EXW Incoterm (Ex Works) - Use and Meaning | iContainers (2024)

FAQs

EXW Incoterm (Ex Works) - Use and Meaning | iContainers? ›

When using EXW Incoterm, or Ex Works, the seller is obliged to prepare the goods for collection at his premises (office, warehouse, factory, etc.) to be picked up by the buyer. It is a versatile Incoterm and can be used regardless of the mode of transport chosen.

Incoterms. When goods are bought or sold "Ex Works" (EXW) it means that the Seller is making the goods available at their factory or warehouse. The buyer is then free to come and pick up the goods. Ex Works places full responsibility for cost and risk with the buyer, as the buyer has to arrange everything.

Key Takeaways. Ex Works (EXW) is a shipping arrangement in which a seller makes a product available at a specific location, but the buyer has to pay the transport costs.

EXW, short for “Ex Works,” places most responsibility with the buyer. The seller is expected to have the goods ready for collection at the agreed place of delivery (commonly the seller's factory, mill, plant or warehouse).

For example, businesses who routinely purchase from one country can take advantage of EXW if they plan to consolidate products from multiple suppliers and consolidate the products together. In this instance, EXW is ideal, as it allows the buyer to export the cargo as a single export.

Ex Works assigns the buyer with the risk for loss and damage to the goods during loading. Though the seller normally loads the merchandise as common procedure, under Ex Works, it is the buyer who's at risk if the goods are damaged during loading. At first, this scenario may seem preferable from the seller's standpoint.

Incoterms EXW: Frequently Asked Questions (FAQs)

The seller's responsibility ends once the products are made available for pickup at their premises. The buyer must handle all aspects of loading, transportation, and any associated costs and risks from that point onward.

EXW stands for Ex Works and is one of the 11 Incoterms® rules. It places minimum responsibility on the seller, who makes the goods available at a location, usually the seller's premises or another named place such as a factory or warehouse. The seller does not need to load goods or clear them for export.

Supplier Relationships: If you have a strong, established relationship with your supplier and trust their handling of the goods, you may be more inclined to choose EXW. FOB can be a better option if you are less certain about the supplier's capabilities.

To sellers EXW's advantage is obvious, that they only cover the minimum scope of responsibilities and costs. To buyers, the EXW agreement can also bring benefits. As the shipping costs and responsibilities are on the buyers' side, they can control the entire shipping process to ensure the products are safe.

Can a shipper benefit more from EXW? ›

EXW can benefit sellers, because they have minimum obligations in the transaction and therefore take on less risk. In some cases, EXW can also serve buyers by helping them save money on shipping costs, since they can shop around for a logistics provider.

One of the main advantages of using EXW for exporters is that it is the simplest and most flexible Incoterm. It allows the seller to avoid any involvement in the export formalities, customs clearance, or transportation arrangements.

The ex-works price includes the value of all the materials used and all other costs related to its production, minus any internal taxes, which are, or may be, repaid when the product obtained is exported.

What Is EXW? EXW (Ex Works) is an incoterm that only requires the seller to make the goods available for pickup by the buyer at the seller's premises or another named location. The buyer is responsible for export clearance, loading the goods at the named location, and bearing all cost and risk to the destination.

In an ExWorks arrangement, the seller is responsible for: Providing the goods or freight. Helping with key documents like commercial invoice, bill of lading or air waybill, export license, and certificate of origin.

EXW is more suited to domestic transactions rather than international transactions. In domestic transactions, the seller has no obligations as there are not likely to be any clearances required. In international transactions under EXW, the seller has no obligation to arrange any export/transit/import clearances.

EXW stands for Ex Works, an Incoterm whereby the buyer of a shipped product pays for the goods when they are delivered to a specified location. FOB, or Free on Board, instead shifts the responsibility of the goods to the buyer as soon as they are loaded onboard the ship.

Under Ex Works (EXW), the buyer pays for all aspects of the shipping process. This includes loading charges, delivery to port, export duties and taxes, origin terminal charges, loading on carriage, carriage charges, destination terminal charges, delivery to destination, and import duty and taxes.

With EXW, the seller has minimal obligations beyond making the goods available at their premises. In contrast, FCA requires the seller to arrange for transportation and ensure the goods are ready for collection by the carrier.