Title: Ex Works (EXW) — Complete Guide, Responsibilities, Comparison, and Practical Steps
Key sources: Investopedia — “Ex Works (EXW)” (Jiaqi Zhou) and International Chamber of Commerce — Incoterms 2020 (ICC)
OVERVIEW
Ex Works (EXW) is an Incoterm that places the minimum obligation on the seller: the seller must make goods available at a named place (often the seller’s premises or nearby terminal). From that point the buyer assumes all costs, risks and export/import formalities unless the contract explicitly says otherwise. EXW is one of the 11 Incoterms in Incoterms 2020 and can be used for any mode of transport.
KEY TAKEAWAYS
– EXW transfers risk to the buyer once the seller has made the goods available at the named place and time.
– The buyer is generally responsible for pickup, export and import clearance, carriage, insurance and all subsequent costs.
– EXW is seller-friendly (lowest seller obligations) and buyer-unfriendly (maximum buyer obligations).
– EXW may be impractical or unlawful in some jurisdictions where only the exporter can complete export formalities.
WHAT EXW MEANS (INCOTERMS CONTEXT)
– Seller obligation: prepare, package and label the goods and make them available at the agreed place (packed and ready for collection). Provide seller’s commercial invoice and any documents agreed in contract.
– Buyer obligation: collect or appoint carrier, arrange inland transport from the named place, handle export clearance where required, arrange carriage and insurance, and pay all costs and risks from the moment goods are made available.
– Risk transfer point: when goods are placed at buyer’s disposal at the named place.
EXW VS FOB AND FCA — PRACTICAL DIFFERENCES
– EXW (Ex Works): Seller’s responsibility ends at making goods available at named place (seller’s premises common). Buyer handles loading (unless agreed), export clearance and onward transport.
– FOB (Free on Board — sea/inland waterway only): Seller delivers goods on board vessel at named port of shipment and handles export clearance. Risk transfers when goods are on board.
– FCA (Free Carrier): Seller hands goods, cleared for export, to a carrier or another party nominated by buyer at a named place. FCA is often a better seller/buyer balance for multi-modal shipments.
WHY CHOOSE EXW (ADVANTAGES)
– Minimal seller obligations and lower seller cost.
– Simple seller process: package, label, make available.
– Useful when buyer wants full control over transport, carriers and insurance.
RISKS & DISADVANTAGES (BUYER PERSPECTIVE)
– Buyer bears nearly all risk and cost from seller’s premises.
– Buyer must handle export formalities in seller’s country — potentially difficult or impossible for non-resident buyers.
– Additional hidden costs: loading, terminal handling, customs, local transport, delays, demurrage.
– Not recommended for inexperienced buyers or where seller cannot provide export documentation.
WHO ARRANGES INSURANCE AND CUSTOMS
– Insurance: Buyer. Buyer should arrange insurance from the moment goods are made available at named place.
– Export/import customs: Buyer, unless the parties explicitly allocate duties differently. In many countries, only the exporter or their representative can file export declarations — making EXW impractical unless seller agrees to assist.
SELLER’S TYPICAL RESPONSIBILITIES UNDER EXW
– Make goods available at agreed place and time, packaged and labelled.
– Provide commercial invoice and any other documents expressly agreed in the contract.
– Assist with export procedures only if specifically agreed (seller is not obliged under standard EXW terms).
– If seller voluntarily loads the goods onto buyer’s transport, the seller does so at buyer’s risk (unless contract states otherwise).
BUYER’S TYPICAL RESPONSIBILITIES UNDER EXW
– Arrange and pay for collection, inland transport, export clearance, main carriage, import formalities, duties and taxes, and final delivery.
– Arrange insurance from the point of availability.
– Provide carrier details and any requisite documents for collection.
– Pay all costs and bear risk from the moment goods are available at named place.
PRACTICAL STEPS — FOR BUYERS (CHECKLIST & TIMELINE)
1. Contract stage
– Specify: “EXW [named place — e.g., Seller’s warehouse, City, Country] Incoterms 2020.”
– Confirm who will load goods (and whether seller will assist) and who provides documentation.
– State governing law and version of Incoterms (e.g., Incoterms 2020).
