Key Takeaways
- Seller delivers goods at their premises only.
- Buyer handles all transport, costs, and risks.
- Minimal seller liability and no export duties.
- Best for buyers with strong logistics capabilities.
What is Ex Works (EXW)?
Ex Works (EXW) is an Incoterm where the seller's responsibility ends when goods are made available at their premises, such as a factory or warehouse. From that point, you assume all risks and costs related to transportation, export procedures, and delivery.
This term places maximum obligation on the buyer, who must manage logistics and export formalities independently, making it essential to understand your ability to pay taxation and comply with export regulations.
Key Characteristics
EXW outlines clear responsibilities, favoring sellers while demanding proactive involvement from buyers.
- Seller’s obligation: Deliver goods at their premises without loading or export clearance.
- Buyer’s responsibility: Arrange and pay for all transportation, loading, export licensing, and customs clearance.
- Risk transfer: Passes to buyer immediately upon goods availability.
- Cost allocation: Buyer bears all costs after the goods leave the seller’s location.
- Documentation: Buyer must handle all export paperwork, which can be complex.
How It Works
Under EXW, once the seller makes the goods available at the agreed location, you take charge of loading, transport, and export clearance. This means arranging carriers, managing insurance, and handling any permits or duties.
Because the seller does not assist with loading or customs, you should have reliable logistics partners and a strong grasp of export requirements to avoid delays or unexpected costs. Understanding financial tools like factoring can also help manage cash flow in complex transactions.
Examples and Use Cases
EXW suits buyers who prefer control over shipping and have established logistics networks.
- Manufacturers: A company like Delta might sell equipment EXW, letting buyers coordinate freight from the factory.
- Importers: Experienced importers with access to trusted freight forwarders often choose EXW to optimize costs.
- Small exporters: Sellers with limited export expertise use EXW to minimize their liability and administrative burden.
Important Considerations
While EXW offers sellers minimal responsibility, buyers must be prepared for the full logistical workload, including export documentation and risk management. Without experience, you might face hidden costs or compliance challenges.
Insurance is not mandatory but recommended to cover transport risks. If you want to improve your financial management around these transactions, exploring best credit cards for excellent credit can provide flexibility and protection when paying for transport services.
Final Words
Ex Works (EXW) places most responsibility on the buyer, making it essential to evaluate your capability to manage export logistics and customs clearance effectively. Before committing, compare shipping offers and ensure you have reliable partners to handle transportation and compliance.
Frequently Asked Questions
Ex Works (EXW) is an Incoterm where the seller makes the goods available at their premises, and the buyer assumes all responsibility for transportation, costs, and risks from that point onward.
Under EXW, the buyer is responsible for loading the goods onto their transport, handling export customs clearance, and obtaining any necessary export licenses, while the seller's obligation ends once the goods are available.
Sellers benefit from minimal liability and risk, a simplified quoting process without shipping costs, and no involvement in loading, freight arrangements, or export documentation.
Buyers must manage complex logistics arrangements, bear all transport risks and costs, navigate foreign export requirements without seller support, and often need established relationships with local logistics providers.
EXW places maximum responsibility on the buyer, unlike FCA or DAP where the seller takes on more duties such as delivering to a carrier or destination, making EXW best suited for experienced buyers with logistics networks.
Yes, buyers can potentially save costs by choosing their own logistics providers and negotiating shipping rates, giving them greater control over transport arrangements.
Buyers bear all risks of loss or damage from the point goods are made available at the seller's premises, including during loading, transport, and customs clearance.
In the EU, buyers must prove goods have left the jurisdiction to avoid sales tax liability, but under EXW, they might not be required to provide this proof to the seller, potentially leaving the seller exposed.
