Top Five Risk Points Buyers Should Notice Under EXW Term

The EXW term, Ex Works, is one of the most common trade terms in international trade, meaning that the seller delivers the goods to the buyer at their premises or another specified location, after which all responsibilities and costs are borne by the buyer. Despite its apparent simplicity, this term harbors numerous potential risks for the buyer. Below are five key risk points that buyers should pay special attention to.

Firstly, the risk associated with transportation arrangements cannot be overlooked. Under EXW conditions, the buyer is responsible for transporting the goods from the seller's location to the destination. This means the buyer must arrange their own transport, routes, and carriers, bearing the corresponding expenses. For instance, in a case in 2025, a Chinese importer signed an EXW contract with a European supplier. Due to the buyer’s failure to plan the transportation method in advance, the goods were stranded at the port, incurring additional storage fees and missing out on the optimal market sales timing. Buyers should formulate a detailed transportation plan as early as possible and cooperate with reliable logistics companies to avoid similar problems.

Secondly, the risk of export clearance deserves equal attention. Although the seller is not required to handle export procedures, the buyer must ensure the goods pass smoothly through the customs inspection of the exporting country. This includes preparing necessary documents such as commercial invoices and packing lists and paying relevant taxes. According to data from the World Customs Organization, approximately 30% of goods are held up at the export stage due to incomplete documentation or incorrect declarations in some countries. Buyers should familiarize themselves with the laws and regulations of the exporting country and seek help from professional agents to complete the customs clearance process.

Thirdly, the issue of quality inspection of goods should not be underestimated. Under EXW conditions, the seller only needs to deliver the goods according to the agreed standards, while the buyer must inspect the goods at the seller's premises. If the buyer fails to promptly detect quality issues, they may face hidden dangers during subsequent use. Therefore, the buyer should carefully verify specifications, models, quantities, and appearance conditions when receiving the goods and retain relevant evidence. It is also recommended to include clear quality assurance clauses in the contract to have grounds to rely on in case of disputes.

Fourthly, the division of insurance responsibilities should also be noted. Typically, under EXW conditions, the buyer is responsible for insuring the goods once they leave the seller's premises. However, many buyers often overlook this detail until accidents occur, realizing the heavy losses incurred. Statistics show that annually, millions of dollars in economic losses result from inadequate insurance coverage. Buyers should choose appropriate insurance products based on actual circumstances and confirm that the insurance scope covers the entire transportation process until final delivery.

Finally, financial pressure caused by exchange rate fluctuations should not be ignored either. Since international trade involves settlements between different currencies, exchange rate fluctuations may directly affect the buyer's actual procurement costs. Especially in today's complex and ever-changing global economic situation, frequent adjustments of interest rate policies by central banks make the foreign exchange market more volatile. To mitigate such risks, buyers can consider using forward foreign exchange settlement services to lock in future exchange rates or avoid uncertainty by signing fixed exchange rate clauses.

In conclusion, when conducting transactions using the EXW term, buyers must fully recognize the above five major risks and take corresponding measures to prevent them. Only then can they effectively protect their own interests and successfully complete cross-border procurement activities.