EXW Meaning: Ex Works Explained (With Examples)

EXW: who pays and who carries the risk?

Under ICC's Incoterms 2020 rules, EXW delivery occurs when the seller makes the goods available to the buyer at the agreed point within the named place, on the agreed date or within the agreed period, without loading the collecting vehicle. The named place can be a factory, warehouse or another agreed location.

The table assumes delivery at the supplier's factory. Cargo risk means responsibility for loss or damage; it does not determine ownership.

What should a Chinese EXW quote include?

Specify EXW, the full collection address, the precise delivery point and Incoterms 2020 in the contract. If you do not agree a precise point and several are available, EXW allows the seller to select one that suits it.

Confirm the agreed goods, packaging and marking. The seller normally pays for packaging appropriate for transport, unless the trade custom is to transport those goods unpackaged or specific packaging requirements have been agreed. Confirm carton or pallet details, collection access, loading equipment and labour. An EXW price is not a delivered price.

EXW assigns applicable export formalities to the buyer; the seller must provide the assistance required by the rule at the buyer's request, risk and cost. Do not assume that manufacturing or selling the goods means the supplier has agreed to clear them for export.

Before accepting, consider FCA with seller-arranged export clearance, or ask your forwarder and Chinese customs broker to confirm the proposed export arrangement. Identify the export consignor, who appoints the broker, the required documents and charges.

China Customs publishes filing requirements for import/export consignors and customs brokers. EXW allocates contractual responsibilities; it does not replace customs filing requirements or a broker's authority to act. Do not assume a foreign buyer can submit a Chinese export declaration itself.

For the wider comparison, use the Incoterms guide and responsibility chart.

Worked examples: loading damage and a China-to-UK order

Hypothetical loading example: packed machinery has been made available at the agreed factory delivery point and is then damaged during loading. EXW normally transfers cargo risk before loading. If the supplier operates the forklift, agree loading risk expressly: ICC cautions against assuming that seller-performed loading keeps that risk with the seller.

Hypothetical UK example: a buyer orders goods EXW from a Ningbo factory for delivery to Cambridge. The buyer arranges loading, applicable Chinese export clearance, transport, UK import clearance and final delivery. Compare an FCA offer against the same destination and scope of services, including charges outside each supplier's price.

Assuming HMRC's transaction-value method applies, customs value includes relevant transport, loading, handling and transport insurance costs to the UK border, adding amounts not already included. The EXW invoice alone is therefore not necessarily the customs value.

Import VAT valuation starts with customs value and adds applicable Customs Duty, levies, excise duty and other import charges, excluding import VAT itself. Relevant incidental expenses include costs to the first UK destination and transport-related expenses to a further UK destination known at importation. Avoid double counting amounts already included.

Destination rules differ. The European Commission describes import VAT valuation using customs value plus applicable additions. US CBP states that using a broker does not remove the importer of record's responsibility for entry accuracy and applicable duties, taxes and fees. Do not automatically apply the UK calculation to another market.

When is FCA better than EXW?

Consider FCA when you want the seller to handle applicable export clearance. ICC Academy encourages considering FCA instead of EXW for cross-border transactions; ICC's EXW notes specifically recommend considering FCA when the buyer anticipates export-clearance difficulties.

With FCA at the seller's premises, delivery normally occurs, and cargo risk transfers, when the goods have been loaded onto the transport arranged by the buyer. The seller handles applicable export clearance. You can nominate your own carrier or forwarder.

With FCA at another named location, delivery normally occurs when the goods arrive there on the seller's vehicle, ready for unloading and available to the buyer's nominated carrier or other person. Specify the location and delivery point precisely.

For containers and carrier handover, see FCA or FOB with your own forwarder.

What should buyers agree before accepting EXW?

Obtain a collection-to-destination quote before comparing prices. Check loading, origin handling, export documentation, freight, destination handling, customs services, applicable taxes and final delivery.

Confirm the delivery point, readiness notice, collection window and responsibility for loading damage. If the seller will load, record who pays and who bears the risk; consider FCA at the seller's premises.

Ask the forwarder and Chinese customs broker to confirm the export parties, authority to act and documents before dispatching a truck.

Consider cargo insurance covering the exposure from the agreed delivery point, including loading. Neither EXW nor FCA requires either party to arrange cargo insurance for the other.

Under EXW, failure to give the required buyer's notice can make the buyer bear risk from the agreed delivery date or the end of the agreed delivery period, provided the goods are clearly identified to the contract. Failure to give that notice or take delivery can also make the buyer liable for additional costs. Agree how delays and storage charges will be handled.

Set product specifications, inspection and acceptance requirements, payment terms and ownership separately. Incoterms allocate delivery responsibilities; they do not replace the sales contract.

Sources

The ICC rules, explanatory notes and Academy articles support the delivery, loading, clearance and insurance explanations. China Customs guidance addresses filing requirements. HMRC, European Commission and CBP guidance supports the destination-specific statements. The worked examples are hypothetical.