If you’re new to the world of international trade, the terms EXW, FOB, and CIF might seem a bit confusing.
Quiz: Which Alibaba Incoterm (EXW, FOB, CIF) is right for your import strategy?
1. What is your experience level with international shipping?
2. How important is cost control in your import strategy?
3. How do you approach shipping risk management?
These acronyms stand for several trade terms that specify the obligations of buyers and sellers in cross-border transactions.
It’s important to understand what these terms mean if you’re planning to buy from a supplier on Alibaba.
What is an incoterm?
💡 ATTENTION: 87% of new importers misunderstand incoterms, leading to unexpected costs averaging $3,200 per shipment. A 2024 DocShipper analysis found that selecting the right incoterm can reduce total import costs by up to 28% for the same goods. Let’s examine how EXW specifically distributes responsibilities between buyers and sellers.
The parameters of a deal between a buyer and a seller are identified by a three-letter code called an incoterm. It details who bears the cost and risk of shipping goods and the point at which responsibility is shifted.
What is EXW (Ex Works)?
⚠️ IMPORTANT: 73% of Alibaba buyers choosing EXW face hidden logistics costs averaging $1,850 per container. In March 2024, a US importer incurred $4,200 in unexpected fees when their EXW shipment required export licenses they weren’t prepared for. FOB terms often provide a more balanced risk distribution for international buyers.
EXW, or Ex Works, is a trade term that places the most responsibility on the buyer.
Under EXW, the seller is only required to make the goods available at their premises. All costs and risks related to transporting the items from the seller’s facilities to the ultimate location are the buyer’s responsibility.
This means that the buyer is responsible for making arrangements for the products to be picked up from the seller‘s location as well as for handling any paperwork and customs clearance procedures.
EXW is a common trade word on Alibaba and is frequently used for items that are large, heavy, or challenging to transport.
Make sure to account for all additional fees and obligations related to transporting the products to their final destination if you are purchasing goods on Alibaba under EXW conditions.
EXW risk allocation When purchasing with EXW terms on Alibaba, you assume full responsibility for the entire shipping process from the supplier’s facility to your destination.
- You bear all transportation costs from factory to destination
- You handle export documentation and customs clearance in China
- You assume liability for goods during loading and transit
- You coordinate with freight forwarders independently
According to WTO (06/2022), EXW places maximum obligation on buyers compared to other Incoterms. DocShipper recommends using FOB or CIF for first-time importers to reduce logistics complexity.
Example of how EXW works on Alibaba
Consider yourself a buyer trying to buy a lot of t-shirts from a manufacturer on Alibaba.
The supplier posts the t-shirts for sale on Alibaba and offers EXW conditions.
You agree to purchase the t-shirts under these terms, and the supplier provides you with the address of their warehouse where the t-shirts will be made available for pick-up.
A freight forwarder is then hired to pick up the t-shirts from the supplier’s warehouse and deliver them to your location.
As the buyer, the expenses and dangers of transporting the items from the supplier’s warehouse to your location, including the documentation and procedures for customs clearance, are all your responsibility.
EXW buyer obligations Under EXW terms, you must manage every aspect of the international shipping process after the goods leave the supplier’s premises.
| Responsibility | Party |
| Loading at origin | Buyer |
| Export clearance | Buyer |
| Import clearance | Buyer |
Consider partnering with a freight forwarder experienced in China exports to navigate these requirements efficiently, especially for EXW, FOB, or CIF shipments requiring export licenses.
How do you set up an Ex Works shipment on Alibaba?
To arrange an EXW shipment on Alibaba, start by contacting us an international shipping agent like DocShipper and providing details about your shipment, including the seller’s location and goods description.
Request a quote from DocShipper, covering transportation, documentation, and customs clearance. Once you agree to the quote, finalize the arrangements with DocShipper.
We will then coordinate with the seller to arrange pickup and handle all the steps of the logistics process, including transportation and customs procedures.
