Global trade is complicated—especially in these uncertain times—so drafting an export contract with clear pricing and defined responsibilities is essential to avoid costly mistakes. 

To simplify the process, the international trade community relies on Incoterms—11 standardized rules that help facilitate global trade. Published by the International Chamber of Commerce (ICC), these terms identify who (seller or buyer) is responsible for the costs, delivery and risks of shipping goods.

“Each three-letter abbreviated term carries 10 categories of obligations on the part of the seller (exporter) and buyer (importer)—those obligations are very detailed,” says Lora Rigutto Vigliatore, Partnerships and Community lead at the Forum for International Trade Training (FITT) with more than 20 years of experience in global business.

“The detailed definition of when delivery takes place is a fundamental component of each Incoterm. That is when risk transfers from seller to buyer,” she says.

Incoterms apply primarily to:

• Costs: Who’s responsible for the expenses associated with a shipment during transportation? These include packing, export logistics and in some cases, customs duties.
• Liability: Who’s responsible for the delivery obligations?

Incoterms are widely used by exporters and importers in their sales contracts, purchase orders and other international export documents because they’re accepted globally. Understanding the proper way to use Incoterms is key to protecting yourself from international trade risks.

“In order to be successful in this changing trade landscape with tight margins and increasing costs of tariffs and other administrative charges, you must pay attention to the nuances within the Incoterms,” warns Rigutto Vigliatore, who is a Certified International Trade Professional (CITP) with the Forum for International Trade Training (FITT).

“Ultimately, using the wrong Incoterm when exporting—one that’s not cost-effective for your organization—can result in delivery costs to the target market exceeding your profit margin, making such transactions unsustainable,” she says.

In September 2019, the ICC published Incoterms 2020, which came into effect on Jan. 1, 2020. For each Incoterm, the seller and buyer have specific obligations. As an exporter, you need to understand these in detail. While the ICC offers a brief overview on its website, we’ll take a closer look, starting with one of the simplest Incoterms for an exporter to use.

Ex Works, or EXW, places minimal responsibility on the seller, other than having to make their goods available to the buyer on a specific time and date and at an agreed-upon location. This is when “delivery” happens—usually at the exporter’s warehouse, factory, or distribution centre. The seller doesn’t have to load the goods or clear them at customs.

This helps reduce the exporter’s costs, but requires very clear communication between the buyer and seller to avoid delays at the cargo pickup. It’s also essential to include all the detailed information in the sales contract.

After securing an international sales contract, a critical step is to co-ordinate logistics. With Ex Works, the buyer is responsible for all aspects of the shipping process, including loading charges, delivery fees, export duties and import taxes.

The seller covers all costs associated with packaging the goods for transport. The seller must also make all relevant export documents, including export permits, available to the buyer, who then pays any costs associated with this paperwork, including the common pre-shipment inspection.

Once the goods have been made available and delivered—meaning the cargo is ready for pickup—the buyer must provide the seller with appropriate evidence that they’ve been received. At this point, the buyer is responsible for all risks of loss or damage to the goods. 

It’s also up to the buyer to arrange for the goods to be loaded and transported from the location specified by the seller and pay any associated costs. Usually, buyers will use a freight forwarder to arrange for pickup and delivery.

EDC InList from Export Development Canada (EDC) is an online tool that helps match Canadian companies with vetted freight forwarders and logistics providers.

Example 1: In the contract, the seller specifies that their goods will be available for pickup at their warehouse on June 6 at 3 p.m. The seller must also notify the buyer of this information, so the buyer knows when they can take delivery of the goods and can communicate this date and time to their freight forwarder or transport company. This is highlighted under the “A2/B2” Delivery/Taking Delivery obligations outlined in the official ICC Incoterm rules, which should always be reviewed when drafting your international contracts.

Example 2: A Canadian exporter of wheat states the place of delivery in the sales contract as “EXW Carman, Manitoba Incoterms 2020.” The American importer is given notice by the Canadian exporter that the shipment under their contract of sale will be available for pickup at the exporter’s warehouse in Manitoba, loading bay No. 1, between 4 and 5 p.m. on Jan. 15, 2026. This information is acknowledged by the U.S. buyer’s logistics co-ordinator in an email. 

On the date of the scheduled pickup, the seller delivered the goods in front of loading bay No. 1 at their warehouse at 4 p.m. But when the buyer arrived on Jan. 16, 2026 at 1:45 p.m., they couldn’t access the specified loading bay because the fire department was onsite putting out a truck fire. The truck was delivering flammable gas tanks for the forklifts in the exporter’s warehouse. The cargo the buyer was there to pick up was destroyed because it had been sitting in the loading bay since the previous day. 

Should the buyer be concerned about the loss? Yes. This is the buyer’s loss because the exporter fulfilled his obligation when the goods were left for the buyer at the seller’s warehouse on the date and time communicated.

• Confirm buyer’s logistics capability
• Provide detailed pickup instructions and deadlines
• Ensure export packaging meets international transport standards
• Document proper delivery evidence for compliance and payment
• One of the main differences between EXW and FCA (free carrier rule) is that the seller isn’t responsible for loading goods onto the buyer’s carrier.

For more specific details, review the official Incoterms rule book for EXW for the obligations under A2 Delivery and the buyer’s obligations under B2. 

For more information about Incoterms, visit EDC’s Export Help Hub.