EXW (Ex Works)

Under EXW, the seller's only real job is to have the goods packaged, labelled and ready for collection at an agreed location on an agreed date. Everything after that point — arranging a vehicle, loading the goods, paying for transport, clearing customs in both countries and insuring the cargo — is the buyer's responsibility.

Crucially, the seller is not even obliged to load the goods onto the buyer's collecting vehicle. If the seller does help load (which is common in practice), they do so at the buyer's risk unless the parties agree otherwise in writing. This makes the exact handover point a frequent source of disputes.

Because EXW imposes so little on the seller, an EXW price looks cheap on paper. The buyer must then add freight, insurance, duty and import VAT to understand the true landed cost. A low EXW quote can easily become expensive once all those buyer-borne costs are included.

The biggest practical weakness of EXW is export clearance. Under the rule, the buyer is formally responsible for clearing the goods for export from the seller's country. But the buyer is often a foreign company with no presence or customs registration there, which makes export declarations difficult or impossible to file in their own name.

For this reason the Incoterms 2020 guidance suggests that buyers importing under EXW from another country should instead consider FCA (Free Carrier), under which the seller handles export clearance. EXW is therefore best suited to domestic transactions or to ex-works pricing where the buyer arranges a freight forwarder who can act on the export side.