What Is EXW? Meaning, Risk Transfer, Export Clearance & EXW vs FCA

EXW is the rule where the seller finishes by saying "come pick it up at our warehouse," carrying the smallest obligation of any Incoterms rule. It looks simple for the seller, but because the buyer has to take on export clearance too, it becomes a trap in international trade.

This article looks at EXW alone in depth. For a comparison of all 11 rules, see the complete Incoterms 2020 guide.

What Is EXW?

EXW (Ex Works) is the Incoterms rule under which delivery is complete once the seller places the goods at the buyer's disposal at its own premises (factory or warehouse). Everything after that, loading, export clearance, main carriage, and import clearance, is on the buyer. It works for any transport mode and belongs to Group E, the smallest seller obligation. In the contract you write the rule and place together, like "EXW Shenzhen."

Who Bears What Under EXW

The seller is only responsible for handing over the goods at its premises. Everything else, from loading through export clearance, transport, and import clearance, falls to the buyer.

Risk Transfers at the Seller's Premises

Under EXW, risk transfers the moment the goods are placed at the buyer's disposal at the seller's premises. Risk passes before the goods are even loaded onto a vehicle. From that point on, the buyer bears the risk of any incident.

EXW vs FCA: The Export-Clearance Trap

This is the biggest problem with EXW. Under EXW the buyer has to handle export clearance, yet a foreign buyer filing an export declaration in the seller's country is rarely practical. Filing under the exporter's name, appointing a local agent, and similar hurdles get in the way.

So hand export clearance and loading to the seller and most of the EXW trap disappears, and that is exactly FCA. The ICC also recommends FCA over EXW for international trade. The differences are covered in detail in the FCA rule explained.

When to Use EXW

• Domestic trade, or when the buyer has a customs agent in the seller's country: the export-clearance burden is effectively resolved.
• When the buyer wants to design the entire logistics chain: it controls every leg from the factory gate.

For genuine international trade where you want the seller to handle export clearance, FCA is safer than EXW.

Import Duty and EXW

Korea assesses import duty on a CIF basis (freight and insurance included). If you contract on EXW, the customs value is the EXW amount plus inland freight and various costs in the exporting country, international freight, and insurance. It is the Incoterms rule with the most items to add on. You can check the duty on the EXW amount plus those costs using the FOB import duty calculator, which uses the same customs-value method.

This guide is for general information. Actual contracts depend on the detailed rules and each deal, so confirm against the ICC rules and with a specialist.