FOB, EXW, and CIF: How I Split Freight on a China Order

Freight terms are a sourcing decision. They decide who clears export, who can see the ocean rate, and which port the truck drives to. I want the term and the port named before the deposit, while the factory can still price the goods honestly.

The three terms I actually use

EXW means you take the goods at the factory door. Export clearance is yours. I rarely recommend it unless you already have a forwarder in China who will act as the exporter. Most first-time buyers do not.

FOB at a named port means the factory clears export and delivers onto the ship at that port. Your forwarder books the ocean freight from there. This is the split I use on most standard-product orders. “FOB China” is not a port. Ningbo, Shenzhen, Shanghai, Qingdao, and Tianjin are ports. Yongkang flasks naturally leave through Ningbo. Shenzhen electronics leave through Shenzhen or Hong Kong-adjacent yards. Xuchang hair usually trucks to Qingdao or Tianjin.

CIF means the factory books freight and insurance to your destination port. It is one number, which is convenient, and it hides the ocean rate, which is not. I use it when you want a delivered-port price and you accept that the freight line is theirs.

Sea, air, and the box you are actually filling

• Samples go by air courier. Production goes by sea, unless the goods are light and the date is real. Hair extensions are a common air case. Flasks are not.
• Ask for carton sizes before you choose LCL or a full container. A first order that does not fill a box should not be forced into one.
• Destination terminal charges are still yours under FOB and often under CIF. I say so in the quotation.
• The balance follows the inspection, on the schedule in the contract. I do not release a weak shipment to catch a sailing.

Tell me the destination port and whether your forwarder is already appointed. I will name the Chinese port and the term in the same sentence as the factory price.

Keep reading

• China Export Documents a Buyer Should Actually Read
• Sourcing Wigs from Xuchang, the Hair-Products Cluster
• Vacuum Flasks from Yongkang: Steel, Lids, and Leak Tests