FOB vs EXW: which Incoterm should you use?
FOB (Free On Board) versus EXW (Ex Works) — who pays freight, where risk transfers, and what each choice does to your landed cost. Last reviewed 16 July 2026.
EXW hands over at the seller's factory with the buyer doing export clearance; FOB has the seller clear export and load the goods onto the vessel.
FOB vs EXW at a glance
| Factor | FOB — Free On Board | EXW — Ex Works |
|---|---|---|
| Group | F — Main carriage unpaid | E — Departure |
| Transport mode | Sea & inland waterway | Any mode |
| Who pays main freight | Buyer | Buyer |
| Insurance obligation | No obligation on either party | No obligation on either party |
| Risk transfers | When goods are loaded on board the vessel at the named port of shipment | At the seller's premises, once goods are placed at the buyer's disposal (not loaded) |
| Export clearance | Seller | Buyer |
| Import clearance | Buyer | Buyer |
| Best for | Traditional sea freight where the buyer arranges and controls the main carriage | Buyers with their own forwarder who want maximum control from the factory gate |
Based on the Incoterms 2020 rules (ICC). Always confirm the exact obligations in your sales contract — as of 16 July 2026.
When to choose FOB
Choose FOB when you want the seller to handle origin haulage and, crucially, export clearance, delivering the goods loaded on board at the port. It is the practical default for sea freight from most suppliers because the seller is far better placed to clear their own country's exports than you are from abroad.
When to choose EXW
Choose EXW only when you (or your agent) can genuinely manage everything from the seller's door — inland transport, export customs, and loading. It gives maximum control and the lowest headline price, but it puts the export-clearance burden on a buyer who is usually not established in the origin country, which is why FOB is normally the safer sea-freight choice.
What it does to your landed cost
EXW looks cheapest on paper because the quoted price excludes origin transport, export formalities and terminal handling — costs that reappear on your forwarder's invoice, often higher than the seller would have paid. FOB folds those origin costs into a cleaner handover once the goods are on board the vessel. Either way, freight and insurance are added back to reach the customs value your duty is charged on (with import VAT on a wider base again). Model the full origin-to-door cost of both in the calculator before you commit.
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