Analyzing seller responsibilities under EXW A2, common practical issues, and why FCA might be a better alternative for shipping.

Intro

Under EXW (Ex Works) term A2, the seller is obligated to make the goods available at the agreed location, date, or time, but is not required to load them onto the transport vehicle.

What potential issues does this rule leave unaddressed?"

Potential problems

• The seller must permit the buyer’s or origin forwarder’s personnel to enter their facility to load the goods. While common in many countries, this is often not the preferred approach.
• Security concerns may arise due to personnel on-site who are not affiliated with the seller.
• The seller’s insurance may not cover the loading process if it is performed by a third party.

In Practice

Given the issues outlined above, it is common practice for the seller to load the goods into the transport vehicle or container. This allows the seller to use their own personnel and equipment, such as forklifts, to ensure safe and efficient loading.

• For FCL (Full Container Load) shipments, goods are loaded directly into a container.
• For LCL (Less than Container Load) shipments, goods are either loaded onto a transport vehicle or delivered by the seller to the agreed location, such as a Cargo Freight Station (CFS).

Documentation issues

A typical export shipment will require:

• Commercial Invoice
• Packing List
• Origin Certificate
• Export Clearance
• VGM declaration
• Booking request to the carrier
• Shipping Instructions to the carrier
• Bill of Lading

Under Incoterms EXW, the seller is only obligated to provide a Commercial Invoice and evidence of conformity, such as a trucker’s receipt for the goods. While a Packing List with weight is commonly required for export, it is not mandatory.

The seller is not required to obtain or arrange additional documents like an Origin Certificate, Export Clearance, VGM declaration, Booking Request, or Shipping Instructions. This can be challenging, as the origin booking agent typically requires confirmed shipping instructions from either the seller or buyer before issuing the Bill of Lading. Although the seller is not obligated to submit shipping instructions, they often contact the shipping line or forwarder to arrange a booking.

If the seller declines to confirm the shipping instructions and the buyer still opts to ship under EXW terms, it is advisable for the buyer to appoint an origin booking agent who will submit the instructions on the buyer’s behalf, ensuring correct Bill of Lading issuance.

Who arranges export customs? The buyer is responsible for handling export customs on behalf of the seller.

Conclusion

• EXW is often used primarily as a financial calculation point for the goods rather than as a practical Incoterm for shipping.
• A more suitable term for delivery purposes is FCA (Free Carrier) at the specified point of delivery where the seller is responsible to clear export customs, load the goods into the transportation vehicle and submit instructions to the origin booking agent (freight forwarder or shipping line)