What are the advantages and disadvantages of using EXW for exporters? (2024)

I never recommend using Ex Works for exports. There are countries that have restrictions or operational obstacles to the use of this trade term in exports. In addition, the exporter is unable to carry out efficient operation management due to not being responsible for customs clearance formalities at the origin, which makes it difficult to fulfill special regimes or apply for VAT refunds.

These AI-generated articles are riddled with errors!There are many so-called "experts" commenting, but the majority clearly have not even read the essential text, namely the ICC's Incoterms 2020 book. Check out the Linkedin profiles of each of them and judge for yourself whether they have any credibility before noting what they say.

Existem interpretações diferentes sobre o uso do EXW (Ex-Works) no Brasil, já que aqui a Receita Federal exige que o despacho aduaneiro seja realizado pelo exportador, com isso na minha opinião o EXW não pode ser utilizado como foi concebido. O exportador iniciante pensa em utilizá-lo para não precisar se preocupar com a questão logística nacional e internacional, que seria uma das principais vantagens. Nesse caso eu sempre sugiro o FCA (Free Carrier) na sua fábrica, que inclui o despacho pelo exportador, mas deixa a responsabilidade do transporte interno até o embarque e a logística internacional pelo importador. O que acham?

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Personally, I would recommend that exporters use EXW with caution. It is important to weigh the advantages and disadvantages carefully before making a decision. If you do decide to use EXW, it is important to make sure that you have a good relationship with your buyer and that you trust them to handle the transportation and delivery of the goods properly.

for the new exporter EXW is the payment terms which offers them least risk.it allows them to forget about the cost of transportation, Expenses at the port, insurance and so on a forth.Once goods are ready and leave sellers premises seller are free from responsibilities and can focus on core business.so if you don't know complex logistics and the charges and dynamic environment you can try and use EXW terms however you can take that as an opportunity to network with your buyer's trusted logistic partner to learn and adapt the things.This will help you in the future to offer FOB / CIF/ DDP payment terms to your buyers.Good luck

Le contact est fondamental entre l'importateur et le vendeur avec les termes d'EXW. Et dans ce cadre là, l'importateur a plus de d'avantages. Car le déplacement est un geste d'engagement et peut soutenir aussi des partenariats solides. En même temps il pourrait contrôler la qualité des produits et optimiser sur une démarche stratégique commerciale. Enfin leur choix est vice-versa chacun d'entre eux pourrais s'apprécier mutuellement pour prendre leur décision sur la prise de décision. Et le vendeur va définir son prix et les termes de paiement

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In my view, EXW (Ex Works) gives exporters great control and flexibility. Sellers can negotiate key details like price, payment, and delivery terms directly with buyers, without being bound by strict rules. This means they can tailor agreements to fit their needs and choose reliable buyers, reducing the risk of issues with transportation and delivery.

Advantages.Exporters can focus on their core business activities (production and quality control) without worrying about shipping and logistics. Exporters can better predict and control their costs, as they are not involved in transportation and other logistics.Disadvantages.Exporters have no control over how their goods are transported, which could impact the condition of the goods upon arrival. There is a risk that the buyer might not handle the goods properly, potentially leading to damage or loss.

You may have less responsibility for the export of goods.By choosing less responsibility, you are also losing control over the shipping process and comp-line.Choose wisely

Using EXW allows the buyer to have more control and choice over the shipping process, including selecting carriers, routes, and insurance. This can be advantageous for buyers with established logistics networks, but it also means the exporter relinquishes control over the goods once they are made available for pickup.

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Incoterms do not address title. In an EXW contract the risk transfers at the seller’s premises or at the agreed place before loading by the buyer, however, title transfer will depend on the contract and is typically linked to payment. Also, be aware that in quite some markets, EXW and FCA are misused, so as a seller, you might still be expected to load on the mode of transport provided to you by the buyer on your EXW sale.As to an inconvenient for the seller not mentioned yet: the buyer will control the transport and the associated costs, which will be priced in the sales contract with a margin. So as a seller, you could make a better deal by taking control of the costs of transport.

Your responsibility is over just by handing over the goods to the buyer.But, as an exporter, you are equally responsible for the compliance of your own country ( country of origin/export) i.e. w.r.t. to IndiaCompliance with - Foreign Trade Policy, Customs, FEMA, and RBI Rules.

L'Incoterm EXW (Ex Works) est en effet un choix populaire pour les exportateurs, car il limite leur risque et leur responsabilité lors de la transaction. En vertu de cette clause, une fois que les marchandises sont mises à la disposition de l'acheteur à l'emplacement convenu, la responsabilité et les risques associés aux marchandises sont transférés à l'acheteur. Cela signifie que le vendeur n'est pas tenu responsable des pertes, dommages ou retards qui pourraient survenir pendant le transport ou la livraison des marchandises. Cependant, il est important que les parties concernées comprennent clairement leurs obligations et responsabilités pour éviter tout malentendu lors de la transaction.

