Introduction

Navigating the world of international trade can be daunting, especially when confronted with a myriad of terms and acronyms. FOB, EXW, and CIF are among the most common shipping terms (Incoterms) used in global trade, each with distinct implications on cost and responsibility. Understanding these terms is crucial for any business, as they directly affect your bottom line and your control over the supply chain.

FOB (Free on Board): The Strategic Choice

FOB shipping terms indicate that the seller is responsible for the goods until they are safely loaded onto a shipping vessel. From that point forward, the buyer takes on the cost and risk.

The Trade Entrust Recommendation: Why FOB is Best

We always advise our clients to choose FOB terms and work with a shipping company based in your own country . This approach offers major advantages:

• Local Expertise & Communication: You speak the same language and share the same time zone as your shipping partner. The level of commitment to you is much higher, and they are experts in your local customs clearance—the most critical step in the journey.

• Hassle-Free Export: Under FOB, the factory is responsible for export customs in China. If there are issues at the origin, it’s their job to fix it, saving you from foreign bureaucracy.

EXW (Ex Works): The New Risks in China

EXW places maximum responsibility on the buyer. The seller’s job is done once the goods are made available at their factory. However, recent changes in China have made this term much more dangerous for buyers.

• The Export License Trap: New regulations in China now strictly require every exporting company to hold a specific Export License. Without it, goods cannot clear Chinese customs.

• Strict Customs Enforcement: In the past, exporting from China was relatively simple. Today, customs laws are extremely rigid.

• The “Stuck Cargo” Scenario: Many buyers purchase under EXW from factories that lack the proper licensing. This results in cargo being stuck at the Chinese border with no way to legally export it. We frequently see clients turning to us for urgent help to rescue shipments stuck due to EXW complications.

• How to avoid this: Always ask your supplier to prove they hold a valid export license before signing an EXW agreement, or simply switch to FOB to shift that responsibility to the factory.

At Trade Entrust, we provide full verification for your suppliers to ensure they are licensed and capable of exporting.

CIF (Cost, Insurance, and Freight): Why We Don’t Recommend It

Under CIF, the seller pays for freight and insurance to your destination port. While it may seem “easier,” it often creates significant problems:

• Hidden Margins: Factories usually add a commission on top of the shipping costs, meaning you pay more than the market freight rate.

• Zero Control: You have no direct contact with the shipping line. If there is a delay, you are left in the dark.

• Communication Breakdown: Most factories do not have dedicated logistics departments. Resolving problems with their Chinese agents is often a nightmare due to language barriers and lack of accountability.

Quick Comparison Table

Conclusion

Choosing the right shipping term is about more than just price—it’s about legal safety and control. By using FOB and a local shipping partner, you ensure that you have an advocate who speaks your language, manages your local customs, and ensures your supplier is fully licensed to get your goods moving.

About Trade Entrust

Your Partner from Factory Floor to Your Door

Trade Entrust provides complete supply-chain management. We don’t just ship; we source, inspect, and consolidate. Our licensed logistics division and on-ground team in China ensure your goods move efficiently, while our local presence ensures you always have a partner you can rely on.

• Full Verification: We verify factory export licenses to prevent your cargo from getting stuck.

• Licensed & Integrated: Fully licensed for international freight forwarding and customs clearance.

• Consolidation Experts: We gather products from multiple suppliers into one cost-effective shipment.