EXW (Ex Works): Meaning, Risks, Costs and When to Avoid It
EXW Ex Works under Incoterms 2020: who loads, who clears export, where risk passes, a worked example and why FCA is usually the safer choice for exporters.
Key takeaways
- Under EXW the seller only makes the goods available at its premises or another named place, not loaded and not cleared for export.
- Risk passes as soon as the goods are at the buyer's disposal, before any loading.
- The buyer must handle export clearance, which is often impossible for a foreign buyer in the seller's country.
- If you load the goods or clear them for export anyway, sell FCA instead: it matches what really happens.
- EXW is a poor fit for letters of credit because the seller obtains no transport document of its own.
EXW, Ex Works, is the rule of Incoterms® 2020 that puts the least obligation on the seller. The seller delivers by making the goods available to the buyer at its own premises or another named place, such as a factory, warehouse or packing station. The goods are packed and marked, but not loaded onto the collecting vehicle and not cleared for export. From that moment the buyer bears every cost and every risk: loading, export formalities, transport, insurance, import clearance and duties.
It sounds like the easiest rule for an exporter. In practice it is often the most troublesome one, because it asks the buyer to do things in the seller's country that the buyer cannot do. This lesson shows you when EXW works, when it does not and what to use instead.
When should you use EXW?
EXW fits a narrow set of cases:
- domestic sales, where no export clearance is needed;
- sales within a customs union where no export declaration is required;
- a buyer with its own legal presence and freight organisation in your country, able to clear goods for export in its own name;
- quoting a factory price for comparison, before the buyer chooses a fuller rule.
You should avoid EXW when the goods leave your country and you, as the local company, will in reality be the exporter, or when you will load the goods yourself. In both cases FCA describes the real arrangement better.
Where does delivery happen and when does risk pass?
Delivery takes place when the goods, clearly identified as the contract goods, are placed at the buyer's disposal at the agreed point within the named place, on the agreed date or within the agreed period. They do not need to be loaded on anything. Risk passes at that moment.
If the buyer does not come to collect, or fails to give the notice it promised, risk can pass anyway from the agreed date, provided the goods have been set aside as the contract goods. The seller must give the buyer any notice it needs to take delivery.
Who pays what under EXW?
| Step | Seller | Buyer |
|---|---|---|
| Packaging and marking | Yes | |
| Loading at the seller's premises | Yes | |
| Export clearance and export formalities | Assists on request | Yes |
| Main carriage | Yes | |
| Cargo insurance | Yes, in its own interest | |
| Unloading at destination | Yes | |
| Import clearance | Yes | |
| Import duties and taxes | Yes |
The seller must provide, at the buyer's request, risk and cost, the information and documents in its possession that the buyer needs for export clearance, transit, import and insurance. The buyer has only a limited obligation to give the seller information about the export, which matters if the seller later needs proof of export for VAT or exchange-control purposes.
Documents and payment
The seller supplies a commercial invoice and any agreed certificates. It has no obligation to provide a transport document. The buyer, for its part, must give the seller appropriate evidence that it has taken delivery.
This has a direct effect on payment. Under a letter of credit, the seller is paid against documents. With EXW, the documents proving shipment are issued to the buyer or its freight forwarder. The seller can only present a buyer's receipt or a forwarder's certificate of receipt, documents whose issue depends on the buyer's goodwill. Sellers who agree EXW usually ask for cash in advance or at least payment before collection.
Insurance
Neither party owes the other an insurance contract. Since the buyer bears all risk from collection at the seller's door, the buyer should insure the whole journey, including loading.
Worked example: cables collected by a Tunisian buyer
A manufacturer of electrical cables in Sétif sells 18 tonnes of cables to a distributor in Tunis at USD 3.10 per kg, EXW Sétif factory, total USD 55,800. The buyer sends a Tunisian truck.
What happens on the day:
- The seller's warehouse team loads the truck with its forklift, at no charge, although this is not its obligation.
- The goods must now be cleared for export at the Algerian border. The export declaration has to be made for a company established in Algeria, and the sale must be domiciled with the seller's Algerian bank so that the proceeds can be repatriated. The Tunisian buyer can do none of this.
- The seller ends up paying a customs broker USD 300 to clear the goods in its own name, a cost and a responsibility that EXW put on the buyer.
The honest quote would have been FCA Sétif factory, Incoterms® 2020, USD 56,100: the same goods, with loading and export clearance included and the seller's role written down. Risk would still pass to the buyer once the truck is loaded at the factory.
EXW compared with FCA
| Point | EXW | FCA at seller's premises |
|---|---|---|
| Loading onto the collecting vehicle | Buyer | Seller |
| Risk passes | Goods available, not loaded | Goods loaded on buyer's vehicle |
| Export clearance | Buyer | Seller |
| Transport document for the seller | None | Proof of delivery; on-board bill of lading option if agreed |
| Fit with letters of credit | Poor | Good |
Read the full comparison in the FCA lesson or on the Incoterms matrix.
Common mistakes with EXW
- Using EXW for a real export where only the seller can lodge the export declaration. The buyer cannot perform, and the seller does the work without the price for it.
- Loading for the buyer without saying so in the contract, then arguing over who bears a loading accident.
- No proof of export: the seller cannot show the goods left the country, which can cause VAT or exchange-control problems.
- A vague named place such as "EXW Algeria". Name the exact address and, if useful, the dock.
- Releasing goods before payment: under EXW the buyer takes the goods at your door; once they leave, your leverage is gone.
These traps come back in the most common Incoterm mistakes.
Frequently asked questions
Who loads the goods under EXW?
The buyer. Under EXW the seller has no obligation to load the goods onto the collecting vehicle. If the seller loads anyway, it does so at the buyer's risk, which creates confusion if something goes wrong, so the ICC recommends using FCA when the seller is expected to load.
Who is responsible for export clearance under EXW?
The buyer must carry out and pay for export clearance. The seller only has to help, at the buyer's request, risk and cost, by providing information and documents it holds. In many countries a foreign buyer cannot legally act as exporter, which makes EXW unsuitable for genuine exports.
What is the difference between EXW and FCA?
Under FCA the seller clears the goods for export and, when delivery is at its premises, loads them onto the buyer's vehicle. Under EXW it does neither. FCA also lets the seller obtain a transport document, which EXW does not.
Does EXW include packaging?
Yes, unless the parties agree otherwise or the trade customarily ships the goods unpackaged. The seller must package the goods in a way suitable for their transport and mark them appropriately, at its own cost.