One of the key determinants of pricing, logistics, and customs duties in international purchasing is the appropriate Incoterm. EXW shipping is a term that seems to be problematic for new importers. The reason is that on the surface, one may be attracted by the low factory quote under EXW shipping. However, in practice, almost all obligations are shifted to the buyer under EXW shipping terms. It is suitable for experienced importers and tough for beginners.

In this guide, we will explain what is meant by EXW shipping, how it is priced, when it should be used, and how it compares with other Incoterms.

1. What Does EXW Mean in Shipping?

EXW is an abbreviation for Ex Works. Under EXW shipping terms, the seller delivers the goods at his premises, i.e., the factory or warehouse. Upon being ready for collection, the buyer becomes responsible for the entire logistics chain, which includes, but is not limited to, trucking, export customs clearance, international freight transport services, insurance coverage, and import customs clearance.

In other words, the seller prepares the goods, while the buyer handles everything after they are collected. Due to this arrangement, most buyers who use EXW shipping prefer to engage a China shipping agent to handle collection and export procedures on their behalf.

For example, to understand how EXW works, imagine a buyer ordering massage guns from a Shenzhen supplier. The manufacturer packs and stores the commodities for pickup at the warehouse. From this point onwards, the buyer or the buyer’s freight forwarder should arrange the collection of the cargo, China export clearance documentation, shipping across borders, and customs formalities at the destination point, followed by delivery of the consignment to the final destination.

This mode enables the buyer to control routing, cost, and scheduling, whereas under EXW shipping terms, it places upon him all operational and regulatory responsibilities.

2. What Is the EXW Price?

The reason EXW prices are often appealing is that factories offer the lowest unit cost under this pricing. Nevertheless, the EXW price pertains only to the goods at the seller’s premises. It excludes logistics, export formalities, and downstream activities. The price quoted under the EXW term normally covers production costs, internal packaging, and basic factory services.

The following are included in the EXW price:

  • Product cost
  • Local packaging
  • Factory loading charges

The following are not included in the EXW price:

  • Trucking to the port
  • Export duties or taxes
  • Export customs clearance formalities/documentation
  • Terminal handling charges
  • Sea freight or air freight
  • Cargo insurance
  • Import clearance/brokerage
  • Duties and taxes at destination
  • Final delivery to the warehouse

The evaluation of EXW shipping with respect to the product’s cost should not consider these items. The appropriate measure is the landed cost, which refers to the total end-to-end cost of transporting the goods to the buyer’s warehouse. An example of a typical landed cost breakdown under EXW shipping terms would include: product cost, trucking, export documentation, terminal handling charges, sea freight or air freight, insurance, customs clearance at the destination, import duty/tax, and final delivery.

Although EXW pricing is usually lower than other INCOTERMS, it does not always result in the lowest total cost. For this reason, experienced buyers will not rely solely on the factory price but will compare options, such as FOB/CIF versus EXW.

3. When Should Buyers Use EXW Shipping?

Not all buyers are suitable for EXW shipping. It is most effective when used by importers with their own logistics set up in the seller’s nation, or those who wish to have more say in the booking and coordination of their freight. This kind of shipping is also widely used for sample orders and consolidation shipments, where either the buyer or their representative can handle the collection of the goods and completion of related export formalities.

The buyer should consider using EXW shipping in the following cases:

  • When one has a strong freight forwarder or logistics agent in the seller’s country
  • For small trial orders or samples that are purchased
  • If one requires greater control over the shipment, like routing and insurance
  • In cases where commodities from different manufacturers are to be packed together
  • When one is experienced in export documentation and compliance with regulations
  • On condition that one follows a structured procurement workflow

EXW shipping may not be suitable for a buyer who:

  • Is new to importing or does not know the export procedures in his country.
  • Cannot get a trustworthy representative for collecting the goods and effecting export clearance formalities.
  • Anticipates that the vendor will look after the paperwork/filing of customs entries
  • Requires full logistic service with collection at the front door but without any involvement
  • Is unable to control compliance with import regulations at the point of destination

The distinction is clear when you look at some real-life cases. Most new Amazon FBA sellers find it difficult to use EXW shipping, especially when they don’t have a freight forwarder partner and need a straightforward delivery to fulfillment centers. DDP becomes a better option for such kind of profiles. Starting with FOB is what many importers do, especially when they are sure that the seller has cleared the goods for export before handing them over, and do not have agents in China.

On the other hand, buyers who consolidate shipments from multiple factories in Shenzhen or Yiwu prefer the EXW term to control loading, timing, and freight costs.

SourcingXpro consolidation service

4. EXW vs. Other Common Trade Terms

Comparing EXW shipping with the other Incoterms makes it easier to comprehend. It is not so much the differences in the goods as it is about which party assumes the liability for each leg of the transport.

