From the side that issues the quote
Ex works vs FOB, explained by the factory quoting you
Most explanations of Incoterms are written by freight forwarders, who see the term from the outside. This one is written by the side that issues the number. An ex-works price is the smallest figure in the whole transaction. It is the cost of the goods standing at our door, and it is deliberately incomplete: it excludes the freight, the duty, the customs clearance, the bank charges, and the local delivery at your end. That is not a trick, it is what the term means. The trouble starts when somebody treats it as a price. Set a retail figure against an ex-works number and you will sell at a loss on every piece, and you will discover it a season later, which is the expensive time to discover it.
Who does what under each term
| EXW, ex works | FOB, free on board | DAP or DDP | |
|---|---|---|---|
| Where the goods change hands | At our door. The moment they are available for collection, they are yours. | Once loaded on the vessel at the named port of origin. | At an address you name, in your country. |
| Who books and pays the freight | You, from our door onward, including the leg to the port. | We deliver to the port and clear export. You take the main carriage. | We arrange it end to end and it is inside the figure quoted. |
| Who clears customs | Export at origin is formally yours, which is the part that surprises first-time importers. | We handle export clearance. Import clearance is still yours. | Export ours. Import yours under DAP, ours under DDP. |
| What is missing from the number | Everything after our door. Freight, duty, clearance, bank charges, last mile. | Main carriage, insurance, duty, clearance at your end. | Under DDP, little. Under DAP, the import duty and taxes. |
| When it is the right choice | When you already have a forwarder and a lane you trust, and you want to control the routing. | The usual middle ground for a buyer with some import experience but no fixed origin agent. | When you want one number and are willing to pay for someone else to carry the coordination. |
These are Incoterms 2020 rules and they allocate cost and risk, not price. Two suppliers quoting the same figure on different terms are not quoting the same thing, and comparing them side by side without converting is the most common sourcing mistake we see.
The terms that decide what you actually pay
Every one of these is third-party verifiable. Where a number matters, we say where to look it up.
- Ex works
- EXW. The seller makes the goods available at its own premises and does nothing else. It places the maximum obligation on the buyer of any Incoterm. It is also the term under which a factory quote looks cheapest, which is why it is quoted so often and why it is misread so often.
- Free on board
- FOB. The seller delivers to the named port of origin and clears the goods for export. Risk passes when the goods are on board. For most buyers importing from Asia this is the practical default, because the origin-side handling is the part hardest to arrange from another continent.
- Landed cost
- What the goods actually cost you once they are in your hands: the ex-works figure plus freight, insurance, duty, customs clearance, bank and currency charges, and inland delivery. It is the only number worth setting a retail price against, and it is the number nobody can quote you from our end.
- HS heading
- The Harmonised System code that determines your duty rate. Men's woven suits, jackets and trousers sit under heading 6203, and knitted equivalents under 6103, which is why a jersey blazer and a woven one can attract different rates. Your own customs tariff is the authority. Look up your country's schedule under those headings rather than taking anyone's word, ours included.
- Preferential origin
- Whether a trade agreement between the country of manufacture and your country reduces the duty. It depends on where the garment was made, not where the cloth came from, and it is decided by rules of origin rather than by the invoice. Worth checking once, properly, because it changes every calculation afterwards.
- Customs value
- The figure your duty is calculated on, which is usually the transaction value plus certain costs depending on your jurisdiction. Under EXW and FOB it is not the same base as under DDP, so the same shipment on different terms can produce different duty. This is the technical reason terms and price cannot be compared separately.
- Consolidation
- Combining several small shipments into one. The per-unit freight on a single garment is disproportionate to its value, so on small and frequent orders the freight line, not the goods, is what moves your landed cost. Ask your forwarder what a consolidated schedule would do before you assume small orders are uneconomic.
What buyers ask when the first quote arrives
What does ex works mean?
It means the price covers the goods, available for collection at the seller's premises, and nothing beyond that. No freight, no export handling, no duty, no clearance, no delivery. It is the term that places the most obligation on the buyer of any Incoterm, and under Incoterms 2020 even the export formalities at origin are formally the buyer's responsibility, which is the part that catches people out on a first import.
Does an ex works price include shipping?
No. Not the main carriage, not the truck to the port, not the last mile at your end. If a quote says ex works and the number looks unusually good, the number is not the reason, the term is. This is worth checking on every quote you receive, because two suppliers quoting on different terms can look like they differ on price when they only differ on how much of the journey is inside the figure.
What is the difference between EXW and FOB?
The distance the seller carries the goods before handing them over. Under EXW the handover is at the factory door. Under FOB the seller moves them to the named port of origin and clears them for export, and risk passes when they are on board. In practical terms FOB removes the part of the process that is hardest to arrange from abroad, which is why most buyers importing from Asia end up on FOB even when EXW is offered.
Which term should I ask for?
If you have imported before and have a forwarder you trust, EXW gives you the most control over routing and often the best total cost. If this is your first import, do not take EXW. We would rather say that plainly than have you accept our lowest-looking quote and then discover that arranging origin-side collection and export clearance from another continent is a job you did not know you had taken on. Ask for FOB, and ask your forwarder to quote the rest.
Can you tell me my landed cost?
No, and be careful of anyone who says they can. Your landed cost depends on your freight lane, your volume, your forwarder's rates, your country's duty rate under the relevant HS heading, whether preferential origin applies to you, and your bank's charges. None of those are visible from our end. What we can tell you is the structure, which is the ex-works figure plus freight, insurance, duty, clearance, bank charges and inland delivery. Fill in your own numbers from your own forwarder and your own tariff.
What duty rate applies to suits?
That depends on your country and on how the garment is constructed. Men's woven suits, jackets and trousers fall under HS heading 6203, and the knitted equivalents under 6103. Those headings are the starting point rather than the answer, because the rate against them differs by destination and may be reduced by a trade agreement. Look them up in your own customs tariff. A supplier quoting you a duty percentage for your country is guessing.
Does the term change my delivery time?
It changes when the clock stops for us and starts for you, not how long production takes. Our own production runs 14 to 20 working days from a confirmed order, and that window is the same under any term. What differs afterwards is how much of the transit you are managing. Under EXW the gap between goods ready and goods moving is entirely on your side, and on a first import that gap is usually longer than people plan for.
Why do factories quote ex works so often?
Because it is the number a factory can state accurately. Everything past our door depends on facts we do not have. That is the honest reason. The less honest use of the same term is that it makes a quote look smaller than a comparable one quoted on delivered terms, so when you compare suppliers, convert everything to the same term first. Whichever supplier you end up with, ours included, ask what is inside the figure before you compare it to anything.
Compare on landed cost, not on the factory door
Bring us the term you want to buy on and we will quote against it. If you are still working out what a garment has to retail at to be worth stocking, work that backwards from landed cost rather than from anyone's ex-works figure.