The EXW Incoterm places the least demands on the seller. They must make the goods available to the buyer at the agreed time at a named place (factory, warehouse, etc.) and packaged for transport. This already fulfils the seller's obligation to deliver, and the risk and costs are transferred to the buyer. The buyer must collect the goods in accordance with the agreement. They organise the transport and can arrange this multi-modally, i.e. use any suitable means of transport. It is advisable that the buyer also insures the transport. If the goods are intended for export, the buyer must take care of clearing the goods for export with Incoterm EXW. As this is done abroad from the buyer's perspective, this can be an insurmountable hurdle - for example, because only a locally-based exporter can obtain the necessary licence for export.
EXW - loading at the place of delivery
As the seller may have several production sites and warehouses, the exact pick-up or delivery location should be specified precisely. Theoretically, the seller is not responsible for loading, but in practice, the seller often assists with loading. This is often in their interest to have the goods ‘off the yard’ quickly and to avoid interruptions in the operational process caused by external personnel (who, for example, do not drive a lorry with a truck-mounted forklift). However, assisting with loading is already the responsibility of the buyer in terms of risk and costs - a legal grey area. If something goes wrong during loading, this can lead to unclear insurance and liability issues. In this case, it makes sense to specify the loading processes on site in the contract, including the costs or additional insurance services relating to loading. Alternatively, you can opt for direct FCA ex works - this means that the seller is responsible for loading ex works.
Note: The seller is also liable after delivery for damage caused by breaches of duty on their part, such as inadequate packaging of the goods.
Packaging of the goods for EXW
In this context, it should also be noted that the seller is responsible for the costs of packaging. They may have an interest in itemising higher packaging costs separately and invoicing the buyer additionally (‘EXW delivery plus packaging costs’).
EXW Incoterm: Documents and information
In principle, the buyer receives proof of delivery from the seller - the buyer in turn provides proof that they have accepted the goods. The seller is obliged to provide the buyer - at the buyer's express request - with the necessary information that the seller needs for the transport organisation, such as timely information about the provision of the goods or information to be able to insure the goods. This can also include documents for security checks on the goods or the early issue of a commercial invoice, as this can be relevant when importing goods, for example.
Electronic documents - but sometimes it has to be paper
In principle, many documents can also be used in electronic form, provided they have been jointly agreed or established as general commercial practice. However, paper documents may be required for customs clearance, for example - the contracting parties should be aware of this if they agree to use electronic documents. If requested by the buyer, the seller must also support the insurance of the transport by providing appropriate information.
EXW Incoterm: Difficulties with export
In principle, with Incoterms 2020, the seller takes care of the export and the buyer takes care of the import. The only exceptions are the Incoterms EXW and DDP - and both can lead to problems when transporting goods across customs borders. With the EXW Incoterm, obtaining an export licence can prove difficult. Although the seller must support the buyer with information and documents at their express request (at the expense and risk of the buyer), they are generally not responsible for whether the export can be carried out. Their obligation ends with making the goods available at the named place in the country. The Incoterm EXW is therefore particularly suitable for domestic transport or within a customs area such as the European Customs Union.
FCA as an alternative to the EXW Incoterm
For cross-border trade, it is better to switch to the FCA Incoterm. This is flexible with regard to the first carrier or the place of delivery. For example, the FCA agreement can already be concluded, which means that the place of delivery or handover is the same as with EXW.
Please note: With FCA - unlike EXW - the seller is responsible for all formalities and costs relating to the export. One advantage of FCA is that the responsibility for loading is more clearly regulated in terms of costs and risk, which avoids grey areas. The Incoterm EXW is often used ‘out of tradition’, but as soon as it is necessary to supplement and largely modify the delivery terms, the question arises as to why one does not choose the Incoterm that already covers these areas.
Simply put, the buyer must bear most of the costs in the case of EXW. The seller has already fulfilled their obligations by providing the goods ex works or ex warehouse. They also bear the cost of suitable packaging. Loading, transport and all expenses for outward, through and inward carriage (if applicable) must be borne by the buyer. The buyer must also pay for transport insurance, if they wish to take out such insurance. If the buyer does not accept the goods at the agreed time, they shall bear the associated costs.
EXW is more suitable for national trade in goods than for international trade, as export by a foreign buyer can be difficult. For international trade, it is more advisable to use FCA. EXW is only suitable for buyers if they have several suppliers in the exporting country, for example, and put together a consignment for joint transport.