Incoterms EXW vs. FCA – a comparison

If the EXW clause is agreed, the seller only makes the goods available for collection at the designated location (e.g. the loading ramp at the seller’s company headquarters). It is not responsible for the organization of transport, export clearance, or loading the goods onto the transport vehicle.

Practical challenges of EXW

Although the seller is not obliged to load the goods according to Incoterms 2020, sellers often take on this task – whether out of a willingness to help or due to a lack of suitable alternatives. If damage occurs, however, the buyer is liable, as the transfer of risk has already taken place before the loading process. This in turn can lead to unpleasant disputes between the two parties.

In addition, in many cases the seller handles the customs export declaration, as the seller needs the electronic proof of export (electronic assessment decision) as proof of the VAT-exempt export shipment. Often, the foreign buyer is not even in a position to complete the necessary customs formalities themselves.

FCA (Free Carrier) – an alternative to EXW

Under the FCA clause, the seller hands over the goods cleared for export (export declaration) at the designated location. Again, the seller does not organize transport, but the transfer of risk only takes place when the goods are loaded onto the transport vehicle.

On request, the seller can arrange transport and conclude a transport contract at the buyer’s expense and risk.

Conclusion

The EXW clause is limited in its suitability for cross-border deliveries, as it often leads to confusion and additional risk in practice. Therefore, in many cases the FCA clause is the better choice as it provides clear rules for both sellers and buyers. Indeed, even where EXW has been formally agreed, the terms of FCA are often applied in practice.