Ex Works (EXW) is a widely used international trade term under the Incoterms (International Commercial Terms) published by the International Chamber of Commerce (ICC). It indicates that the seller has fulfilled their responsibility once the goods are made available for pickup at their premises or another named place, such as a factory, warehouse, or distribution center. All remaining costs, risks, and responsibilities from that point forward are transferred to the buyer.
EXW represents the minimum obligation for the seller, making it especially important for buyers to understand the risks involved in this type of transaction.
1.Key Takeaways
- EXW (Ex Works) is an Incoterm where the seller’s only obligation is to make goods available at their premises or another agreed location.
- The buyer bears all costs and risks from the point of pickup, including transportation, export and import duties, insurance, and delivery.
- EXW is best suited for buyers who are experienced in international logistics or working with a trusted freight forwarder.
- The buyer may face difficulties with export clearance in countries that restrict foreign parties from handling customs declarations.
2.How EXW Works
Under EXW terms, the seller is responsible only for:
- Packing the goods.
- Making them available at the named location.
- Providing the commercial invoice or agreed documentation.
The buyer, in turn, must handle:
- Loading the goods at the seller’s premises (unless otherwise agreed).
- Inland transportation to the port or airport.
- Export customs clearance.
- Freight charges for international transport.
- Insurance and import clearance at the destination.
- Final delivery to their warehouse or customer.
In practice, EXW is often used when the buyer wants to control the entire logistics process or when dealing with large volumes that justify managing the transport chain independently.
3.Real-World Example
Let’s say a clothing retailer in Germany buys garments from a manufacturer in Guangzhou, China, under EXW terms.
- The Chinese seller prepares the garments and places them in their factory for pickup.
- The German buyer arranges a trucking service to collect the goods from the factory.
- The buyer hires a freight forwarder to manage export customs in China, sea freight to Hamburg, and import clearance in Germany.
- The buyer also pays for local delivery from Hamburg to their final warehouse.
If any delay, damage, or issue occurs after pickup from the factory, the buyer assumes full responsibility.
4.EXW vs. FCA vs. FOB vs. CIF
EXW is just one of many Incoterms, and understanding how it compares to others is critical for making informed decisions:
| Incoterm | Seller Delivers To | Export Clearance | Freight Arranged By | Risk Transfer Point |
|---|---|---|---|---|
| EXW | Own premises | Buyer | Buyer | At seller’s location |
| FCA | Carrier at named place | Seller | Buyer | Once goods are handed to carrier |
| FOB | Onboard vessel at port of origin | Seller | Buyer | Once goods pass ship’s rail |
| CIF | Destination port (includes freight and insurance) | Seller | Seller | Once goods are onboard at origin port |
5.Pros and Cons of EXW
Pros
For Sellers:
- Minimal logistical responsibilities.
- No need to deal with customs or international transport.
- Reduced liability and risk.
For Buyers:
- Greater control over the shipping process.
- Ability to choose preferred carriers and routes.
Cons
For Buyers:
- Must manage all logistics, including difficult export procedures.
- Higher exposure to risk, especially in unfamiliar markets.
- May face legal restrictions on handling customs clearance in some countries.
For Sellers:
- May still be pressured to assist with loading or documentation, blurring the lines of responsibility.
6.Is EXW Right for You?
EXW is ideal when:
- The buyer has experience with international shipping or a local agent in the seller’s country.
- The seller wants minimal risk and logistical involvement.
- The buyer wants full control of the supply chain from start to finish.
However, it may not be appropriate when:
- The buyer is unfamiliar with export regulations in the seller’s country.
- There are legal limitations that prevent foreign entities from handling export clearance.
- The seller is expected to assist beyond simply making the goods available.
Final Thoughts
Ex Works (EXW) is one of the most seller-friendly Incoterms in global trade. It places the burden of logistics, documentation, and risk squarely on the buyer’s shoulders. While it can offer control and flexibility to experienced importers, it may create significant challenges for buyers without reliable freight partners or local knowledge.
Before agreeing to EXW terms, buyers should carefully assess whether they are equipped to handle the full transportation chain—especially when sourcing goods from countries like China, where export customs clearance can be complex.
Need a Shipping Quote?
Click below to get a free, no-obligation quote from TJ China Freight.
We’ll respond within 24 hours with the best shipping options for your cargo.
FAQ:
Q1: What does EXW stand for?
EXW stands for Ex Works, an Incoterm that defines the point at which responsibility for goods transfers from the seller to the buyer.
Q2: Who pays for shipping under EXW?
The buyer pays all shipping costs, from pickup at the seller’s premises to final delivery.
Q3:Is the seller responsible for export customs under EXW?
No, under EXW terms, the buyer is responsible for export customs clearance, unless otherwise agreed.
Q4:Does EXW include loading the goods onto the truck?
By default, no. The seller is only required to make the goods available. If loading is required, it must be specified in the contract.
Q5:What are the risks for the buyer under EXW?
The buyer assumes all risk and cost from the seller’s door onward, including customs issues, transportation delays, and damages.
Q6:Can EXW be used for air and sea freight?
Yes, EXW can be applied to any mode of transport, including air, sea, rail, and road.
Q7:Is EXW better than FOB or FCA?
Not necessarily. EXW is better for sellers who want minimal involvement. FOB or FCA may be better for buyers who prefer the seller to handle local transport and export clearance.
Q8:What happens if the buyer fails to clear export customs?
If the buyer cannot complete export clearance, the shipment may be delayed or rejected. In some countries, foreign buyers are not legally allowed to file export documents, making EXW impractical.