EXW vs FCA: which Incoterm should your PO for machined parts from Vietnam use?

What is the difference between EXW and FCA?

The difference is export clearance, loading and the moment risk passes: under FCA the seller clears the parts for export and, at its own premises, loads them, while under EXW the buyer takes over unloaded, uncleared goods at the factory door. Everything after the handover, including the main carriage, cargo insurance and import clearance, is the buyer’s job under both rules.

Both rules belong to the group of seven Incoterms 2020 rules that work for any mode of transport, so either can be used for a carton sent by air, a pallet consolidated into a shared container, or a full container loaded at the plant. EXW places the minimum obligation on the seller. Beyond supplying goods that match the contract with a commercial invoice, packaging them, and making them available at the named place on the agreed date, the seller mainly owes the buyer help with information. The buyer arranges and pays for everything from that point, including the export formalities in the seller’s country.

FCA adds two things for the seller. It must complete export clearance, and it must deliver the goods to the carrier or other person the buyer nominates, either at the seller’s premises, where delivery happens once the goods are loaded onto the buyer’s vehicle, or at another named place, where delivery happens once the goods arrive on the seller’s vehicle ready for unloading. The International Chamber of Commerce, which publishes the rules, describes EXW in its Incoterms 2020 checklist as suitable primarily for domestic trade, and an ICC Academy article comparing EXW and FCA, written by an ICC Incoterms trainer and presented as the author’s own view, encourages traders to consider FCA instead when the goods cross a border. The Incoterms rule does not decide who owns the parts or when the invoice is due; the US International Trade Administration makes the same point, and both belong in the purchase contract.

Why should a buyer without a Vietnam entity avoid EXW?

Because EXW makes the buyer responsible for the Vietnamese export declaration, which a foreign company with no Vietnamese registration is rarely set up to file in its own name. In practice the filing is often made by a local broker using the factory’s name and records, so the contract can say one thing while the customs paperwork says another.

The Customs Law of Vietnam (No. 54/2014/QH13), in Article 4(14), lists customs declarants as goods owners, owners and operators of means of transport, customs brokers, and other persons the goods owner authorizes. A buyer in the United States, Canada, the United Kingdom or Australia with no Vietnamese subsidiary will in practice need a Vietnamese customs broker, usually through its forwarder, and that broker needs the commercial invoice, packing list, material data and often the exporter details of the factory itself. The seller is drawn into the export filing after all, but under EXW it has no contractual duty beyond providing information at your request, risk and cost.

The ICC flags the same gap. Its 2025 note on national regulatory barriers to the Incoterms 2020 rules repeats the ICC Secretariat’s guidance that a buyer who plans to export the goods and expects trouble getting them cleared should prefer FCA, which puts export clearance and its cost on the seller. There is a commercial reason on the seller’s side too. Vietnam’s Law on Value-Added Tax (No. 48/2024/QH15) applies the 0% rate in Article 9 to goods sold from Vietnam to organizations and individuals abroad and consumed outside Vietnam, and Article 14 lists a customs declaration for the exported goods among the records the seller needs to credit input VAT on them. A factory that controls its own export filing under FCA has that evidence in its own files, and the shipment it hands to your forwarder is already cleared.

The result for a buyer is simpler accountability. Under FCA, if the export declaration is late, wrong or held for inspection, the party that holds the goods, the records and the local registration is also the party the contract makes responsible.

Should the FCA named place be the factory or the forwarder’s warehouse?

Name the factory when your forwarder sends a truck or container to collect, and name the forwarder’s warehouse or container freight station when the seller will deliver there. Either works, as long as the named place is a full address that matches where the handover really happens.

FCA at the seller’s premises suits a full container loaded and sealed at the plant, or a regular pickup by the same forwarder. Risk passes earliest, at the factory dock, so your cargo insurance has to start there, and the seller has to be able to load the vehicle you send. Ask before booking whether the plant can load a container from the dock or needs a side-loader or flatbed.

FCA at a named warehouse suits shared-container shipments, which is how many orders of machined parts travel. The seller trucks the cleared cargo to the warehouse, risk stays with the seller on the road, and your forwarder’s staff unload and receive it. The weak point is the receiving record. Ask the forwarder to note the carton count and any visible damage on arrival, because that note is the evidence of what condition the goods were in when risk passed.

If your bank or your internal process requires an on-board bill of lading for a sea shipment, FCA can still provide one. The ICC’s summary of the Incoterms 2020 changes describes the 2020 change to FCA articles A6/B6: the parties may agree that, once the goods are loaded, the buyer’s carrier gives the seller a bill of lading with an on-board notation, and the seller hands that document on to the buyer, often through the banks. Write that option into the PO if you need it; it does not apply unless agreed.

How should the purchase order word the delivery term?

Write the rule, the full named place and the edition, for example “FCA [seller’s street address], Vietnam, Incoterms 2020”, and add one line on who books the carrier. Do not write “EXW Vietnam” or a city name alone, because a country or city is not a delivery point.

• Factory handover: “FCA [seller’s factory street address], Vietnam, Incoterms 2020. Seller loads onto the buyer’s nominated carrier and completes Vietnamese export clearance. Carrier: [forwarder name and contact].”
• Warehouse handover: “FCA [forwarder warehouse or container freight station name and street address], Vietnam, Incoterms 2020. Seller delivers export-cleared goods on its own vehicle, ready for unloading.”
• If you need it: “Per FCA A6/B6, buyer’s carrier will issue a bill of lading with an on-board notation to seller after loading.”
• Outside the rule: title transfer, invoicing and any packing or labeling requirements go in their own PO clauses, since no Incoterms rule covers them.

Naming the edition matters because older editions are still in use and the parties may choose any of them; the ICC rules apply only when the contract incorporates them. When we review a PO for CNC turning or CNC milling work, we check that the delivery term on the PO matches the one in our written quote, that the named place is an address, and that the forwarder contact is there so export documents can be prepared before the parts are packed. To get both priced on the same basis, send your drawings for a quote and name the delivery term you want; the terms available for your part are confirmed in the written quote.