and EXW (Ex Works), depending on the shipment and the level of control required. If you need a broader explanation of the different terms, see our Incoterms Explained guide.
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Why Your Incoterm Changes Your China Import Costs
An Incoterm sets out which party is responsible for different stages of transporting the goods. Choosing one term rather than another can shift costs such as factory collection, inland transport in China, export procedures, international freight and UK delivery between the supplier and buyer.
Incoterms do not determine the Customs Duty or VAT rate applied to the products themselves. They do, however, affect which transport and related costs are paid by each party, which can change the overall landed cost of the import.
The named location matters too. The same Incoterm can result in different costs depending on where responsibility changes and how far the goods need to travel before reaching the main international freight stage.
FOB vs EXW for Imports From China
FOB: More China-Side Costs Stay With the Supplier
Under FOB, or Free On Board, the supplier is generally responsible for getting the goods to the agreed port of departure in China, completing export clearance and loading the goods onto the vessel.
The buyer then takes responsibility for the main international freight and the subsequent stages of the shipment.
For a UK importer, this means more of the China-side logistics remain with the supplier. You do not usually need to arrange the factory-to-port movement separately, and the supplier’s FOB price may therefore be higher than an EXW price because it includes more origin-side transport and handling.
FOB is intended for sea and inland waterway transport. For some containerised shipments, a freight forwarder may recommend FCA instead, depending on where the carrier receives the goods. FOB should not simply be applied to air or rail freight.
EXW: More Freight Responsibility Moves to the Buyer
With EXW, or Ex Works, the supplier makes the goods available at its factory, warehouse or another agreed location. Responsibility passes to the buyer much earlier in the transport process.
The buyer may therefore need to account for factory collection, inland transport in China, origin handling, export arrangements, international freight, UK customs clearance and final delivery.
This can give the importer greater control over how the freight is arranged, but a low EXW product price should not be mistaken for a low total import cost.
In practice, a UK importer will usually rely on a freight forwarder and local partners to coordinate the China-side collection and export procedures rather than handling every local formality directly.
FOB vs EXW Cost Comparison
| Cost or responsibility | EXW | FOB |
|---|---|---|
| Factory collection | Buyer | Seller |
| Inland transport in China | Buyer | Seller |
| Export arrangements | Buyer | Seller |
| Origin handling | Buyer | Seller up to the agreed FOB point |
| Main international freight | Buyer | Buyer |
| UK customs clearance | Buyer | Buyer |
| UK delivery | Buyer | Buyer |
An EXW quote will often look lower because fewer logistics costs are included. FOB includes more of the origin-side movement. Neither term is automatically cheaper overall, so compare the landed cost rather than the supplier price alone.
Why the Cheapest Supplier Quote Is Not Always the Cheapest Import
Imagine one supplier offers a lower EXW price while another offers a slightly higher FOB price. The EXW offer may look cheaper at first, but the buyer still needs to add the cost of collecting the goods from the factory, moving them through China and arranging the export side of the shipment.
The same principle applies when a supplier offers CIF. A CIF price may include the main freight and insurance to the named destination port, but the buyer still needs to understand which destination charges, customs costs and onward delivery expenses sit outside that quote.
When comparing supplier offers, look at the complete cost of getting the goods to their final UK destination, not just the factory or supplier price. Our guide to calculating landed cost explains this in more detail.
What to Check Before Agreeing FOB or EXW
The Incoterm should always be agreed alongside a specific named location. Simply writing “FOB” or “EXW” without making the handover point clear can create uncertainty over who is responsible for particular costs.
Before accepting the supplier’s terms, check:
- The exact Incoterm
- The named factory, location or port
- Who will arrange factory collection
- Who is responsible for export formalities
- Any China-side handling costs
- Shipment dimensions and weight
- International freight costs
- UK destination charges
- Customs clearance arrangements
- The final delivery address
The supplier’s location can make a noticeable difference. An EXW quote from a factory a considerable distance inland may require a substantial domestic journey before the goods reach the departure port. That additional movement needs to be included when comparing the quote with an FOB alternative.
Getting an Accurate Freight Quote
When requesting a freight quote, tell us whether your Chinese supplier has quoted FOB, EXW or another Incoterm. We will also need details such as the collection point or named port, shipment dimensions and weight, number of pallets or packages, freight method and final UK delivery location.
This helps us identify which transport stages still need to be arranged rather than quoting for services already covered by the supplier.
Barrington Freight can arrange imports from China by sea, air or rail, depending on the shipment requirements.
We can coordinate customs clearance through experienced partner agencies and help you understand which freight costs sit with you under the agreed shipping terms.
About the Author
Simon Poole began his career in production planning, quickly rising to manage 24-hour manufacturing lines and oversee a team of 140 staff. In 2007, he joined Barrington Freight, where he brought his operational expertise into the logistics sector. Appointed Operations Director in 2021, Simon now leads all day-to-day operations, including sea, air and European freight, working closely with clients and partners worldwide.
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