Ex-Works from a Procurement Service Provider's Perspective

EXW (Ex Works) is an international trade term that minimizes seller responsibility and maximizes buyer control. For B2B businesses and cross-border e-commerce sellers, the EXW model can reduce procurement costs, but it can also introduce risks due to logistical complexity. However, for companies new to international sourcing, the specific meaning of EXW terms, division of responsibilities, and potential risks can often be confusing.

This article provides an in-depth analysis of EXW's operational logic, division of responsibilities, cost calculations, and risk mitigation strategies from the perspective of an international sourcing service provider.

EXW Shipping's Core Definition and Application Scenarios

EXW (Ex Works) means that after the seller prepares the goods at a designated location (such as a factory or warehouse), the buyer is responsible for arranging the entire process, including transportation, export declaration, insurance, and import customs clearance. The seller is solely responsible for ensuring that the goods are packaged as required, providing basic documents (such as invoices and packing lists), and assisting in obtaining export permits (if required). 

Applicable Scenarios

Buyers with international logistics experience: For example, large enterprises with established supply chain teams or long-term freight forwarding partners.

Multi-supplier cargo consolidation: Buyers need to consolidate goods from different sellers to reduce costs (for example, sourcing from multiple Chinese factories and then shipping them to an overseas warehouse).

Customized product procurement: Buyers must monitor the entire production and transportation process to ensure quality and delivery.

EXW Shipping Process

1. Delivery Preparation: The seller completes the production and packaging of the goods and notifies the buyer of the delivery date.
2. Risk Transfer: Risk transfers to the buyer upon delivery of the goods at the seller's site.
3. Logistics Execution: The buyer arranges transportation to pick up the goods and bears international transportation, customs duties, and port of destination fees.
4. Document Handover: The seller provides basic documents (such as invoices and packing lists), while the buyer handles export customs clearance and import formalities.

Division of Responsibilities and Risks under the EXW Model

Seller's Responsibilities: Sellers only need to prepare the goods at the designated location (usually the seller's factory or warehouse), notify the buyer of the delivery date, provide basic documents (invoices and packing lists), and assist in obtaining export permits (if required). Buyer's Responsibilities: The buyer is responsible for all costs and risks from the point of pickup, including:

Loading costs

Export customs clearance and fees

International transportation arrangements and freight

Customs clearance and taxes in the importing country

Transportation to the final destination

The buyer arranges transportation to pick up and load the goods; handles export/import customs clearance; and bears all costs and risks associated with transportation (such as damage and delays).

EXW Freight and Pricing Calculation: How to Avoid Hidden Costs?

Under the EXW model, the buyer is responsible for all costs from the factory to the destination, including:

Domestic transportation (truck/rail);

Export customs clearance fees and port charges;

International transportation (sea/air);

Import customs clearance fees and duties;

Insurance (if required).

How is EXW pricing calculated? 

EXW price = product cost + seller's packaging fee + seller's export documentation fee (if applicable)

EXW to FOB price formula

To convert EXW to FOB (the seller is responsible for loading the goods onto the vessel), domestic costs must be added:

FOB price = EXW price + domestic freight + customs clearance fees + port charges

Advantages and Disadvantages of the EXW Model and Suitable Business Types

Advantages

Extremely low seller costs: No logistics or insurance costs are required, making it suitable for asset-light suppliers. It offers the greatest benefits to the seller, minimizing liability, as risk transfers as soon as the goods leave the factory.

Buyer control: The buyer can independently choose the freight forwarder and shipping route, optimizing costs and timeliness.

Pricing transparency: This facilitates comparison of net product costs across different suppliers.

High flexibility: The buyer can freely choose the logistics provider.

Disadvantages

High buyer risk: The buyer bears all shipping risks, such as damage to the goods and delays due to customs inspection.

High operational complexity: Familiarity with the customs clearance policies and tax regulations of the destination country is required.

Responsibility ambiguity: For example, determining liability for damage during factory loading.

Suitable Business Types:

Large multinational companies (with professional supply chain teams);

Cross-border e-commerce sellers (needing to flexibly coordinate goods from multiple suppliers);

Trading agents (needing to integrate resources and provide value-added services).

Key Questions and In-Depth Answers about EXW

Under the EXW model, does the seller need to assist with loading?

No. The seller only needs to prepare and place the goods at the agreed location; loading responsibility rests with the buyer. If seller assistance is required, this must be separately agreed upon in the contract, with clear fees.

Is the EXW model suitable for small-volume purchases?

Not recommended. Due to the higher per-shipment costs for small-volume shipments, EXW can be more expensive than FOB. Cnstorm offers Less-than-Container Load (LCL) services, which consolidate shipments from multiple customers to reduce unit transportation costs, allowing even small-volume purchases to enjoy the price advantages of EXW.

Who pays for EXW freight?

Under EXW freight terms, all transportation costs are borne by the buyer. This contrasts sharply with terms like FOB and CIF, where the seller covers some of the transportation costs.

How is EX Works pricing calculated?

EXW prices typically include: product cost, factory profit, and packaging fees, but exclude: local transportation costs to the port, export customs fees, and international ocean/air freight (depending on the channel). Professional advice: Buyers should request a complete breakdown of EXW shipment costs from suppliers to avoid hidden fees.

What is the difference between EXW and FCA?

The key difference lies in loading responsibility—EXW sellers are not responsible for loading the goods, while FCA sellers are required to load the goods onto the buyer's designated vehicle.

Cnstorm: Your International Sourcing and Logistics Partner

Cnstorm has been deeply engaged in international sourcing and logistics for over a decade, providing B2B companies and cross-border e-commerce sellers with one-stop services including procurement, export customs clearance, international transportation, warehousing and sorting, and destination delivery. It is particularly suitable for cross-border sourcing scenarios using EXW terms.

Our Core Services

Domestic Pickup and Consolidation: Our nationwide pickup network supports multi-supplier cargo consolidation.

Export Customs Brokerage and Compliance: Our familiarity with the customs policies of major trading countries ensures fast customs clearance for goods. International Transportation Optimization: Multimodal transport by sea, air, and rail offers a balanced approach to timeliness and cost.

Destination Country Delivery: Partnering with international couriers like DHL and FedEx, we support drop shipping from overseas warehouses.

Whether you're a B2B company or a cross-border e-commerce seller, Cnstorm can tailor-make procurement and logistics solutions for you. Contact us through our official website or customer service channels to make international procurement simpler, safer, and more efficient.