The short answer is by doing this, it will greatly reduce your shipping costs and give you more control over the shipment. Quite a few buyers come to us and ask our comments about choosing EXW for the max control of the goods. If you have ever looked into the meaning of EXW, you may change your decision. When the truck arrived at the warehouse or the manufacturer, the supplier even has no obligation to loading on it.
Not mentioning the customs declaration at the loading port. All export clearance documents and procedures are included in the FOB price. Importers are wise to avoid hassle and simply stick to FOB. Yes, we can do all the stuff for you if you insist on EXW. Things should be easier. The supplier told you the logistics cost, and you paid it. Most manufacturers in China are made-to-order. They need time to get the production done. The total amount has to be settled down before that.
So hundreds dollars added in reserve for future changes. The price is very likely not the cheaper one. Your China local forwarding company will quote the best price and provide more than one solution. This is very important. Otherwise, you can end up with a host of additional charges when your goods arrive in the UK. The FOB price in combination with the use of a freight forwarder is the most cost-effective way to do sea freight shipments from China.
Sounds good, right? Perfect, right? And then add the actual shipping cost, customs clearance, etc. Some Chinese suppliers are taking advantage of various loopholes in the transit system, undervaluing the goods, hiding smaller shipments in bigger pallets, etc.
If you do, you are almost certainly taking part in a tax evasion scheme, which can hurt you very badly in the long term. Ok, I really hope this clarifies the various terms you might see in relation to pricing and shipping methods when dealing with importing from China. This covers the cost of the product and local charges in China to the nearest port. On the other hand, if your order is very small and you plan to use a courier for delivery, work with EXW prices.
You can ask your supplier to organise courier delivery and add that extra cost to the invoice. Just so you know, DDP terms as such are not illegal. Even companies like Amazon use DDP for international orders.
For example, when you order goods from Amazon. The problem is that Chinese suppliers are not using this process correctly or legally.
If you have any further questions, make sure to leave them in the comments section below. I personally reply to all comments within 24 hours, Mon-Fri. Nice blog! I am based in UAE, and am in a position to place my first order within the next few weeks. I am importing customized face mask from Alibaba, Qty: pcs usd0. I would appreciate your advice me on which terms should i use.
Hi Andrew. Thanks for all the info its a massive help! But I cant seem to find the answer to a query I have.
This is for a door to door delivery to my address in the UK from China. You can read more about this scheme here:. I have the shipment coming to my home address in the US from China.
Does this mean I have to arrange anything or will it be straightforward and shipped directly to my home? Will I incur any additional fees on the bulk purchase? Hi Andrew I trying to buy matllic yarn kg 1 container 20ft. You will want to get a FOB price from your supplier AND work with a freight forwarding company, which will take care of the shipping process, customs clearance and delivering goods to your address. Your freight forwarder should be able to consolidate such shipments into one.
Just ask them about this. I am in the middle of a trade assurance order, invoice received for payment. Gold supplier, verified. Already ordered samples and they were good.
Not branded products. Invoice says EXW:You need to pick up the goods from the nominated factory place, and arrange shipment by yourself, also afford all the fees and risks that may occur during delivery. Supplier says customs and duty included. So far all things look good but shipping confusing me. Also, when invoiced he added items to my invoice but the cost of goods is the same end price. I asked him about it and he says he wants to get data on other products.
My item and quantity is on the invoice also though. You will pay these separately when goods arrive in the UK. Not sure what you mean about those other products added to the invoice? I was wondering what is classed as a small shipment is this based on both weight and quantity? I have not shipped anything before and I am looking for the cheapest option including all of the fees. I am looking to order and ship units of a g product from China to the UK.
Which shipping method would you recommend based on this? The item is 20cm height, At the moment I am trying to get the best possible deal without spending too much.
Lets say units, would it be ideal for the shipping method to be by sea? No, at that quantity sea shipping will not be cost-effective. And same applies for courier shipping — it will be very expensive. You should increase the order size to units and ship it via sea, to kee shipping costs per unit down. I have ordered elastic from China via AliBaba. The whole shipment weighs In future what would be a better option? Especially if the weight will probably double or triple?
Also could you explain what the freight forwarder company would do? Does the Chinese supplier only ship to the port and then the FF company takes over and delivers to your door? It will be more expensive and totally unnecessary. These numbers you can calculate in advance too. It all went well and was super straightforward. I am guessing I should request it to change to EXW?
This would be my very first attempt at Alibaba. Pillowcase total weight will be under 60 KG and its going to 3 cartons. Most freight forwarders will have some sort of warehouse facilities in China, so they can combine the shipments for you and wait a few days.
Just contact freight forwarding companies, get quotes and see what they can do to help with your situation. I am researching importing and getting all the info I need before placing my first order and your website has been an invaluable tool. I have negotiated with one factory who manufacture lighting. I have an FOB price for an initial order of 5 units.
Each unit is boxed individually and per box measures 55x55x29cm and 4. My next stage of research is finding a freight forwarder who can get these from Port to Door and take care of all the paperwork, duties, etc. So should I be considering Air instead?
Hopefully a glitch in their website, rather than ignoring the small order. Yes, that order is way too small for using sea freight. Way too small. With sea freight, ideally, you want to send at least 2 cubic meters one full pallet , to make it cost-effective.
