EXW Incoterms (Ex Works)
EXW represents the minimum obligation for sellers, making it a popular choice for businesses looking to streamline their export processes. Under this arrangement, the seller simply makes goods available at their premises while the buyer handles everything else.
At Seller's Premises
Any Mode
Minimum
What Are EXW Incoterms?
EXW (Ex Works) represents the most basic delivery term among the 11 Incoterms 2020 rules established by the International Chamber of Commerce (ICC). Under EXW terms, the seller fulfills their obligation by making goods available at their premises—typically a factory, warehouse, or office. The buyer assumes responsibility for all transportation costs, risks, and formalities from that point forward.
Ex Works translates to "from the works" or "from the factory" in English. This Incoterm places maximum responsibility on the buyer and minimum obligation on the seller. The seller's sole duty involves preparing goods and making them accessible at a named place, usually their own facility.
The buyer handles everything else, including:
- Loading goods onto the transport vehicle
- Export customs clearance and documentation
- Transportation to the final destination
- Import customs procedures and duties
- Insurance coverage during transit
Key Responsibilities Under EXW Terms
Seller's Obligations
Your obligations as a seller under EXW terms are minimal compared to other Incoterms. You're responsible for preparing goods and making them available at your designated premises.
Risk transfer point: At seller's premises
Buyer's Obligations
Your responsibilities as a buyer under EXW terms are extensive and begin immediately after the seller makes the goods available.
Risk transfer point: From seller's premises
Advantages and Disadvantages of EXW
Advantages
Maximum Control for Buyers
Buyers gain complete control over the shipping process, selecting preferred freight forwarders, negotiating rates, and choosing transportation routes.
Reduced Seller Liability
Sellers benefit from minimal risk exposure since responsibility ends at their premises. This reduces insurance costs and eliminates export documentation needs.
Cost Transparency
EXW provides complete visibility into logistics costs. Buyers see exact charges for transportation, insurance, customs duties, and handling fees.
Shipment Consolidation
Buyers can consolidate shipments from multiple EXW suppliers, reducing per-unit shipping costs by up to 40%.
Disadvantages
Limited Seller Support
Buyers receive no assistance with loading, export documentation, or customs clearance, creating operational challenges for inexperienced importers.
Maximum Financial Risk
Buyers assume all risks from the moment goods are available, including loading damage. Insurance costs increase 15-20% compared to FCA or FOB.
Export Compliance Risks
Managing export compliance without seller support creates legal exposure. Penalties can range from $1,000 to $250,000 per violation.
Challenges for Small Buyers
Small importers face higher per-unit costs, facility access restrictions, and limited negotiating power with carriers.
Hidden Costs to Watch For
Underestimating total landed costs leads to budget overruns of 20-40% in EXW transactions.
| Cost Category | Average Amount | Frequency |
|---|---|---|
| Export clearance fees | $150-500 | Per shipment |
| Loading charges | $200-800 | Per container |
| Documentation fees | $75-300 | Per document |
| Facility access fees | $50-150 | Per visit |
| Storage penalties | $50-200 | Per day |
When to Use EXW in International Trade
Ideal Scenarios for EXW
- Buyer operates their own logistics network
- Large multinationals with global shipping contracts
- Trade within free trade zones or economic unions
- Companies without dedicated export departments
- High-volume domestic operations accepting international orders
Scenarios to Avoid EXW
- Government contracts requiring specific delivery terms
- Perishable goods needing coordinated logistics
- Custom manufacturing requiring seller involvement
- Restricted export items requiring special documentation
- First-time importers or small businesses
Common Mistakes to Avoid with EXW
Documentation Errors
Missing export declarations cause 35% of EXW shipment delays. Incorrect HS codes on customs forms result in penalties ranging from $1,000 to $10,000 per violation.
Risk Transfer Misconceptions
Assuming risk transfers upon payment is a critical error. Risk passes once goods become available at the seller's premises, regardless of payment status.
Cost Calculation Oversights
Underestimating total landed costs leads to budget overruns of 20-40%. Hidden costs include export duties, terminal handling charges, and documentation fees.
Communication Gaps
Failing to establish clear communication protocols results in 40% of EXW disputes. Written confirmation of goods availability and pickup details is essential.
Legal Compliance Failures
Violating export control regulations can result in fines exceeding $250,000 per violation. Understanding both origin and destination country regulations is critical.
EXW vs Other Incoterms
| Aspect | EXW | FCA | FOB |
|---|---|---|---|
| Export Clearance | Buyer | Seller | Seller |
| Loading Obligation | Buyer | Seller | Seller |
| Risk Transfer | Seller's premises | Delivery to carrier | Ship's rail at port |
| Transport Mode | Any mode | Any mode | Sea only |
| Cost Distribution | 90% buyer / 10% seller | 70% buyer / 30% seller | 60% buyer / 40% seller |
Frequently Asked Questions
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