EXW Incoterms and the AWB Trap: A Recipe for Confusion?

Intro

In documentary credit practice, mismatches between Incoterms® rules and LC document requirements are a frequent source of confusion — and disputes.

One such classic mismatch arises when a credit issued under EXW Incoterms nevertheless requires the presentation of an air waybill (AWB).

Is this automatically wrong?

Or merely risky?

 A reader raised the issue bluntly — and rightly so.

Question

“The demand for an AWB under EXW Incoterms is a recipe for confusion.

The seller should not have accepted the L/C and should have requested amendment.”

— Pieter Muus

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Answer

Dear Pieter,

Thank you for your comment.

You are right that, under EXW Incoterms, the seller’s responsibility is strictly limited to making the goods available at their premises (factory, warehouse, etc.). From that point onward, all costs, risks, and responsibilities — including loading, carriage, export formalities, and transport documents — rest with the buyer.

From an Incoterms perspective, therefore, a letter of credit requiring presentation of an air waybill (AWB) under EXW is indeed unusual and often a recipe for confusion.

That said, real-life practice is sometimes less tidy than the textbook.

There are cases where, despite EXW being agreed, the buyer asks the seller to arrange air shipment on the buyer’s behalf, with freight prepaid or reimbursed later. In such situations, the seller is not acting under an EXW obligation, but rather as the buyer’s agent for transport. If the seller controls the shipment and can obtain an AWB consistent with the LC terms, the requirement may be workable from a documentary credit standpoint.

However, where the seller does not arrange or control the air shipment, an LC requirement for an AWB is clearly inconsistent with the EXW allocation of responsibilities. In such cases, the prudent course is exactly as you suggest:

the seller should not accept the credit as issued and should request an amendment to delete the AWB requirement.

In short:

• EXW + AWB is a red flag;
• It may work only if the seller agrees to step beyond EXW and act as the buyer’s agent;
• Otherwise, amendment is not optional — it is essential.

Best regards,

Mr. Old Man