From Factory Floor to Freight: Understanding EXW

What EXW means

Ex Works (EXW) is one of the standard Incoterms published by the International Chamber of Commerce. At its core, EXW sets the seller’s obligation to the lowest practical level: the seller must make the goods available at a named place (commonly the seller’s factory, warehouse, or other premises). From that point, the buyer assumes responsibility for loading, domestic transport, export clearance (where applicable), international carriage, insurance, import clearance, duties, and final delivery.

How the transaction works — step by step

Seller responsibilities:

• Make the goods available at the agreed place and time.
• Provide the buyer with the commercial invoice and any agreed proof that the goods are ready for collection.
• Package the goods appropriately if this was agreed in the contract (packaging is often included in seller obligations by default but should be clarified).

Buyer responsibilities:

• Arrange and pay for loading (unless the contract says seller will load), domestic transport, export clearance and documentation if required, international carriage, insurance, and import formalities and duties at destination.
• Bear all risks and costs once the goods are made available at the named place.
• Coordinate pickup logistics — often via a freight forwarder who will collect the shipment from the seller’s premises.

Risk transfer and timing

Under EXW, risk passes from seller to buyer when the goods have been placed at the buyer’s disposal at the agreed place. If the place is the seller’s premises, risk transfers before loading onto the buyer’s collecting vehicle. This is an important point: the buyer bears risk during loading and all subsequent transport unless the contract explicitly shifts loading responsibility back to the seller.

Costs — who pays what

Because EXW assigns minimal obligations to the seller, the buyer pays most of the costs: pickup and loading at seller’s site, export clearance (if needed), international freight, insurance, import duties and taxes, and onward delivery. The seller typically bears the costs of producing and packaging the goods and making them available.

Practical examples

• Example 1 — International buyer with logistics partner: A European retailer orders garments from a manufacturer in Bangladesh on EXW terms. The retailer hires a freight forwarder with local agents in Dhaka to handle pickup, export clearance, and booking on a ship to Europe. The forwarder loads the garments at the factory, arranges export documentation, and the retailer pays for ocean freight, insurance, and import customs clearance.
• Example 2 — Domestic pickup: A small business buys equipment from a local supplier and agrees EXW with pickup at the supplier’s warehouse. The buyer arranges a truck to collect and is responsible for loading and any transport damage that occurs thereafter.

When EXW makes sense

• The buyer has strong logistics capability or uses a forwarder with local presence at the seller’s location.
• The buyer wants full control over export and shipping arrangements (for example, to consolidate multiple suppliers or negotiate better freight rates).
• Transactions are domestic and the buyer prefers to arrange their own pickup.

When EXW is not recommended

For many cross-border transactions EXW can create problems for buyers who lack local export experience or legal ability to handle export clearance in the seller’s country. Some countries require the seller to be involved in export formalities; in those cases EXW can generate delays or legal complications. If the buyer prefers the seller to arrange export and main carriage, consider alternatives like FCA, FOB (for sea freight), or CPT.

How EXW differs from similar Incoterms

• EXW vs FCA: Under FCA the seller is often required to hand goods to a carrier nominated by the buyer at a named place, and the seller can be responsible for loading if the named place is the seller’s premises. FCA is generally more balanced when international carriage and export clearance are involved.
• EXW vs FOB (Free On Board): FOB is a maritime term where the seller loads goods onto the vessel and clears export; risk passes when goods are on board the ship. EXW shifts responsibility earlier, at the seller’s premises.
• EXW vs DDP: DDP (Delivered Duty Paid) puts maximum responsibility on the seller — they deliver cleared for import and pay duties. EXW is the opposite extreme.

Common mistakes and pitfalls

• Assuming seller will handle export clearance or loading when the contract does not specify it.
• Failing to name the exact place (e.g., “seller’s premises” is vague — include full address and specify whether goods will be loaded onto a vehicle).
• Not organizing local pickup or not using a forwarder with a local presence, leading to missed collections or storage charges.
• Not arranging insurance. Because risk transfers early under EXW, buyers frequently forget to cover the cargo during loading and transit.
• Overlooking special local regulations — some countries require the seller to complete export declarations.

Best practices and tips

• Specify the Incoterms version (e.g., Incoterms 2020) and the exact named place and address in the sales contract.
• Clarify who will load the goods at the seller’s premises — if the buyer will arrange loading, specify equipment and timing to avoid delays or extra charges.
• Engage a reliable freight forwarder with local agents at the seller’s location who can handle export clearance and pickup.
• Obtain appropriate cargo insurance that covers the period from pickup onward.
• If unsure about export formalities, negotiate an alternative Incoterm (FCA or FOB) so the seller handles export clearance, or explicitly contract for seller assistance with costs and liability allocated in writing.

Summary

EXW is useful when buyers want control over logistics and when they or their agents can efficiently manage pickup and export responsibilities in the seller’s country. It's straightforward and seller-friendly, but it shifts most costs and risks to the buyer. To avoid misunderstandings, name the exact pickup location, specify responsibilities for loading and export clearance, use professional freight partners, and insure cargo promptly.

Quick buyer checklist:

• Confirm exact named place and timing.
• Engage a forwarder with local pickup capability.
• Arrange export clearance (or confirm seller’s assistance in writing).
• Purchase cargo insurance.
• Plan for import clearance, duties, and final delivery.

Quick seller checklist:



• Make goods available on time and provide required documents (invoice, packing list).
• Clarify whether you will assist with loading or export formalities and record any assistance and charges in writing.
• Confirm the buyer’s forwarder appointment and expected pickup arrangements.