Definition of the Incoterm EXW (Ex Works)

The EXW Incoterm requires the seller to make the goods available to the buyer at their own premises (factory, warehouse, office, etc.).

From that point forward, all costs and risks are the buyer’s responsibility.

• Current version: EXW remains unchanged in Incoterms 2020.
• Multimodal transport: Can be used with any mode (sea, air, road, rail).
• User profile: Best suited for experienced importers with local presence who can handle export formalities at origin.

Seller’s Obligations (EXW)

• Make the goods available at the agreed date and location
• Proper packaging and preparation for transport
• Provide necessary commercial documents (invoice, packing list, etc.)

Note: The seller is not responsible for loading the goods onto the buyer’s vehicle or for export customs clearance

Buyer’s Obligations (EXW)

• Payment for the goods as per the contract
• Loading and inland transport to the export customs point
• Export customs clearance and origin charges
• International freight
• Destination charges and unloading
• Import customs clearance and payment of VAT, duties, and taxes
• Inland transport to the final destination

Insurance under EXW Conditions

Insurance is not mandatory, but it is recommended that each party covers their segment of responsibility.

Alternatively, one party may choose to take out a comprehensive policy.

In any case, insurance terms should be clearly stated in the sales contract to avoid legal disputes.

Limitations and Risks of EXW

Worked Example: the EXW Cost Shock

Scenario. A US importer purchases $20,000 of CNC machinery parts from a factory in Cincinnati, Ohio on EXW Ohio Factory terms, shipping to a buyer in Antwerp, Belgium. The seller's price covers nothing beyond making goods available at the loading dock. The "true landed cost" the buyer pays:

The EXW "cost shock": the seller's $20,000 EXW invoice represents only 64-70% of the buyer's actual landed cost. ICC officially recommends FCA instead of EXW for cross-border because EXW puts US export filing on the seller while practically allowing the buyer to manage it — a US Foreign Trade Regulations (15 CFR Part 30) gray area.

Footnote: EU VAT base includes freight + insurance per Council Directive 2006/112/EC art. 86. US inland trucking rates are mid-cycle volatile; verify against the FreightWaves National Truckload Index weekly.

EXW vs FCA - When to Switch from EXW to FCA (ICC's Recommendation)

The ICC Academy notes that EXW is most suitable for purely domestic trade. For cross-border shipments, ICC recommends using FCA instead, because under EXW the seller often cannot legally file the export declaration (regulations like the US Foreign Trade Regulations require the exporter of record to be in the exporting country).

Conclusion

EXW is appropriate for buyers who have a reliable logistics network and local agents at origin.

For less experienced operations, it is advisable to consider FCA or other Incoterms that distribute responsibilities more evenly.

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Sources and References

• ICC – International Chamber of Commerce Official source for Incoterms 2020 rules, including EXW details.
• Trade Finance Global – EXW (Ex Works) Guide Detailed explanation of EXW, its responsibilities, and typical use cases.
• International Trade Administration (U.S. Department of Commerce) Overview of Incoterms including EXW, with practical business advice.
• Shipping Solutions: What Does Ex Works (EXW) Mean in Incoterms 2020? Clarifies seller and buyer responsibilities under EXW terms.