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What Shipping Terms are Best!? It's Confusing!

When you've just about had enough or re-reading the shipping terms and STILL don't understand

A lot of new importers get caught out with this one, and so we've tried to keep things as plain/clear as possible as so many other sites cloud over what's what, with more jargon! So here's our simple explanation which we hope helps.

From a simple point of view as a buyer, EXW terms are the worst, FCA 2nd worst and FOB the best.

Here's why;

EXW = Ex-Works. Your freight charges start ex-works or in other words ex the Factory. You have to pay freight right from their doorstep including all the documentation for exporting. Raising bill of ladings, export customs declaration, handling the cargo into the container itself with the proportion of the containers cost from getting from 'loading warehouse' to the port.

FCA = Free Carrier Alongside. Your freight charges start once the supplier has delivered your goods to alongside the carrier whether thats a container (LCL) or vessel (FCL). You will therefore pay the handling/documentation charges as above but, not the trucking from factory to the loading warehouse/vessel. Hence it's a bit cheaper than EXW.

FOB = Free on Board. Your freight charges are free, until the goods are actually on board the LCL container or the Vessel (FCL). So the supplier pays all the local charges including the trucking from factory to the port or loading warehouse, their documentation fees, export declaration and handling for the goods to get onboard.

When negotiating with suppliers it's therefore imperative you hold your own, and push for FOB even if it cost you very slightly more per item, it should be cheaper overall vs EXW or FCA + a slight discount on the goods.

It's normal to accept EXW when using courier because, the cost doesnt change anyway. It's always Door to Door for a courier so makes no odds where they collect from, so might as well accept EXW and collect from the factory door instead of carting it around the country and have them pick it up from another place. It's also normal to accept EXW for Airfreight general services, because the local handling is more expensive than seafreight, and suppliers will not be able or expected to have so much margin on their products to absorb this.

Seafreight however, is always, or 99.9% of the time agreed as FOB so don't accept anything different.

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