What is EXW (Ex Works)?
EXW, or Ex Works, is one of the most commonly used Incoterms (International Commercial Terms) in international trade. It defines the point at which the seller’s responsibility for the goods ends, and the buyer’s responsibility begins.
Under an EXW agreement, the seller makes the goods available for pick-up at their premises or another agreed location. This means the buyer assumes full responsibility for transportation, customs duties, and all associated costs once the goods are made available for collection.
Under EXW, the seller makes the goods available for pick-up at their premises or another agreed location. The buyer assumes full responsibility for transportation, customs duties, and all associated costs once the goods are made available for collection.
EXW Breakdown
| Seller’s Responsibilities | Buyer’s Responsibilities |
|---|---|
| Goods made available for pick-up at seller’s premises or agreed location | Responsible for transport from seller’s premises to final destination |
| Packing the goods for shipment | Arranging export customs clearance |
| No export customs formalities or duties | Handling all import customs, duties, and taxes |
| No risk once the goods are available for pick-up | Assumes risk for loss or damage once goods are available |
EXW vs Other Incoterms
EXW is one of the simplest Incoterms for the seller, but it places maximum responsibility on the buyer.
| Incoterm | Seller’s Responsibility | Buyer’s Responsibility | Risk Transfer Point |
|---|---|---|---|
| EXW (Ex Works) | Provides goods at seller’s premises | Handles all transport, customs, and import duties | At the seller’s premises (goods available for pick-up) |
| FOB (Free On Board) | Delivers goods to the port of shipment | Pays for freight, insurance, and customs at destination | When goods are loaded onto the shipping vessel |
| CIF (Cost, Insurance, Freight) | Covers shipping, insurance, and freight to the destination port | Pays for unloading and customs at destination | When goods are loaded onto the shipping vessel |
| DDP (Delivered Duty Paid) | Responsible for all transport, duties, and customs costs until the goods arrive at the buyer’s location | Receives the goods at their location, no additional responsibilities | At the buyer’s location |
Related Incoterms to EXW
Here are some other important Incoterms commonly used in global shipping.
FOB (Free On Board)
Under FOB, the seller is responsible for delivering the goods to the port of departure, and the buyer assumes responsibility from that point forward. This includes freight, insurance, and import customs.
| Seller’s Responsibilities | Buyer’s Responsibilities |
|---|---|
| Goods delivered to the port of shipment | Arranges freight, insurance, and import customs |
| Export customs clearance | Risk is transferred once goods are loaded onto the vessel |
Authoritative Link: FOB Incoterms Definition – ICC
CIF (Cost, Insurance, Freight)
CIF means the seller is responsible for shipping the goods, paying for the insurance and freight costs, and delivering the goods to the destination port. The buyer assumes responsibility after arrival.
| Seller’s Responsibilities | Buyer’s Responsibilities |
|---|---|
| Pays for shipping and insurance to the destination port | Handles unloading, import customs, and final delivery to destination |
| Provides goods and transport to the port of destination | Risk transfers once the goods are loaded on the vessel |
Authoritative Link: CIF Incoterms Definition – ICC
DDP (Delivered Duty Paid)
In a DDP arrangement, the seller takes full responsibility for the entire shipment process, including customs clearance, import duties, and delivery to the buyer’s location.
| Seller’s Responsibilities | Buyer’s Responsibilities |
|---|---|
| All costs associated with shipment, customs, and delivery | Receives goods at their location, no further obligations |
| Delivers the goods to the buyer’s location | Assumes no risk or responsibility at any stage |
Authoritative Link: DDP Incoterms Definition – ICC
EXW in Practice – Example
Let’s say an electronics company in Shenzhen, China, agrees to sell a batch of electronics to a U.S. importer under EXW terms.
Seller’s obligations: The seller in China makes the goods available at their warehouse.
Buyer’s obligations: The buyer arranges transport, export clearance, and import duties from the Chinese port to their U.S. location.
Example:
The electronics company in China delivers a batch of electronics to the buyer’s forwarder. The buyer’s forwarder handles:
The ocean transport to the U.S.
Customs clearance upon arrival in the U.S.
Final delivery to the buyer’s warehouse.
Key Takeaways for EXW
EXW places the maximum responsibility on the buyer.
The seller’s role is limited to providing the goods and packaging them for transport.
The buyer must handle all logistics, transport, and customs duties once the goods are available for pick-up.
Related Terms
FOB (Free On Board)
CIF (Cost, Insurance, Freight)
DDP (Delivered Duty Paid)
Incoterms 2020
FCA (Free Carrier)
Conclusion
EXW is a straightforward Incoterm, but it puts a lot of responsibility on the buyer. It’s important for buyers to understand how logistics work and have good relationships with customs brokers and freight forwarders to handle the complexities of importing under EXW terms.
Want to learn more about other Incoterms?
Check out our detailed guides on FOB, CIF, and DDP for more in-depth information about the responsibilities of each party involved in international shipping.
Need Help with EXW or Other Incoterms?
If you’re handling international shipments and need advice or assistance with EXW or other Incoterms, contact us today to find out how we can help streamline your process, reduce costs, and manage customs more effectively.