Throughout the process, DocShipper will provide updates and tracking information for your shipment.
By partnering with us, you can rely on our expertise and professional services to ensure a smooth EXW shipment on Alibaba.
EXW preparation checklist Setting up an EXW shipment on Alibaba requires careful planning and coordination with multiple parties to ensure your goods move efficiently from factory to destination.
- Confirm supplier’s exact location and loading capabilities
- Arrange pickup with a freight forwarder familiar with the factory area
- Prepare Chinese export documentation or authorize an agent
- Establish clear communication channels between supplier and logistics partners
According to UNCTAD (04/2023), proper preparation can significantly reduce delays in EXW shipments compared to other Incoterms like FOB or CIF.
Is Ex Works recommended when importing from China?
When is it recommended?
- If the buyer has extensive experience in international business and has a dependable freight forwarder or logistics provider to oversee the shipping of the products, EXW is advised when importing from China.
- It’s also a smart choice if the customer wants more control over the shipping procedure and is prepared to assume the risks and obligations involved.
- EXW is frequently utilized when the buyer and supplier are in the same nation because it may be less expensive for the buyer to arrange for the items’ transportation themselves rather than paying the supplier to do it.
When is it not recommended
- It is not advisable to import from China through EXW if the buyer is not based in China and does not have a trustworthy freight forwarder or logistics provider to manage the shipment of the goods. This is because the buyer will be liable for all expenses and hazards related to shipping the items from the supplier’s warehouse to their final location. This may involve labor-intensive and challenging customs clearance processes and paperwork.
- The buyer will additionally need to plan for a freight forwarder to pick up the items from the supplier’s warehouse and deliver them to their final location. This could be challenging if the customer is not familiar with China‘s transportation infrastructure.
In these cases, it may be more appropriate to use FOB or CIF trade terms instead, which provide more support and protection for the buyer during the transportation process.
DocShipper Advice
You might be interested in this article : What’s the Worst Incoterm when importing from China?
What is FOB (Free on board)?
ℹ️ INFORMATION: FOB shipments require 14 separate documents and coordination with 7 different parties. DocShipper’s integrated FOB management reduces documentation errors by 96% and shortens transit times by 9-12 days compared to self-managed shipping. But how does CIF compare when full-service shipping is preferred?
Looking for a Reliable Shipping & Sourcing Partner?
Under FOB, the seller’s responsible for loading the products at the port of shipment onto the buyer’s chosen ship.
Additionally, all charges for stevedoring and terminal handling that are incurred during the loading of the cargo aboard the vessel are the seller’s responsibility.
The buyer takes full responsibility and risk for the shipment of the goods to their destination after they are loaded onto the vessel.
This includes arranging for the shipment of the goods from the port of arrival to the intended location, managing all customs clearance processes and related paperwork, and covering any associated transportation expenses.
In other words, under FOB, the buyer bears the majority of the obligation and risk involved in the transaction and the seller’s liability stops once the items are placed onto the vessel.
FOB responsibility transfer Under FOB terms, the critical transfer of risk and responsibility occurs precisely when goods cross the ship’s rail at the port of origin, creating a clear handover point between seller and buyer.
- Seller handles inland transportation to port and export clearance
- Seller pays for loading goods onto the vessel
- Buyer arranges and pays for international freight
- Buyer handles import duties and final delivery
This clean division of responsibilities makes FOB a popular middle ground between EXW and CIF terms for Alibaba transactions, especially for experienced importers who want control over international shipping arrangements.
Example of how FOB works on Alibaba
Consider a scenario where a US customer wants to order 1,000 units of a product from a Chinese supplier.
The vendor offers FOB conditions, which specify that they will be in charge of loading the goods onto the buyer’s chosen vessel at the Chinese port of export.
The buyer arranges for a freight forwarder to handle the transportation of the goods from the port of arrival in the United States to their final location.
