EXW and FCA differ significantly in transportation, delivery, and risk transfer. Understanding these differences helps buyers and sellers create better shipping agreements and achieve higher profits. In today’s blog, we will compare their features and advantages with real examples from our clients.
What is EXW? (example included)
EXW (Ex Works) means the seller gives the goods to the buyer at the seller’s place, like a factory or warehouse. But the seller does not load the goods onto the buyer’s vehicle or handle customs. However, in practice, the seller and buyer can agree for the seller to help with loading and customs. The buyer pays for all costs and takes all risks from the seller’s place to the final destination.
Under EXW terms, once goods are ready at the seller’s premises (warehouse, factory, etc.), they are considered “delivered.”
For example, if our customer buys goods from Yiwu, China to Los Angeles, USA, we prepare the goods as requested and then tell the customer’s transitario to pick them up from our warehouse. The customer’s freight forwarder handles the rest, including taking the goods to the nearest port in Ningbo, loading them onto the ship, clearing customs, and transporting them to the customer’s specified destination.
In this case, the buyer is responsible for the following costs:
- Coste del producto
- Inland transportation cost from Yiwu to Puerto de Ningbo
- Export customs clearance fee
- Transporte marítimo
- Import customs clearance fee
- Import duties and taxes
- Last-mile delivery fee
What is FCA? （example included）
FCA (Free Carrier) meaning in shipping is that the seller delivers the goods to a specified location, typically within their own country, and hands them over to the buyer’s chosen carrier. The seller assists with export clearance but doesn’t cover costs or risks beyond that point. Both parties can agree on whether the seller covers some international transport costes.
FCA is very common in daily transactions. Our customers may buy goods from Yiwu and Guangzhou, and then request these goods to be consolidated and sent to the carrier at Guangzhou port. This is known as consolidation. Under FCA terms, the seller is also responsible for the export customs clearance. It’s important to note that sellers often include costs like shipping fees into their product prices, similar to Precios FOB. If a product originally costs $2, adding these fees could raise the unit price to $3 per item.
In this case, the buyer is responsible for the following costs:
- FCA product cost
- Transporte marítimo
- Import customs clearance fee
- Import duties and taxes
- Last-mile delivery fee
When to pay under EXW and FCA?
EXW:
Under EXW works payment terms, the seller does not pay any costs from their warehouse to the buyer’s warehouse, so the EXW price is the product’s original manufacturing cost. To compare the prices of products from two factories, you should ask for the EXW price.
When signing EXW trade terms, sellers usually require full payment before shipping because ownership transfers to the buyer once the goods leave the warehouse. The seller has no control over the goods, so they won’t feel secure if the balance is unpaid.
FCA:
Under FCA payment terms, the seller pays for delivering the goods to the agreed location, covering freight, export clearance fees, and so on. Once the goods are loaded, the buyer will pay for the main carrier charges to transport the goods from the origin place to the destination and the costs of transporting the goods from the destination to their store, warehouse, or other locations.
EXW vs FCA which one is better for your business?
Choosing EXW
Under EXW terms, the seller only prepares the goods, and the buyer manages all shipping and customs. This suits buyers familiar with international shipping and with a reliable freight forwarder. EXW is often cheaper because the buyer knows local costs and avoids seller markups. The buyer also controls the entire shipping process, optimizing costs and gestión de la cadena de suministro.
Choosing FCA
FCA terms are more flexible. It is ideal for buyers with multiple suppliers because it allows for flexible delivery locations. If you place orders with various suppliers, you can designate one supplier to consolidate all shipments for international transport, making the process highly efficient.
This suits buyers unfamiliar with local transport and customs or without a reliable freight forwarder. In practice, FCA is commonly used because it reduces buyer risk and effort before the goods reach the carrier. However, delays or issues with the carrier could incur extra costs to buyers.
Reflexiones finales
There are many trade terms, with the most common being FOB, CIF, DDP, and DDU. While their definitions might seem complex, they mainly differ in the delivery point, affecting the division of risks and responsibilities between the buyer and seller. Buyers and sellers can choose trade terms based on their specific situations. If you have any questions, feel free to leave us a message or contact us for help with shipping, especially if you are importing from China.
We are Jingsourcing. Please feel free to leave a comment and share your questions and experiences with us!
