What the rest of the journey costs

The basis decides who pays for the distance between the factory gate and your warehouse. That distance has a number attached to it, and the number is usually larger than the difference a buyer was trying to measure between two suppliers.

What the rest of the journey costs

Three consequences follow from that table, and each changes how a comparison should be read. The lines that sit between EXW and FOB are mostly fixed per shipment, so the gap between the two bases shrinks as order size grows and is proportionally largest on the smallest order. Duty and freight are not the factory's to control, which is why they never appear on a factory quotation even when the buyer is comparing landed cost. And volumetric weight decides which lines dominate: a container of soft plastics runs out of space before it runs out of weight, while a container of jigs runs out of weight first.

What goes wrong when the basis is missing

A number without a basis is not a price, and the failures that follow are consistent enough to name.

The most common is a comparison between two different scopes. A supplier quoting EXW and a supplier quoting FOB produce numbers that differ by the inland freight, clearance and loading — a difference that has nothing to do with the product and can easily exceed the margin being negotiated. The second is a budget built on the lower number: the landed cost turns out to be materially higher than the quotation suggested, and the gap is discovered after the order rather than before it. The third is an argument about who arranges what after production has started, which is the worst moment to discover that nobody booked the inland leg.

None of these is a supplier behaving badly. A basis omitted from a quote is usually a basis omitted from the enquiry, and the fix is one line in the first email.

How to make two quotes comparable

Four steps, and the third is the one buyers skip.

Ask for the same basis. Pick FOB or EXW and ask both suppliers to quote on it. Where a factory only quotes one, ask it to quote the other as well — the conversion is arithmetic and the factory already knows the numbers.

Match the quantity and the specification. Two quotes at different order quantities are not comparable regardless of basis, because the setup cost is spread differently; nor are two quotes with different materials or different hardware.

Ask the price to fall as quantity rises. Request the unit price at two or three quantities and note where the reduction flattens. The point at which it stops falling is the point at which you are covering material rather than setup, and it tells you what the real minimum is.

Add the destination costs yourself. Freight, insurance and duty are the same for both suppliers in most cases, so including them does not change the ranking — but knowing them turns a quote into a landed number you can budget against.

What the bands look like by sub-category

The reference bands published on this site are stated per sub-category with their unit and the quantity they apply to, which is the same discipline a quotation needs. They exist to tell you whether a corrected quote is plausible, not to replace the correction.

Two habits make them useful rather than misleading. Read the band only after the basis and the quantity are fixed, because a band read against an EXW number is off by the inland leg. And treat a material difference between two suppliers as information about the specification before treating it as information about the price — in tackle, the hardware and the body material explain most of the spread that looks like a margin difference.

How do you make two quotes comparable?

1. Write the unit down: per piece, per set or per carton —a price without a unit is not a price.
2. Write the order quantity down: the same product at 5,000 and 50,000 pieces carries the same tooling across different volumes.
3. Write the basis down: FOB with a named port, or EXW at the factory.
4. Convert one to the other before comparing, then compare against the band for the sub-category.
5. Keep the freight and duty question separate —the basis decides who pays them, not how much they are.

What do the bands look like by sub-category?

What does the rest of the journey actually cost?

Two conclusions follow. Ocean freight is the largest single line inside the EXW-to-FOB gap, and it swings weekly: the same container cost US$3,997 or US$9,726 depending only on the destination port. And a quote that does not name the port cannot be compared, because the spread between Los Angeles and New York is wider than most factories' entire margin.

The duty figures above are the general rates only. Section 301 measures on Chinese-origin goods, and any other trade measure in force, are additional and are not included; confirm the applied rate for your entry before you build a landed-cost model on it.

Under CIF the seller must insure at a minimum of 110% of the contract price on Institute Cargo Clauses (C) cover. That is a floor rather than a recommendation, and clause (C) is the narrowest of the three standard sets: it excludes theft, water damage and non-delivery. A buyer who cares about the cargo usually insures it separately.

What goes wrong when the basis is missing?

1. Two suppliers quote 8% apart and both are telling the truth, because the scopes differ.
2. A buyer compares an EXW number with an FOB number and rewards the wrong factory.
3. Freight is added twice, once by the factory and once by the forwarder.
4. The landed-cost model is built on a number that was never a landed cost.

Where this sits in the process

This page is one topic out of the verification standard. The overview is FOB vs EXW for China sourcing.