EXW in International Trade: Simple Term, Serious Responsibility

What EXW means

EXW, short for Ex Works, is one of the International Chamber of Commerce’s Incoterms. It sounds simple: the seller makes the goods available at their premises (factory, warehouse, or another named place) and the buyer arranges everything else — collection, export, carriage, insurance, import clearance, and delivery to final destination. Because the seller’s responsibility ends at the agreed place, EXW is sometimes chosen by sellers who want minimal logistical involvement.

Who does what: clear allocation of tasks

• Seller’s basic obligations: make the goods available at the agreed place on the agreed date, provide the commercial invoice and any contractually required documents, and package the goods in the agreed manner. The seller is not obliged to load the goods onto the buyer’s collecting vehicle nor to clear the goods for export (unless local laws make export clearance mandatory for the seller).
• Buyer’s responsibilities: arrange and pay for collection, loading (unless otherwise agreed), inland transport, export formalities and customs clearance, carriage to destination, insurance, import clearance, duties, taxes, and final delivery to the buyer’s premises or other agreed place.

Why EXW feels simple — and why that can be risky

On the surface EXW is attractive because it’s easy: the seller’s job is limited. But that simplicity shifts significant operational and regulatory burden to the buyer. In many countries export formalities or terminal access require documentation or actions by the exporter (seller). If the buyer is remote or unfamiliar with the origin country’s export procedures, arranging export clearance and moving goods from the seller’s premises can be complicated and costly.

Practical examples

• Example 1: A small manufacturer in Lyon sells under EXW. A U.S. buyer hires a freight forwarder to pick up goods at the manufacturer’s warehouse, handle export customs in France, port handling, ocean freight, import clearance in the U.S., and delivery to their distribution center. The buyer pays all costs and accepts risk from pickup.

• Example 2: An electronics supplier in Shenzhen sells EXW. Chinese export procedures often require the seller’s involvement for export declarations. If the seller refuses or is unable to assist, the buyer’s forwarder may be blocked from completing export clearance, delaying shipment and increasing costs.

Common pitfalls and mistakes (and how to avoid them)

1. Assuming the seller will handle export formalities
2. Many buyers expect the seller to do export customs clearance. Under EXW the seller isn’t obliged to, so confirm who will handle export documentation and permits before signing the contract.
3. Unclear named place
4. Always specify the exact place (for example, "EXW Seller’s warehouse, Unit 5, 12 Industrial Way, City, Country"). Vague locations like "EXW factory" invite disputes and added charges.
5. Not confirming loading responsibilities
6. By default the seller does not have to load the goods onto the buyer’s vehicle. If loading is expected, state it explicitly and who pays for it.
7. Underestimating local requirements
8. Some countries require the exporter to present documents or be present for customs clearance. Ask local experts or your freight forwarder whether export clearance can be handled by a buyer-appointed agent under EXW.

Best practices for buyers and sellers

• Buyers: hire an experienced freight forwarder familiar with the origin country; arrange insurance from seller’s premises; verify export clearance procedures; negotiate clear named place and loading terms; include responsibilities for documentation in the sales contract.
• Sellers: clarify obligations in the contract (loading, packaging, documents); confirm whether local law forces you to complete export formalities and, if so, adjust the price or use a different Incoterm; consider offering alternatives such as FCA if you’re willing to assist with export processes.

When EXW is appropriate

EXW can be suitable when the buyer has strong logistics capabilities in the seller’s country (e.g., a buyer has a local subsidiary or a trusted forwarder), when sales are domestic, or when the seller wants minimal involvement. It is generally not recommended when the buyer lacks local presence or when origin-country export rules effectively require seller action.

Alternatives to consider

If the buyer or seller want a split of obligations that is less extreme than EXW, consider:

• FCA (Free Carrier): seller delivers goods to a carrier nominated by the buyer at a named place and is responsible for export clearance — often a better choice when export formalities must be done by the seller.
• FOB (Free On Board): common for sea freight; seller loads goods onto the vessel and handles export clearance.
• DAP/DDP: place more responsibility on seller for delivery (DAP = Delivered at Place; DDP = Delivered Duty Paid).

Insurance and risk management

Under EXW, risk transfers to the buyer when goods are made available at the named place. Buyers should arrange insurance to cover transit and handling from that point. Sellers should confirm packaging is appropriate for the buyer’s transport plan and consider advising buyers about local export rules to reduce disputes.

Simple term, serious responsibility — final takeaway

EXW is straightforward in definition but shifts most logistical, regulatory, and financial responsibilities to the buyer. Use it only when the buyer is confident and capable of handling export and transport tasks at the seller’s location, or when both parties clearly document who will do what. When in doubt, consider FCA or another Incoterm that shares responsibilities more evenly and reduces the chance of costly surprises.