2. Before collection
– Appoint a freight forwarder or carrier experienced in the seller’s country.
– Secure a power of attorney if export customs declaration must be lodged by a local agent.
– Arrange export license or verify seller will supply required export licenses and permits (agree payment responsibility).
– Arrange marine cargo insurance effective from the pickup point.
3. Collection and onward transport
– Confirm pickup date/time with seller.
– Ensure carrier has suitable equipment for loading if seller will not load.
– Obtain signed delivery/collection receipt from seller stating goods made available.
4. Customs and arrival
– File export and import declarations (or ensure local agent does).
– Pay duties, taxes and terminal handling charges.
– Track shipment and manage claims if damage/loss occurs after pickup.
PRACTICAL STEPS — FOR SELLERS (CHECKLIST)
1. Contract stage
– Specify precise named place and Incoterms version.
– State whether you will assist with loading or export documents (and if assistance is without liability).
2. Before availability
– Pack and mark goods per buyer’s requirements and transport regulations.
– Prepare commercial invoice and packing list; provide copies to buyer or their agent.
– Ensure goods are ready and accessible at the agreed time.
3. At handover
– Provide proof that goods were made available (release note, time-stamped pictures, signed collection receipt).
– Do not assume responsibility for loading or export clearance unless contractually agreed.
CONTRACT DRAFTING TIPS (PRACTICAL CLAUSES)
– Always use the exact phrase: “EXW [Named Place, including full address], Incoterms 2020.”
– Specify who is responsible for loading and who pays for loading: e.g., “Seller will not load; Buyer or Buyer’s carrier to load at Buyer’s cost.”
– Confirm export documentation: “Seller will [shall / shall not] provide export documentation. Buyer to reimburse any fees for documents if Seller assists.”
– Add insurance requirement: “Buyer to obtain cargo insurance covering from the point goods are made available.”
– Add proof of availability: “Seller to provide a signed Goods Available Note upon handover.”
EXAMPLES & SCENARIOS
– Small exporter selling locally to an experienced international buyer that has a forwarder in the seller’s country: EXW may work well — buyer’s forwarder collects and handles export.
– Buyer without local representation in seller’s country or where export declarations must be lodged by exporter: EXW can create problems — consider FCA or FOB instead.
– Sea freight scenario: FOB would usually be preferable to EXW if the buyer wants seller to handle export clearance and loading onto the vessel.
DISPUTE AVOIDANCE
– Name precise location (not just “warehouse”) and time/date for availability.
– Specify loading responsibilities explicitly.
– Require a signed handover or goods available document.
– State Incoterms version and governing law in the sales contract.
INSURANCE & CLAIMS — PRACTICAL ADVICE
– Buyer should obtain insurance effective from the time goods are made available at EXW named place.
– If seller assists with loading and damage occurs during loading, clarify in contract whether seller assumes liability for loading (otherwise buyer bears risk).
– Keep thorough documentation and photographs at handover to support claims.
WHEN NOT TO USE EXW
– When the seller is in a jurisdiction that restricts export filings by non-residents.
– When the buyer lacks experience or a reliable local agent/carrier.
– For complex shipments requiring seller involvement for packaging, consolidation or export clearance.
SUMMARY
EXW is the most seller-friendly Incoterm and transfers most responsibility and risk to the buyer at the point the goods are made available. It can be efficient when the buyer has the logistics capability and local representation to handle export procedures, but it can create hidden costs and legal problems when buyers lack local presence or the seller cannot legally or practically allow export to proceed without their involvement. Many cross-border sellers and buyers prefer FCA or FOB (for sea shipments) where export clearance and initial carriage responsibilities are clearer.
FURTHER READING / SOURCES
– Investopedia — Ex Works (EXW). Jiaqi Zhou. https://www.investopedia.com/terms/e/exw.asp
– International Chamber of Commerce — Incoterms 2020 (overview and guidance). https://iccwbo.org/resources-for-business/incoterms-rules/
If you want, I can:
– Draft sample contract language for your specific sale (include seller address, goods, and responsibilities).
– Provide a one-page EXW buyer checklist you can hand to a freight forwarder.