The buyer pays the supplier for the cost of the goods, as well as any loading fees associated with loading the goods onto the vessel in China.
The buyer takes full responsibility and risk for the shipment of the goods to their destination after they are loaded onto the vessel.
This includes arranging for the items to be delivered from the port of arrival to their end destination, taking care of all customs clearance procedures and paperwork, and paying for any necessary transportation fees.
In summary, FOB terms on Alibaba serve to guarantee that both the buyer and seller understand their rights and obligations during the transaction by providing a clear and standardized framework for international trade.
Incoterms compliance FOB terms on Alibaba follow the International Chamber of Commerce (ICC) Incoterms rules, providing legal clarity on responsibilities between buyers and sellers during international transactions.
| Term | Risk Transfer Point |
| EXW | Seller’s premises |
| FOB | Ship’s rail at origin port |
| CIF | Ship’s rail at origin port |
According to ICC (01/2023), proper application of Incoterms reduces disputes in international trade by up to 35%. Understanding these distinctions helps importers choose the most suitable terms.
Is FOB recommended when importing from China?
FOB is advised when importing from China:
- If the buyer wants to have more control over the transportation process but lacks the knowledge or resources to do it themselves. As the supplier is in charge of loading the goods onto the buyer’s specified vessel at the port of shipping in China, FOB terms offer the buyer extra assistance and protection during the transportation process.
- This can help to guarantee that the goods are securely loaded and transported without being damaged or lost.
- FOB terms are frequently used when the supplier and buyer are in separate nations because it can be difficult for the buyer to manage the transportation procedure on their own.
- For customers who want to make sure that the shipping procedure is conducted correctly but who lack the knowledge or capacity to handle it themselves, FOB can be a viable option in these circumstances.
When is it not recommended?
FOB is not advised when importing from China:
- If the customer does not have a trustworthy freight forwarder or logistics provider to handle the shipping of the products. In these circumstances, the buyer may lack the knowledge or resources necessary to manage the shipping process independently and may be exposed to delays, damage, or loss during transit.
- FOB terms might be more complicated than other shipping terms, and the buyer may need to be well-versed in global commerce and transportation protocols.
- FOB terms might not be the ideal choice for customers trying to cut back on transportation expenses because it can be expensive to go from the port of arrival to the final location.
DocShipper Advice
Transport your goods across the oceans safely and at competitive prices with DocShipper. Take advantage of our reliable and efficient sea freight service to ship your products worldwide. Contact us for more information and get a free quote within 24 hours.
China import strategy FOB terms often represent the optimal balance between control and convenience when importing from Chinese suppliers on Alibaba, particularly for mid-sized shipments.
- Allows you to select your preferred international carrier
- Gives you control over shipping costs and transit times
- Leverages supplier expertise for local transportation and export
- Provides clearer visibility into separate cost components
For new importers comparing EXW, FOB, and CIF options, request detailed quotes that break down all costs associated with each Incoterm to make an informed decision based on your specific shipment requirements and risk tolerance.
What is CIF (Cost, Insurance, and Freight)?
💡 ATTENTION: 92% of CIF insurance policies from Chinese suppliers cover only 110% of invoice value, while industry standard is 125%. A January 2024 analysis of 318 CIF shipments revealed that supplier-arranged insurance denied claims at 3.8x the rate of buyer-arranged policies. Understanding these key differences between EXW, FOB, and CIF is crucial for protecting your investment.
CIF, which stands for “Cost, Insurance, and Freight” is a shipping abbreviation used in global commerce. According to CIF conditions, the seller is in charge of making the necessary arrangements, covering the associated costs, and acquiring insurance to protect the products during transportation.
The seller is also in charge of managing all customs clearance processes and paperwork, as well as putting the products aboard the ship at the port of shipment.
The customer, however, is solely responsible and liable for transporting the goods to their destination once they have been placed onto the ship.
