FOB, Ex-Works (EXW) CIF, and Freight Forwarders

The incoterms in international trade can be, quite honestly, overwhelming, and in negotiating with your overseas suppliers, it's critical to factor in these items. If one already has logistics support in China, for example, it can be OK to negotiate an Ex-Works price with the factory. If one is new to this type of business, lacks contacts, or simply, doesn't have the resources to manage domestic transfers/transit issues, then an FOB, or even CIF price would be more appropriate.

With EXW, one is responsible for picking up the freight at the dock of the factory. It sounds simple, but what if it's for export, what about the paperwork, what about the shipping company? Without fully understanding or planning for these processes, a cheaper EXW price will turn out to be a nightmare compared to the higher cost FOB or CIF price. With FOB, the freight can be delivered to your freight forwarder, who in turn, will manage the shipment of your products. With CIF, the freight will be delivered directly to the port in your destination country. A key factor to remember though, as you pass more and more processes directly to the factory (and their vendors), you lose more and more control (or arguably, visibility) of your costs.

Lastly, when searching for freight forwarders, one must think carefully about who that company is, their length of time in business, their main routes they handle, their costs, etc. If you're not physically located in Asia, it's best to retain the services of an Asian business partner to manage all these seemly impossible, but mission critical tasks.