EXW and FOB Explained for Shipping Incoterms?

“Incoterms” is short for International Commerce Terminology. It outlines the terms of sale between the buyer (your manufacturer or supplier) and the seller (you).

The typical terms for sea and air freight shipments will be one of two Incoterms: Ex Works (EXW) or Free on Board (FOB).

EXW – Ex Works

In simple terms, you are responsible for arranging all transportation, international shipping, and customs from their factory to the final destination. Your supplier will not arrange for this and it will not be paid on your behalf by the supplier. The title of the goods is passed to the buyer once the goods leave the factory.

What does this mean for ForestShipping customers?

Instead of arranging this all yourself, you hand the reins to us and we take over communication with your supplier. We will schedule to pick up your goods from the supplier and will deliver it to the port of origin, where we will ensure all customs and port fees are paid for. We book your shipment, clear customs, and arrange for delivery to ForestShipping and then to Amazon.

Should I choose EXW?

This is the highest risk option for those who are not using a freight forwarding company to handle the process. It is the lowest risk option for those who are using a freight forwarding company, since all aspects of transportation and customs will be handled by a single company.

FOB – Free on Board

When your shipment is FOB, you will pay your supplier to handle everything up until the goods are delivered to the port. They will handle any of the paperwork, customs fees at the origin, and port fees at origin. Once your goods are at the port of origin, you are responsible for arranging and paying for shipping and customs at the destination port. FOB is the most popular term of sale that we see.

What does this mean for ForestShipping customers?

ForestShipping will arrange for your shipment to be booked on a boat or plane. We will make sure all documents are filed for your goods to clear customs before they arrive in the United States. We will arrange for delivery to ForestShipping and then to Amazon’s fulfillment centers.

Should I choose FOB?

This is the lower risk option of the two for those who are not using a freight forwarding company to handle transportation from your supplier to the port, though there are still several hurdles to jump through when arranging shipping and customs clearance on your own. It is the slightly riskier option for those who are using a freight forwarding company, since the supplier is responsible for delivering the goods. However, in our experience, most suppliers do not have a problem delivering goods in a timely manner.