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Detailed Explanation of International Commercial Terms (Incoterms) 2020 — The Real Story Behind EXW Shipping
Created on 08.22
If you’ve Googled EXW shipping before, you’ve probably seen a dozen dry definitions. But in real life, EXW (Ex Works) isn’t just about “goods available at the seller’s premises” — it’s about negotiating with factory managers, chasing customs brokers, and sometimes, watching your shipment sit for days because of a paperwork gap.
I’ve spent years arranging shipments under EXW Incoterms 2020, and I can tell you: the difference between a smooth delivery and a disaster is usually hidden in the details no guidebook covers.
1. When EXW Shipping Backfires: Stories from the Field
One of my clients once bought machinery from a supplier in Eastern Europe under EXW delivery terms. They assumed the factory would load the crate onto the truck. The driver arrived, and the factory manager shrugged — “Not our responsibility.”
Result? A six-hour delay, an angry truck driver charging extra waiting fees, and a shipment that missed its sea freight booking.
Lesson learned: Under ex works shipping terms, the seller has no obligation to load the goods unless it is explicitly agreed in the contract. Always confirm loading arrangements in writing before committing to EXW — a rule clearly outlined in the ICC’s official Incoterms® 2020 guidelines.
2. The Psychology Behind Choosing EXW Over FOB
Why do some buyers willingly take on the extra work of EXW?
From what I’ve seen, there are three main reasons for this:
- Control: They like being in charge of picking the transport companies, routes, and when things get shipped.
- Trust Issues: They'd rather stick with their own transport contact instead of relying on who the seller knows.
- Cost Strategy: In some places, it's cheaper to handle local transport and export stuff themselves.
It might not always be the cheapest option in the end, but for importers that know what they're doing and have good people to work with, using EXW shipping terms can help keep things predictable.
3. EXW Shipping from China vs. Europe — A World of Difference
An EXW shipment from a Chinese factory often plays out differently than one from a European supplier.
- China: Many factories will help load your goods if you have a good relationship, even though EXW doesn’t require it. But export clearance can be tricky — some sellers can’t legally let buyers handle it directly.
- Europe: Processes are usually more rigid. If it’s EXW, expect to handle everything — and “factory gate” really means factory gate.
Knowing these regional habits can help you decide whether EXW Incoterms 2020 or something like FCA is more practical.
4. The Hidden Costs Nobody Mentions in EXW Shipping
People love EXW because the EXW price definition is clean — product cost, basic packing, nothing else. But here’s where the hidden costs sneak in:
- Forklift or loading crew fees if the factory won’t load for free
- Local transport surcharges for remote pickup locations
- Customs document prep charges at origin
- Storage fees if export clearance isn’t ready on time
I’ve seen importers save $300 on the quoted product price, only to pay $800 extra in unplanned local fees.
5. From Factory Gate to First Customs Check — An EXW Shipment’s Journey
Here’s what actually happens after you agree on EXW freight terms:
Day 1: Your forwarder’s truck arrives at the factory. If you’re lucky, the goods are loaded quickly. If not, the driver waits — at your expense.
Day 2: The truck heads to a warehouse or port terminal. Export documents are prepared.
Day 3: Customs inspects the shipment. Any missing permit or mismatch in HS codes can halt the process.
Day 4+: Once cleared, your shipment finally moves to the main leg — sea freight, air freight, or rail.
On paper, EXW looks like a one-step “pickup and go.” In reality, it’s a chain of events where one weak link can delay the whole shipment.
6. Would I Recommend EXW to a First-Time Importer? My Honest Answer
If you’re new to importing, my advice is probably not.
With FOB shipping, the seller handles loading and export clearance, giving you fewer moving parts to manage.
EXW works best if:
- You have a trusted agent or freight forwarder in the seller’s country
- You’re importing high-value goods and want tight control over the process
- You’re experienced enough to manage customs and local transport issues
If that’s not you, EXW might cause more headaches than savings.
7. The Customs Clearance Trap in EXW Shipping
In EXW, export clearance is officially the buyer’s job. That means you need:
- A local export license (or an agent who has one)
- Correct HS codes for your goods
- Any special permits for restricted items
This is where I’ve seen many shipments get stuck — especially in countries where foreign buyers can’t directly lodge export declarations.
8. How to Arrange Transport Without Losing Sleep
From my own checklist for how to arrange transportation for EXW shipping:
- Hire a forwarder with offices or strong partners at origin
- Confirm pickup access (some factories have truck size limits)
- Plan for multimodal transport if needed
- Always get cargo insurance — risk is yours from the factory gate
If you don’t want to deal with these steps yourself, companies like Dafey’s EXW freight services handle factory pickups, customs clearance, and main carriage as one package.
9. Other Options If EXW Doesn't Work
- FCA (Free Carrier): The seller takes care of loading the stuff and getting it cleared for export, then it's your responsibility.
- FOB (Free on Board): The seller gets the stuff to the port and loads it onto the ship.
- DDP (Delivered Duty Paid): Seller handles everything, even paying the duties.
Knowing when to use something other than EXW can save you time, money, and headaches.
Conclusion: Mastering EXW Without the Surprises
Using EXW shipping with Incoterms 2020 can be a great option for buyers who know what they're doing. You get a lot of control, straightforward prices, and wiggle room. But if you're not ready, it can be tricky.
If you decide to use EXW, get the right partners in place, budget for hidden costs, and understand your customs obligations before you book anything. That’s how you turn EXW from a risky gamble into a smooth, cost-effective operation.
Need help with EXW? Talk to the Dafey logistics team. We've dealt with all sorts of EXW shipments, from small online orders to big industrial stuff, and we always deliver on time and within budget.
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