Why Choose EXW Term? Top 3 Advantages of Delivery at Factory

The 3 Major Advantages of EXW Terms Why Choose Delivery at the Factory?

In international trade, choosing the right trade terms is crucial as it directly affects the responsibilities, costs, and risk distribution between buyers and sellers. Among these, EXW Ex Works, or delivery at the factory, is a widely used trade term, particularly suitable for export sellers who wish to deliver goods directly from the production site to the buyer. So why are more and more companies inclined to choose EXW? Here are its three main advantages.

Firstly, the biggest feature of EXW is that it minimizes the seller's responsibilities and costs. According to INCOTERMS 2025, when using the EXW term, the seller only needs to place the goods at their disposal at their location, usually the factory or warehouse, to complete the delivery obligation. This means the seller does not need to arrange transportation, purchase insurance, or even handle export clearance procedures. For example, in a case in 2025, a Chinese manufacturer sold a batch of electronic products to an European customer through the EXW clause. Since the buyer was responsible for subsequent logistics and customs clearance, the seller not only saved a lot of time and effort but also avoided potential additional costs caused by international transportation issues. This model is especially suitable for companies focused on production and RD, allowing them to enhance competitiveness by concentrating on core businesses.

Secondly, EXW provides greater flexibility for the buyer. As the seller only needs to place the goods at the agreed location, the buyer can freely choose carriers, modes of transport, and destinations, and adjust transportation plans according to their own needs. Buyers can also use their resources to handle export documents or find more cost-effective freight forwarders. This flexibility is particularly important for multinational corporations because they often need to quickly adjust supply chain strategies based on market demands. For instance, a US retailer frequently uses EXW terms to procure goods from Asia, as they can flexibly allocate inventory according to seasonal sales peaks, ensuring products arrive at various stores in a timely manner.

Finally, EXW helps reduce transaction risks. Under traditional FOB Free On Board terms, the seller typically bears all responsibilities before the goods are loaded onto the ship, and any unexpected losses could result in significant economic losses. However, under EXW conditions, the risk transfer occurs when the seller delivers the goods to the buyer. This greatly reduces the seller's exposure to risks. At the same time, since the buyer controls the entire transportation process, they are more likely to avoid potential issues such as delays, damage, or loss. Recent reports indicate that an Italian importer found that working with a Chinese supplier via EXW significantly improved order execution reliability, as they could monitor the status of the goods throughout the process and respond quickly to any emergencies.

In conclusion, EXW, as a simple and efficient trade term, has three significant advantages reducing seller costs, granting buyer flexibility, and minimizing transaction risks. Of course, enterprises still need to carefully assess their own conditions and the capabilities of their partners in actual operations to ensure smooth implementation of this model. With the deepening of global economic integration, it is believed that more companies will choose EXW to optimize their cross-border trade processes in the future.