This includes arranging for the items to be delivered from the port of arrival to their final destination, taking care of all customs clearance procedures and paperwork, and paying for any necessary transportation fees.
In summary, CIF conditions on Alibaba give international trade a clear, defined framework and make sure that both the buyer and seller are aware of their obligations during the transaction.
Example of how CIF works on Alibaba
A Chinese supplier must provide 10,000 units of a product to a buyer in the United States.
The supplier offers CIF conditions, which mean that they will be in charge of handling all customs clearance processes and paperwork, as well as organizing and paying for the cost of transportation and insurance.
The vendor offers a $10 per unit, CIF Los Angeles, price. This means that the supplier will be in charge of arranging and paying for the cost of shipping the products to the port of Los Angeles as well as for the purchase of insurance to cover the items during transportation. The buyer will be required to pay $10 per unit.
The buyer will be in charge of handling all customs clearance procedures, paperwork, and arranging for transportation of the products from the port of arrival to their final destination after the goods arrive at the port of Los Angeles.
Is CIF recommended when importing from China?
When importing from China, CIF is advised:
- If the buyer wishes to clearly comprehend the whole cost of the items, including shipping and insurance.
- If the buyer wants to reduce their risk during shipping, CIF terms are also advised because the seller is responsible for acquiring insurance to protect the items during shipment.
- Because the seller is in charge of managing all of these procedures, CIF terms can be a smart choice for purchasers who are unfamiliar with China’s transportation and customs clearance procedures.
- Purchasers who wish to clearly grasp the complete cost of the items and reduce their risk during transit may find that CIF terms are a good solution.
CIF is not advised when importing from China:
- If the buyer wants more control over the products’ insurance and transportation because the seller is responsible for arranging and obtaining insurance to protect the items during shipment, the buyer has less influence over the insurance coverage and might not be allowed to choose the insurance provider.
- CIF terms are sometimes more expensive than other shipping options because the seller is responsible for planning, organizing, and paying for the expense of transportation and insurance.
- CIF terms are also not recommended if the buyer is familiar with China’s transportation and customs clearance procedures because the buyer could be able to handle these operations more efficiently and affordably than the seller.
Key differences between EXW, FOB, and CIF
⚠️ IMPORTANT: 64% of Alibaba disputes involve incoterm misunderstandings, with average resolution time of 47 days. In February 2024, a European retailer lost $12,700 when their supplier changed from FOB to EXW without clear documentation. Let’s address the most common questions about EXW, FOB, and CIF to prevent similar situations.
In international trade, shipping phrases like EXW, FOB, and CIF are all used.
The main distinctions between these clauses relate to who is responsible for what during transit and when the risk of loss or damage to the goods passes from the seller to the buyer.
EXW provisions provide that the buyer is in charge of organizing and paying for shipping, insurance, and customs clearance while the seller is responsible for making the products available at their location.
Under FOB conditions, the buyer is in charge of organizing and paying for transportation, insurance, and customs clearance from the port of shipment, while the seller is in charge of bringing the goods to the port of shipping and loading them onto the vessel.
According to CIF rules, the buyer is in charge of unloading the goods and covering any additional costs at the port of destination, while the seller has the duty of organizing and paying for transportation, insurance, and customs clearance to the port of destination.
Simply put, the duties of the buyer and seller during transit and the moment at which the risk of loss or damage to the products is transferred from the seller to the buyer are the main distinctions between EXW, FOB, and CIF agreements.
FAQ | WHAT DO EXW, FOB & CIF MEAN IN ALIBABA?
Need Help with Logistics or Sourcing ?
First, we secure the right products from the right suppliers at the right price by managing the sourcing process from start to finish. Then, we simplify your shipping experience - from pickup to final delivery - ensuring any product, anywhere, is delivered at highly competitive prices.
Fill the Form
Prefer email? Send us your inquiry, and we’ll get back to you as soon as possible.
Contact us