Responsibility Allocation Across Incoterms:

EXW (Ex Works) – Buyer Assumes Maximum Responsibility

  • Seller: The goods are only available at his premises.
  • Buyer: Export clearance, freight, insurance, import clearance, as well as final delivery

FOB (Free on Board) – Shared Responsibility

  • Seller: Export clearance and loading at the port of departure
  • Buyer: Freight, insurance, import clearance, and final delivery

CIF (Cost, Insurance & Freight) – Balanced Approach

  • Seller:  Freight, export clearance, and insurance.
  • Buyer: Import clearance, as well as final delivery

DDP (Delivered Duty Paid) – Seller Assumes Maximum Responsibility

  • Seller: Export clearance, transportation, insurance, import clearance, and final delivery
  • Buyer: Receives goods at destination only

FOB should be used when a buyer wants the seller to handle the export documentation until the goods are loaded onto board at the port of shipment. On the other hand, CIF is appropriate when buyers need sellers’ help in shipping between countries and insurance coverage up to the destination point.

DDP is chosen for ease, as it provides a door-to-door shipment in which the seller handles almost everything. However, EXW shipping lies at one extreme, as it gives buyers total control while imposing the highest level of work and risk on them.

5. Common Mistakes to Avoid with EXW Shipping

The majority of issues related to EXW shipping do not concern the quality of the goods but rather the operations. This Incoterm puts the liability on the buyer immediately the goods are available at the seller’s premises; this can lead to assumptions and coordination gaps that result in actual delays and additional costs.

One common error under EXW shipping is assuming that the seller will help with customs export procedures. In a pure EXW contract, the seller is not responsible for any export clearance formalities or documentation. Problems also arise for buyers when they fail to confirm that they will be ready to pick up the goods at the factory or when they do not agree on where and when the goods will be available.

There is also a problem of cost blind spots. Buyers usually don’t account for costs such as export declarations, inland trucking, and terminal handling. These charges may add up quickly and make EXW more costly than planned. Many newbie importers only realize this when shipping from China to Amazon FBA, since duties, customs procedures, and last-mile delivery all pose similar cost and responsibility blind spots.

Among other frequent errors are:

  • Engaging shipping partners who do not operate in the country of the supplier
  • Forgetting to allocate funds for destination customs duties and taxes
  • Failure to take insurance cover on either inland or export legs
  • Believing that they will save a fortune by simply checking the price indicated in the factory quote

Buyers must also know how risks are shared under EXW terms of shipment. According to the strict EXW regulations, the seller is not supposed to load the goods onto the truck. This is important for bulky, delicate, or palletized cargoes because at the factory door, as opposed to the port, responsibility and liability change.

Is EXW Right for You?

The suitability of EXW shipping hinges on ability as opposed to choice. A simple self-evaluation helps clarify fit. Before deciding on this option, a buyer should consider whether he or she has a trusted freight forwarder from the seller’s country, feels ok with taking all the transport risks and responsibilities related to the goods bought, and would agree to give up some ease in transporting the goods for a better deal on the product itself. If those three things are true about the buyer, then EXW shipping could work out nicely.

The following are reasons why a buyer may consider using EXW shipping:

  • Has a freight forwarder or logistics partner in the supplier’s country
  • Can consolidate shipments from multiple factories if needed
  • Familiar with export and import compliance requirements
  • Prefers to determine routing, freight prices and insurance itself
  • Uses an organized method of purchasing materials

Buyers who lack logistics support or experience find EXW shipping inappropriate. In such cases, FOB, CIF or DDP are better options as they help in lowering the operational burden and risks.

This can be illustrated using some practical examples. For instance, most buyers prefer EXW shipment because it allows forwarders to bundle export parcels. On the other hand, wholesale importers that combine goods from different suppliers in Shenzhen or Yiwu and use EXW shipping because they can determine when the load will take place at their own convenience. For example, new e-commerce vendors cannot use EXW shipping without agents and therefore resort to DDP for ease.

Final Thoughts

The seller may find EXW shipping easy, but it places many duties, costs, and compliance requirements on the buyer. Experienced importers or buyers with established logistics networks in the supplier’s homeland are the most appropriate users of this Incoterm. On the other hand, beginners or individuals who prefer less-involved alternatives would opt for terms such as DDP, FOB, or CIF, as they are simple and require little work. Some buyers see FOB as a starting point that evolves into EXW as a good logistics network develops.

Still uncertain about whether EXW shipping fits your situation? We can help evaluate the right Incoterm for your needs. SourcingXPro supports global buyers with one-stop sourcing solutions, including product selection, customization, factory coordination, quality inspection, and cost-efficient shipping arrangements.

In case you are wondering about EXW shipping or would like some help in selecting the best shipping terms for your business, then please get in touch with us. SourcingXPro is committed to making international trade easier, more reliable, and more predictable for buyers worldwide.