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Advantages.The risk of loss or damage transfers to the buyer as soon as the goods are available for pickup, reducing the exporter’s liability. Exporters do not need to insure the goods for transportation, potentially lowering costs.Disadvantages.If the buyer does not insure the goods adequately, it could lead to disputes and financial losses. Buyers may perceive the exporter as uncooperative if they are not willing to provide further logistical support.

A third advantage of using EXW (Ex Works) for exporters is that it significantly minimizes their risk and liability in the transaction. Under EXW terms, the seller's responsibility ends once the goods are made available at the agreed location, usually the seller's premises. From that point onward, ownership and risk transfer to the buyer. This means that the seller is not accountable for any loss, damage, or delay that might occur during transportation or delivery. Additionally, the seller is not liable for any taxes, duties, fees, or charges that could be imposed by authorities or third parties in either the exporting or importing country. By limiting their involvement to the initial stage of the transaction.

İOne disadvantage of using EXW is that it may limit market access. Buyers might be discouraged by the added responsibility of handling logistics, especially if they lack experience or resources. This could reduce the number of potential buyers, particularly in regions where logistics infrastructure is less developed or more challenging to navigate.

Advantages.Exporters can focus on local markets and leave international logistics to buyers with better resources and knowledge.Disadvantages.Relying on EXW can limit an exporter’s ability to reach international markets where buyers expect more comprehensive logistical support. Competitors offering more comprehensive terms might be more attractive to international buyers.

One of the main disadvantages of using EXW (Ex Works) for exporters is that it can limit their market access and competitiveness. EXW places significant responsibility on the buyer, requiring them to handle and pay for all export formalities, customs clearance, and transportation from the seller's premises to the final destination. This can be daunting for buyers, particularly those unfamiliar with the exporting country's regulations, procedures, or logistics. As a result, some buyers may be discouraged from purchasing under EXW terms, opting instead for sellers who offer more convenient and comprehensive Incoterms like FCA (Free Carrier), FOB (Free on Board), or CIF (Cost, Insurance, and Freight).

Another disadvantage of using EXW for exporters is that it can reduce their visibility and communication with the buyer and the intermediaries involved in the transaction. Under EXW terms, the seller's involvement ends once the goods are made available at the agreed location, leaving the buyer responsible for the subsequent steps in the export process. This separation can create a communication gap, as the seller may not be informed about the exact status, location, or condition of the goods once they leave the seller's premises. Additionally, the seller might not receive timely feedback, confirmation, or proof of delivery from the buyer or the carrier. This lack of visibility seller's ability to provide effective customer service!

Advantages.Less involvement in logistics means fewer touchpoints and less need for constant communication with the buyer.Disadvantages.Exporters have no visibility over the shipment once it leaves their premises, making it difficult to provide updates to buyers. Potential for miscommunication or lack of communication about the status of the shipment.

Under EXW terms, exporters have limited visibility and communication regarding the transportation of goods. Since the buyer manages the shipping process, the exporter might not receive timely updates on the shipment's status, leading to potential misunderstandings or difficulties in managing customer expectations.

A liberação alfandegária no Brasil do Incoterm Ex-Works é de responsabilidade do comprador, contudo para que o seu despachante possa fazer o desembaraço aduaneiro o vendedor deverá habilitá-lo perante as instituições governamentais (Siscomex). Potenciais riscos aos exportadores: 1) Responder legalmente como responsável pelas ações do despachante do comprador credenciado. 2) Permitir o acesso a todas as suas operações, seja de exportação ou importação (dependendo do tipo da habilitação concedida ao despachante do comprador). É necessário haver uma relação de extrema confiança entre os envolvidos.

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Advantages.Contracts under EXW terms are generally simpler and less detailed, focusing mainly on the availability of goods.Disadvantages.Lack of clarity about responsibilities beyond the point of delivery can lead to legal disputes if something goes wrong during transit. Different interpretations of EXW terms under various legal jurisdictions can lead to complications.

Generally speaking, from a purely customs and trade compliance management perspective, it is advisable to avoid the Ex-Works. Essentially, this creates obligations for an entity typically not established in the country of departure, leading to operational, fiscal, and documentary complexities (and this is by the way also true for the seller). Now, if within your company, Ex-Works is imposed (usually for tax or commercial reasons), it is crucial to assert forcefully and clearly that it is not a standard Incoterm, at least not recommended in best practices, and therefore requires extra preparation time or will lead to operational risks.

I completely agree. I tell my clients all the time that ex-works and DDP should be avoided because they cannot be executed correctly for international shipments. I also think the people drawing up contracts with these terms are only thinking about tax and legal factors. They do not understand what these terms obligate their company to do from a logistics and customs compliance perspective.

It is difficult to give a "one size fits all" answer. In the context of Europe's unified market for example, where trade regulations among EU member states are harmonized, opting for Ex Works (EXW) terms can be highly beneficial for businesses primarily operating within this region. EXW offers simplicity and transparency, allowing sellers to present clear product costs without additional logistics fees, and places responsibility for transportation and customs on the buyer, who may be better equipped to navigate the minimal trade barriers within the EU.