In international commerce, the terms of delivery can make or break a transaction. Among the most straightforward yet potentially challenging trade terms is EXW (Ex Works), where the seller's responsibility ends at their factory gate, leaving the buyer to handle all subsequent logistics.
The Bare Minimum of Seller Obligations
Under EXW terms, the seller's sole obligation is to make the goods available at their premises or another specified location. The moment the products are ready for collection, all responsibilities—including costs, documentation, and risks—shift entirely to the buyer. This includes export clearance, loading operations, transportation arrangements, and final delivery to destination.
The Buyer's Burden
Purchasers opting for EXW terms must possess or acquire substantial logistics expertise. Key considerations include:
• Precise cost calculation for loading, export duties, and transportation
• Compliance with export regulations in the seller's country
• Arrangement of cargo insurance from the point of collection
Risk Assessment Required
While EXW minimizes seller obligations, it creates significant exposure for buyers. The apparent simplicity often masks hidden complexities:
1. Regulatory hurdles : Buyers unfamiliar with the seller's local export procedures may face unexpected delays
2. Cost variables : Unanticipated charges for local handling or documentation can erode profit margins
3. Liability gaps : Damage during loading or initial transport typically falls to the buyer
Strategic Considerations
Successful EXW transactions require clear contractual agreements detailing:
• Exact point of goods availability (factory floor, loading dock, etc.)
• Time windows for collection
• Documentation provision responsibilities
For businesses with established logistics networks, EXW can offer cost advantages through direct control of supply chain operations. However, less experienced importers should carefully weigh the trade-offs against more supported Incoterms® like FCA (Free Carrier) or CIP (Carriage and Insurance Paid To).
Mastering EXW provisions remains an essential skill for international traders, enabling informed decisions about risk allocation and operational capabilities in cross-border transactions.