For your order, a courier is the only reasonable shipping method to use. It will be super expensive, but still — cheaper than sea or air. I know this is all part of the learning curve, but why is shipping 5 boxes so expensive? Is it because they are relatively large, but light in weight? Is the only way to make this cost effective simply to order more units?
Advice is greatly appreciated. But yes, in general, the order is simply too small. For an item like this, you would want to order at least one pallet worth of goods and ship it via sea, to get a reasonable shipping cost per unit. Hey I wonder if you can help me I recently ordered some inflatable castles from China and I have just had the invoices come through I believe the company sent the shipment cnf and no I just been hot with lots of different charges from handling fees to CAF charges LCL document charges the lot is this right and can they charge me for import dutys as well as tax and custom clearance I just think the total of what they invoiced me is more then what the castle is worth.
Supplier has said they will ship it to Felixstowe. Is it cheaper and less complicated now that they are shipping it to Felixstowe or is it the opposite? Please let me know. Thanks in advance. You will face a ton of extra costs in the UK when goods arrive. Thank you so much for all the articles you post. Is this normal for an order of this nature because they are lighter items? Or should I be asking for FOB terms? If so, what recourse do we as buyers have if the goods turn out to be defective or non-compliant?
This is not related to the topic of this particular article, but how do we deal with products that are not satisfactory in quality? On that note, are there certain terms you recommend we get in writing during the quotation process to protect ourselves in case we run into quality issues?
No contract will protect you — you just have to take the risk. You also want to do a pre-shipment inspection before goods are shipped out:. Thank you for your reply, Andrew. So when do people use EXW? One supplier told me that the order would have to meet a certain weight threshold to be shipped by boat. And so when do freight forwarders come into play?
Sorry, I guess I am just very confused and am missing something. It is also often used with courier deliveries, yes, when they quote you EXW price and courier shipping price separately. In the first scenario, a freight forwarder will deal with picking up goods from supplier, organising export procedure etc. This is usually more expensive than letting supplier do it and buy on a FOB basis. Do you have a directory of such agents, that could help me with my new venture. Hi Andrew, thanks for the great work.
I run a law firm and I intend to import some office furniture from China to Nigeria. I have requested the merchant on Alibaba for an FOB price. So, my question is, do you advise I use a freight forwarding company in China to obtain this goods at Port Shanghai and ship same to my doorstep in Nigeria, or is it a Nigerian freight forwarding company that ought to undertake this task?
Thank you. Yes, you will want to use a freight forwarding company who can handle the shipment, customs clearance and delivery to your door. I guess my question is, is FOB best option for me? A package that size should go via courier shipping method. Hi Andrew, I am reading all your comments, however if you have already replied to a question such as mine, my apologies. Please could you explain the difference between door to door and FOB? Shipping from China to UK.
Many Thanks for your wonderful advice so far! But it means that your supplier, freight forwarder or shipping company WILL clear the goods through customs and deliver to your address in the UK. Happy New Year Andrew! I am importing a 40ft container from China going to Philippines. Is it really required to apply for insurance? The CNF is new to me. Thank you for your time. Regards wes. If you feel that supplier over-charges you for insurance part, get it somewhere else — usually, insurance for sea freight shipments is very cheap and it should NOT affect your final cost that much.
Good morning, Andrew. FOB without the shipping point designation. Or is there some nuance about the handling of the product on the dock? Any clarification you can share is appreciated. Thanks for the quick reply. For example: FOB Shenzhen. Great post! I have a question regarding air courier shipping terms. I am exporting from China. The supplier will be sending the goods via air courier however they initially sent me a contract containing FOB terms.
I requested for this to be amended to EXW. Instead, they have changed the contract to CIF. We are starting our trading agency and as part of the first deal, we are working with buyer and seller agents. In total there will be three parties involved, including us. As we are dealing with used goods, there is a risk of shipment getting rejected at the arrival port by the agent we are selling to. What should be the best payment and shipping terms for us with both buyer and seller agents?
As we are completely new to this business, we would want to reduce our risk to minimum. Both the agents we are working with prefer CIF basis but to minimize our risk of payment default, we ideally would like FOB with whom we are selling to, would this be an ideal situation or what would you suggest? Do you have any article about payment issues? She has agreed to deliver the product within 15 days through E-Express with full responsibility to my door step. We have agreed on the payment term EXW and lastly, I have paid the payment through trade assurance.
After paying the money, I got a message that money will be delivered to the supplier after 2 days. That moment i realized how big a mistake i have made by agreeing on EXW payment term. Can you kindly tell me what kind of payment term I should agree on in a contract with a supplier exw, fob, etc before ordering my product so that it become their responsibility to deliver my product at my doorstep dealing with custom and other hurdles also within time otherwise i get full refund payment.
Thoroughly enjoy learning from your articles! I am based in Australia, and am in a position to place my first order within the next few weeks. It is one of the most used terms and also the most misused term in the shipping industry.
The term FOB is often used for describing inland movement of cargo. However, it explicitly stands for transportation of goods through inland or ocean waterways. Delivery of goods is considered completed once the consignment is loaded on a vessel at the port of shipment. From that point onwards the buyer becomes responsible for the consignment. The seller is of course under no obligation to cover the insurance or freight charges. The buyer on the other hand is at liberty to pick whichever ocean carrier he chooses.
When a buyer thinks of cargo shipping from China under an FOB contract a local ocean freight company can prove to be of immense help, as it is likely to be familiar with the system and procedures involved.
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