What Does EXW Stand For in International Shipping?

International trade involves complex logistics, costs, and risks. To standardize these, the International Chamber of Commerce (ICC) developed Incoterms, or International Commercial Terms. These terms establish rules for the delivery of goods under sales contracts. Among the eleven Incoterms 2020 rules, Ex Works (EXW) is widely used.

Meaning of EXW

EXW, or “Ex Works,” means the seller delivers goods by making them available at their own premises, such as a factory or warehouse. The literal translation of “Ex Works” implies self-pickup. Under EXW, the buyer assumes virtually all responsibility, costs, and risks for transporting the goods from that point onward. This term places the minimum obligation on the seller in an international transaction.

Seller’s Responsibilities, Costs, and Risks

Under EXW, the seller’s responsibilities are minimal. They must make the goods ready for collection at the agreed location, such as their factory or warehouse. This includes properly packaging the goods for export. The seller must also provide any necessary assistance to the buyer in obtaining export licenses or other required paperwork, though the buyer bears the fees and risks.

Risk transfers from the seller to the buyer once the goods are available at the named place of delivery. The seller is not responsible for loading the goods onto the buyer’s vehicle or arranging export customs formalities. Their involvement in the shipping process effectively ends once the goods are ready for collection at their premises.

Buyer’s Responsibilities, Costs, and Risks

The buyer bears extensive responsibilities, costs, and risks under EXW. From the moment goods are available at the seller’s premises, the buyer is responsible for all subsequent logistics. This includes arranging and paying for all transportation, starting with loading the goods onto the first carrier at the seller’s location. The buyer is also responsible for handling all export customs formalities in the country of origin, including obtaining necessary licenses, paying duties, and managing taxes.

The buyer assumes all risks of loss or damage from the point of collection. This encompasses managing all transit risks, including potential delays or complications during the journey. Upon arrival in the destination country, the buyer is responsible for all import customs formalities, duties, and taxes, as well as arranging final delivery.

When EXW is Used

EXW is commonly chosen when the buyer possesses significant expertise in international logistics and customs procedures. Buyers often opt for EXW when they desire complete control over the entire shipping process, from pickup to final delivery. This term is also practical when a buyer is consolidating shipments from multiple suppliers within the same region, allowing for a single export process.

EXW is frequently used in domestic trade where goods do not cross international borders, simplifying the customs aspect. It can also be beneficial when the seller is new to exporting or lacks the necessary export licenses and capabilities, shifting the burden to the buyer. In such cases, the buyer often has established relationships with freight forwarders who can manage international shipping requirements.