What is Ex Works (EXW)?

Ex Works is one of 11 standard Incoterms published by the International Chamber of Commerce (ICC) in incoterm 2020, defining the responsibilities of buyer and seller . It describes a shipping arrangement where the seller makes goods available at an agreed place. The buyer covers all transport costs and risks from that point. 

Under Ex Works shipping terms, the buyer and seller have certain responsibilities. For example, the seller must pack and label the goods and deliver them to the agreed location, usually their warehouse or depot. Additionally, the seller may help the buyer complete export clearance paperwork. 

Once the goods are ready, the buyer takes care of everything else in the shipping process. For example, under EXW shipping terms, the buyer typically pays for loading, moving goods to the port, export fees, loading on ships or planes, freight costs, insurance if needed, and import duties.

Buyers may choose Ex Works shipping terms when the seller can't handle the export process, or when the buyer wants to combine multiple shipments under a single export. This approach gives the buyer full control over transportation and logistics costs, and it helps keep their supplier details confidential. However, organizing transportation, handling export and import processes, and all associated risks can be daunting.  FedEx makes this easier with tools to simplify import logistics and customs clearance.  

Ex Works and FOB Incoterms are both used to clarify who takes responsibility for the shipment delivery. The main difference between Ex Works vs FOB relates to the transfer of risk from seller to buyer. 

With Ex Works Incoterms, the seller makes goods available at their location or another agreed place. The risk and responsibility transfers to the buyer once the goods are made available at the seller’s location, and the buyer must arrange everything else from loading to final delivery. 

With FOB, the seller delivers goods on board the buyer’s chosen vessel and clears export customs. Risk and responsibility transfers to the buyer once the goods are loaded onto the vessel at the port of shipment.

Using Ex Works shipping terms provides buyers full control over the shipping process, allowing them to consolidate shipments, avoid hidden handling fees, and choose their own logistics providers for potentially better rates. However, this preference comes with higher responsibility and risks, as buyers must manage all shipping and customs formalities themselves, potentially facing challenges if local regulations require a presence in the seller's country.

It is worth noting that unless there is a legitimate reason why a buyer wants to use Ex Works, some sellers may prefer to quote other Incoterms rules like FOB, DDP, or DDU due to concerns over export compliance or lack of control over logistics.

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