EXW vs FOB Incoterms for Apparel Buyers

01What Incoterms do and do not cover

Incoterms 2020 are standard trade terms published by the International Chamber of Commerce. Each one sets three things: where the seller delivers, who pays which costs, and the point where risk of loss passes from seller to buyer. They do not set the price, the payment terms or who owns the goods. Those sit in your purchase order and payment agreement.

Our quotes are on one of two terms: Ex-Factory (EXW Sialkot) or FOB at a named point. For sea freight that is FOB Karachi (Karachi port). For air freight it is FOB Sialkot (Sialkot International Airport). We do not quote DDP. The garment prices on our wholesale pricing page are Ex-Factory and never include freight.

02EXW vs FOB side by side

The two terms differ at one point in the chain: the trip from our door to the vessel. Everything before that point is the same, and everything after it is the buyer's under both terms.

Loading at the factory: EXW, buyer's job (in practice we load your truck); FOB, seller.
Inland trucking to the port: EXW, buyer; FOB, seller.
Export clearance and export documents: EXW, buyer, with the exporter's paperwork; FOB, seller.
Loading on board the vessel: EXW, buyer; FOB, seller.
Main freight, cargo insurance, destination charges and delivery: buyer under both.
Risk passes: EXW, at our door; FOB, once the goods are on board.

03EXW: you take the goods at our door

Under EXW the seller makes the packed cartons available at the factory. From that moment the buyer pays for and carries the risk of everything: loading, local trucking, export clearance, main freight, insurance, import clearance and delivery.

EXW suits buyers who already have a forwarder with an office or agent in Pakistan. It gives you full control of routing and freight cost, and the product price on the invoice is the cleanest number to compare between factories.

The weak point is export clearance. Under strict EXW the buyer is responsible for it, but export filing in Pakistan has to be done against the exporter's registration. In practice the exporter supplies the export paperwork and works with your forwarder's local agent on the filing. Agree who does what in writing so nobody assumes the other side has it covered.

04FOB: we deliver on board the vessel

FOB is a sea and inland waterway term only. The seller clears the goods for export, moves them to the named port and loads them on board the vessel your forwarder has booked. Risk passes once the goods are on board. From there you pay ocean freight, insurance, destination charges and delivery.

FOB is the common term for container or consolidated sea shipments of apparel. For sea freight we quote FOB Karachi: your forwarder books the vessel, we handle the inland leg from Sialkot and the export side, and the cost split is easy to read on both quotes.

05Why FCA exists, especially for air

FOB is often misused for air freight. A plane has no ship's rail, and goods for air or container shipping are usually handed to a carrier or terminal well before loading. FCA (Free Carrier) was written for that case. The seller delivers to the buyer's nominated carrier at a named place, such as a forwarder's warehouse or the airport cargo terminal, cleared for export, and risk passes there.

For air freight our quotes name FOB Sialkot, which means we clear the goods for export and hand them to your carrier at Sialkot International Airport. The handover point is written on the quote. If your forwarder asks for FCA terms on an air shipment, raise it when you request the quote so the named place and handover are written into the order. For express courier shipments the courier usually picks up at the factory, which works like EXW in practice.

EXW: risk passes at the factory, before loading on your truck.
FCA: risk passes when goods are handed to your carrier at the named place.
FOB: risk passes when goods are on board the vessel at the named port.

06Your forwarder or factory-arranged freight

You can use your own forwarder on either term, or ask us to arrange air and sea freight by Express Air, Cargo Air or Sea. Factory-arranged freight is quoted separately from the goods, never folded into the garment price, so you can compare it against your forwarder line by line.

Using your own forwarder makes sense when you ship regularly, consolidate several suppliers, or need a specific destination agent. Asking us to arrange it can be simpler for a first order, a sample or a direct shipment to your customer. In both cases you remain the importer of record unless you name someone else.

07Which Incoterm to choose for your order

Pick the term that matches who already does the work on your side. If your forwarder has an agent in Pakistan and you consolidate cargo from several suppliers, EXW gives the agent full control from our door. If you only book main freight and want the factory to handle the local leg and export filing, FOB is cleaner. For air cargo and courier, talk to your forwarder about FCA, since FOB was written for ships.

The method of transport matters as much as the term. A few cartons on a deadline usually travel by air; a planned replenishment run often goes by sea. Our guide to air freight vs sea freight compares the three methods we arrange.

Own forwarder with a Pakistan agent, regular volume: EXW.
Own forwarder, sea freight, factory handles export: FOB Karachi.
Own forwarder, air freight, factory handles export: FOB Sialkot (Sialkot International Airport).
Air cargo with your forwarder: FCA at the named terminal or warehouse.
No forwarder yet: ask us to arrange freight and quote it separately.

08Documents you should expect

Whatever the term, the paperwork for a garment shipment is similar. Check these against your broker's list before the goods leave.

Commercial invoice with HS code, fiber content, unit value and Incoterm.
Packing list with carton count, sizes per carton, net and gross weight and dimensions.
Air waybill or bill of lading, issued by the carrier or forwarder.
Certificate of origin through the Sialkot Chamber of Commerce.
Test reports or compliance data if your market or customer requires them.

09The honest caveat

An Incoterm only works if the named place is specific. EXW Sialkot, FOB Karachi, FOB Sialkot or FCA a named terminal must appear on the quote and the invoice. Vague terms like FOB Pakistan leave the handover open to argument when a carton is damaged. Also note that cargo insurance is not included in EXW, FCA or FOB. If you want cover from our door, buy it through your forwarder from the moment risk passes to you.

Q&AQuestions buyers ask

What is the difference between EXW and FOB?

Under EXW the buyer takes the goods at the factory door and handles everything from there, including local trucking and export clearance. Under FOB the seller clears the goods for export and loads them on board the vessel at the named port, and risk passes once they are on board. Main freight and insurance are the buyer's under both terms.

Do you offer DDP pricing?

No. We quote Ex-Factory (EXW Sialkot), FOB Sialkot for air freight or FOB Karachi for sea freight. We can arrange shipping by Express Air, Cargo Air or Sea and quote it separately, while your broker or forwarder handles import clearance in your country. Talk to your account manager about the import side of your order and we will walk through it with you.

Which term is cheaper, EXW or FOB?

Neither is cheaper by itself. EXW shows the lowest invoice number because local trucking and export handling are on your side. FOB includes those costs in our price but removes them from your forwarder's bill. Compare total landed cost: goods, inland and export charges, main freight, insurance and delivery. That total is the number that matters for your margin.

When does risk pass to me under FOB?

Under FOB, risk passes to the buyer once the goods are loaded on board the vessel at the named port of loading, which is Karachi for our sea shipments. For air shipments on FOB Sialkot, risk passes at the handover to your carrier at Sialkot International Airport. Before that point, loss or damage is the seller's responsibility. After it, the buyer carries the risk during the ocean voyage, so buyers usually arrange cargo insurance from that moment through their forwarder.

EXW vs FOB: which Incoterm fits your teamwear order