Every quote from China is given on a trade term, usually EXW, FOB or CIF. These Incoterms (published by the International Chamber of Commerce; the current version is Incoterms 2020) decide who pays for each part of the journey and when the risk passes from seller to buyer. Comparing a price without the term is like comparing prices without the currency.

EXW – Ex Works

The seller makes the goods available at its premises (factory or warehouse). The buyer pays and organises everything else: pickup, export clearance in China, ocean freight, insurance, import duties and delivery.

Pros: lowest price on paper; full control for buyers who have a forwarder in China.
Cons: the buyer is responsible for Chinese export clearance, which is difficult without a local partner. Local charges can make the total cost higher than expected.

FOB – Free On Board

The seller delivers the goods on board the vessel at the named Chinese port (for example “FOB Ningbo”) and handles export clearance. Risk passes to the buyer once the goods are on board. The buyer books and pays ocean freight, insurance and everything at destination.

Pros: the most common term for imports from China; you choose your own forwarder and freight rate, and the export side is handled by people on the ground.
Cons: you need a freight forwarder for the sea part and destination.

CIF – Cost, Insurance and Freight

The seller pays freight and minimum insurance to the named destination port (for example “CIF Santos”). Note that the risk still passes to the buyer when the goods are on board in China; the seller only pays for the transport and insurance. The buyer pays unloading charges, import duties and taxes and delivery from the port.

Pros: simple for first-time importers: one price to your port.
Cons: less control over the carrier and transit time; destination charges can be high, so ask your local broker for an estimate.

Quick comparison

Who pays for each part of the journey under EXW, FOB and CIF

	EXW	FOB	CIF
Export clearance in China	Buyer	Seller	Seller
Ocean freight	Buyer	Buyer	Seller
Insurance	Buyer	Buyer	Seller (minimum cover)
Risk passes to buyer	At the seller’s premises	On board in China	On board in China
Import duties and taxes	Buyer	Buyer	Buyer

Under FOB and CIF the seller handles export clearance and delivery on board in China

Which term should you choose?

First import, no forwarder yet: CIF, so you only organise customs and delivery at home.
You have a forwarder or regular shipments: FOB is usually the best balance of cost and control.
Your own team or forwarder in China: EXW can work, especially when you consolidate goods yourself.

Whatever you choose, budget for destination charges, import duties and taxes, which are always paid by the buyer under these three terms.

Terms at TIMBOMDOM

We quote EXW, FOB or CIF, shipping from Ningbo, Shanghai, Shenzhen, Tianjin or Qingdao. Tell us your destination port in the quote form and we will recommend the best option for your shipment.