EXW vs FCA: Which Incoterm Should You Use?

EXW (Ex Works) and FCA (Free Carrier) are the two "seller does the least" Incoterms - but the small step from EXW to FCA changes who clears the goods for export, who bears loading risk, and whether the seller can produce the export evidence their tax authority will ask for. The ICC has repeatedly recommended FCA over EXW for cross-border trade, and for containers it is one of the two rules (with CIP) they actively endorse.

Where the goods change hands

Under EXW, the seller only has to make the goods available at their own premises - loaded on nothing, cleared for nothing. The buyer collects, loads, and handles export formalities. Under FCA, the seller delivers either at their own premises (loaded onto the buyer's collecting vehicle) or at a named terminal (unloaded from the seller's vehicle and ready for the carrier).

Export clearance - the deciding factor

This is where EXW breaks down in practice:

• EXW - buyer is the exporter of record. In the EU, UK and most jurisdictions the buyer needs local standing to lodge an export declaration - a non-resident buyer often cannot, which leaves the seller doing it "off the books" and unable to zero-rate VAT properly.
• FCA - seller handles export clearance and receives the export-stamped evidence needed to zero-rate the sale for VAT/GST.

For any cross-border transaction with a foreign buyer, this alone is usually enough to prefer FCA.

Loading risk at seller's premises

Under EXW, if the buyer's truck driver injures themselves or damages the goods while loading at the seller's warehouse, the loss sits with the buyer - but the incident happens on the seller's property, which creates messy liability arguments. FCA at seller's premises makes loading the seller's obligation and risk, which matches physical control: the seller's forklift, the seller's staff, the seller's insurance.

FCA and the on-board bill of lading problem

A longstanding issue with FCA for container cargo was that letters of credit typically demand an on-board bill of lading, but under FCA risk passes at the terminal - before the vessel loads. Incoterms 2020 added an optional provision (A6/B6) allowing the parties to agree that the carrier will issue the seller an on-board B/L after loading, so the seller can present it under the LC. If you are using FCA under an LC, write this into the sales contract explicitly.

Customs valuation impact

Both EXW and FCA are ex-origin prices - the customs value in CIF-based jurisdictions (EU, UK, India, GCC) is built up by adding freight and insurance. The practical difference is that FCA invoices usually already include inland haulage to the named terminal, so the "add-ons" the buyer has to declare are smaller and easier to evidence.

When EXW is still defensible

Domestic sales where the buyer is a local company with their own export team; ex-showroom or ex-factory pickups where no border is crossed; and situations where the buyer explicitly wants full control from the seller's gate onward and has the legal standing to file the export entry.

Which should you use?

For containerised or cross-border sales, use FCA. It gives the seller export clearance (and clean VAT treatment), clarifies loading risk, and - with the Incoterms 2020 on-board addendum - is compatible with a letter of credit. EXW should be reserved for domestic transactions or unusual arrangements where the buyer really is the exporter.

Run your specific case through the Incoterms Selector Wizard - it asks eight questions and returns the ICC-recommended rule for your mode, LC status and control preference. Then cross-check obligations with the Incoterms Visualiser.