WHEN EXW MEETS BILL OF LADING: A LOVE STORY THAT SHOULDN’T EXIST (BUT SOMETIMES DOES)

QUESTION

Dear Mr. Old Man,

I’ve come across a bit of a puzzler:

The LC I’m handling shows the goods are sold on EXW (Ex Works) terms, yet it also calls for presentation of a Bill of Lading (BL).

From what I understand, under EXW, the seller’s responsibility stops at their own doorstep—they’re not even obliged to load the goods. So how can the LC require a BL?

Also, what if the shipper on the BL is a third party?

Wouldn’t it make more sense under EXW for the LC to ask for a buyer’s acknowledgment or receipt of goods instead?

Appreciate your expert insight.

Best regards,

Ms. Woo

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ANSWER

Hi Ms. Woo,

Great questions—classic case of theory vs. reality. Let’s tackle them one by one:

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1. LC uses EXW but demands a Bill of Lading?

You’re absolutely right in your understanding. Under EXW, the seller’s job is simple: open the factory gates and wave goodbye. The buyer takes care of everything else—including loading the goods and arranging transport. So, strictly speaking, asking for a BL under EXW makes no sense.

BUT (and it’s a big “but”)…

In the real world, sellers sometimes go the extra mile and help the buyer arrange transport—even under EXW. Of course, this is done at the buyer’s expense, and purely as a service.

So if the seller arranges shipment (again, as a courtesy) and gets a BL issued, then yes, they can present it under the LC, even if the sale term is EXW. It’s not ideal, but it happens.

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2. Can the shipper be a third party other than the beneficiary?

Yes. According to UCP 600 sub-article 14 (k), the shipper or consignor indicated on any document does not need to be the beneficiary. So, the shipper on the bill of lading can be a freight forwarder, a shipping agent, or any other third party involved in logistics.

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3. Should EXW sales ask for a cargo receipt instead of a BL?

That would actually make much more sense. If you’re dealing with a pure EXW sale and the seller is truly only handing over goods at their premises, then an acknowledgment from the buyer (or their agent) would be more appropriate than a BL.

But again, reality isn’t always textbook. If the LC demands a BL and everyone’s okay with the seller arranging shipment, it’s possible to work around it—as long as the documents match the terms.

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Bottom line:

EXW and BL don’t naturally go together. It’s like ordering instant noodles and getting a full-course meal. But with clear communication and a bit of practical flexibility, it can work.

Hope that clears things up!

Warm regards,

Mr. Old Man