How will trade term(FOB&EW etc) affect shipping cost

When our customers contact our company(DAKA International Transport Company) for shipping cost from China to Australia/USA/UK, we usually ask them what is the trade term. Why ? Because trade term will affect shipping cost a lot

Trade term includes EXW/FOB/CIF/DDU etc. Totally there are more than 10 kinds of trade term in international trade industry. Different trade term means different responsibility on seller and buyer.

When you import from China to Australia/USA/UK, most factories will quote you product price under FOB or EXW, which are the two main trade terms when importing from China. So when you Chinese factories quote you product price, you’d better ask them if the price is under FOB or under EXW.

For example, if you buy 1000 pcs of T-shirts from China, factory A quoted you product price of USD3/pc under FOB and factory B quoted USD2.9/pcs under EXW, which factory is cheaper ? The answer is Factory A and below is my explanation

FOB is short for Free On Board. When your Chinese factory quoted you FOB price, it means their price include products, shipping the products to Chinese port and making Chinese customs clearance. As an overseas buyer, you only need to find a shipping company like DAKA to ship products from Chinese port to your door in AU/USA/UK etc. In a word under FOB DAKA will quote you shipping cost from port to door instead of door to door

EXW is short for Exit Works. When Chinese factory quoted you EXW price, your shipping agent like DAKA need to pick up the products from Chinese factory and charge you all shipping cost and customs fee from door in Chinese factory to door in Australia/USA/UK. In a word under EXW DAKA quote you shipping cost from door to door instead of port to door.

Take the 1000 pcs of T-shirts for example, if DAKA is your shipping agent and you buy from factory A , as trade term is FOB, DAKA will quote shipping cost from Chinese port to door in Australia/USA/UK like USD800 . So the total cost =product price+ shipping price under fob =1000pcs*usd3/pcs+USD800=USD3800

If you choose to buy from factory B , as trade term is EXW, factory B will do nothing. As your shipping agent, DAKA will pick up the products from factory B and quote you shipping cost from door to door like USD1000. Total cost =product price + shipping price under EXW =1000pcs*USD2.9/pcs+USD1000=USD3900

That is why factory A is cheaper