FOB vs. EXW vs. FCA: The Hidden Costs of Alibaba Sourcing Terms (2026 Guide)

Date: January 20, 2026

Category: Sourcing Strategy / Incoterms

Reading Time: 8 Minutes

When negotiating with suppliers on Alibaba or Global Sources, you are often presented with a classic pricing dilemma. The supplier offers two quotes: a lower EXW (Ex Works) price and a slightly higher FOB (Free On Board) price.

Instinctively, many new Amazon sellers choose EXW, believing that "a lower unit price equals higher profit." However, with over 15 years of supply chain management experience, Forest Leopard knows that comparing unit prices alone is the single biggest mistake in calculating Landed Cost.

In this guide, we strip away the marketing jargon and dissect the cost structures of EXW, FOB, and FCA from a financial and operational perspective. We will help you make the most profitable decision for your 2026 sourcing negotiations.

1. Core Definitions: The Transfer of Risk & Cost

First, we must clarify exactly where risk and cost transfer from the seller to the buyer under Incoterms 2020.

🏭 EXW (Ex Works)

• Definition: The seller's only responsibility is to pack the goods and make them available at their factory door.

• Buyer's Responsibility: You must arrange the pickup, handle inland trucking in China, manage the export customs declaration, and pay all port origin fees.

• Best Use Case: Small courier shipments (DHL/UPS) or when you have total control over local logistics.

🚢 FOB (Free On Board)

• Definition: The seller is responsible for moving the goods to the port of origin (e.g., Shenzhen Yantian) and clearing them for export. The risk transfers to you only when the cargo crosses the ship's rail.

• Buyer's Responsibility: You pay for the ocean freight and all destination charges.

• Best Use Case: Standard FCL (Full Container Load) shipments.

🤝 FCA (Free Carrier) 

• Definition: The seller is responsible for delivering the goods to a named place (e.g., your freight forwarder's warehouse) and—crucially—handling the export customs clearance.

• The Difference: Unlike FOB, the seller does not pay port fees. Unlike EXW, the seller does handle the export paperwork.

• Best Use Case: LCL (Less than Container Load), multi-supplier consolidation, and Amazon FBA shipments. 

2. The Math: Is "Cheap EXW" Really Cheaper?

Let’s reconstruct a real-world sourcing scenario to reveal the hidden costs.

Scenario: Sourcing 500kg (2 CBM) of phone cases from a factory in Dongguan, shipping to Amazon FBA in Los Angeles.

Analysis:

While the EXW product price was $100 lower, the fragmented "Local Charges" added $295 to your bill.

Furthermore, if you are unfamiliar with the Amazon FBA Shipping Cost Structure, these fees often appear as a surprise on your final freight invoice.

3. Deep Dive: Why We Recommend FCA Over EXW

For most Small and Medium-sized Enterprises (SMEs), FOB is great for full containers, but EXW is a logistical headache. FCA (Free Carrier) is often the most efficient hybrid solution for 2026, especially when utilizing Consolidation Services.

The Three Advantages of FCA:

1. Tax Compliance:

   Under FCA, the factory is responsible for the export declaration. This is vital because it allows the factory to legally claim their Export Tax Rebate from the Chinese government. If you force an EXW term, many smaller factories cannot claim this rebate, and they may secretly increase your unit price to compensate.

2. Avoiding the "Local Fee Trap":

   In an EXW model, when a forwarder sends a truck to pick up goods, factories sometimes charge arbitrary "Gate Fees," "Parking Fees," or "Loading Fees." Under FCA, the factory must deliver the goods to Forest Leopard's warehouse in Shenzhen or Yiwu at their own expense. The responsibility is clear.

3. Flexibility for Consolidation:

   If you are sourcing from three different suppliers:

   • Supplier A (FCA Shenzhen)

   • Supplier B (FCA Shenzhen)

   • Supplier C (FCA Shenzhen)

   • Result: All three deliver to our hub. We consolidate them into one shipment. You get the domestic convenience of the factory handling the trucking, plus the international savings of bulk shipping.

Related Reading: Learn how to optimize multi-supplier logistics in our guide: Stop Paying for Domestic Shipping: Our 9-City Network. 

4. Decision Matrix: Which Term Should You Choose?

Do not rely on intuition. Use this matrix to select the right term based on your logistics model.

Note: Regardless of the term you choose, once the goods arrive in the USA or Europe, you must handle import customs. For Amazon sellers, we recommend pairing these terms with our DDP (Delivered Duty Paid) Service to automate the final mile.

5. Risk Alert: The "Maidan" Export Issue with EXW

If you insist on EXW terms, you must be aware of the Export Declaration liability.

According to Chinese customs law, all commercial exports must be declared.

• If your factory has an Export License: They can provide the necessary documents.

• If your factory does not have a license (common with smaller 1688 suppliers): You must pay a forwarder to perform a "Maidan" (Gray Market) Export.

In 2026, customs audits are stricter. Improper declaration can lead to cargo being held at the border.

(For more on the costs of customs delays, read: Stuck at the Border? A Guide to US Customs Exams).

Summary: The Professional Buyer's Choice

In international trade, "Unit Price" does not equal "Total Cost."

• EXW is for couriers and total control.

• FOB is the gold standard for full containers.

• FCA is the smart strategy for consolidation and tax compliance.

As your logistics partner, Forest Leopard supports all Incoterms. We don't just give you a shipping quote; we analyze your specific supplier location, cargo weight, and tax needs to calculate the route with the lowest Total Landed Cost.

Unsure if your supplier's quote includes hidden fees?

Send us your Proforma Invoice (PI). Our supply chain experts will perform a free cost audit to ensure you aren't overpaying.

👉 [Get a Free Logistics Cost Analysis]

💡 Why this style works for the US market:

1. Objective Tone: Uses phrases like "Financial Perspective" and "Operational Perspective" instead of "We save you money."

2. Terminology: Correctly uses "Landed Cost," "CFS Charges," and "Tax Rebate," which signals to professional buyers that you know what you are talking about.

3. Logical Flow: Moves from Definition -> Math/Calculation -> Strategy -> Risk, which is the standard structure for American business writing.