The aim of this guide is to provide insight for any individual or business who wants to arrange a shipping method through the Ex Works Incoterm. Read on and learn more about this international trade mechanism.
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Ex Works Meaning
Ex Works, commonly abbreviated as EXW, is a term used in international trade. Specifically, it refers to a situation where a seller has a product listed on a given location, and the buyer of that said product should handle the transportation cost.
Ex Works Incoterms 2010
Ex-works is among the eleven existing Incoterms.. The International Chamber of Commerce (ICC) is the one that published all of the present Incoterms.
There are specific changes implemented in the 2022 Incoterms. Compared to the Incoterms 2010, the Incoterms 2022 addresses a number of issues, such as improved security requirements, streamlined procedures for cost allocation, and clarity on insurance matters.
Ex Works Basis: When To Use
Many businesses today prefer to use an EXW agreement if they need products from sellers, but the latter doesn’t have the capability to export due to various justifiable reasons. Another situation where Ex Works is being used is when the buyer intends to integrate numerous shipments for exportation, but these shipments are under a single name.
How Does It Work?
As a type of contract, Ex Works is actually more suitable for the sellers than the buyer. In this setup, the seller only has to package and label the products properly, as well as deliver the goods to the indicated location (i.e., ports).
EXW contract has to assist the buyer in acquiring export documents and other related paperwork. However, it is the buyer that pays for these fees and other essential expenses for the export.
EXW Shipping Point
The shipping point for an Ex Works setup is determined by the seller and buyer. The transaction won’t take place unless the involved parties have designated a shipping point.
EXW Conditions
Several conditions are set for Ex Works. At its core, the seller establishes the fact that it is not capable of shipping its products. So the buyer has to shoulder the shipping process with minimal assistance from the seller.
- Sellers handle the packaging, labeling, and delivery of products to a designated pick-up point
- Buyers are responsible for the loading and transportation of goods
- Both the seller and buyer have shared responsibility for license processing and other paperwork
Applicable Transport Options
The following are the suitable transport options for EXW Incoterms:
- Air freight/air express
- Sea Freight
- Land-based transport / door-to-door deliveries
EXW Shipping: Is It Worthy?
Before businesses enter into an EXW contract, it is necessary that they understand its advantages and disadvantages.
Pros:
- Sellers have minimal responsibility when it comes to the legwork and cost of product shipping
- Sellers can’t charge expensive shipping fees
- Buyers have greater control over the shipping products, which guarantees the safety of the goods
- Buyers gains insight into the potential shipping cost
- EXW is profitable for local transportation and deliveries
Cons:
- Certain countries have rigid custom requirements that make it difficult to opt for EXW Incoterms
- Buyers encounter difficulties in customs clearance, especially if the information given by the seller is inaccurate
- Buyers have to handle the majority of the shipping and inspection costs
- Buyers are responsible for processing the export license of sellers
- Buyers must look for freight forwarding companies that provide a door-to-door delivery and support customs clearance services
Ex Works Incoterms Examples
Image Source: Shippo
Ex Works happen when there’s an agreement between the seller and the buyer to enter into this setup. For instance, a manufacturer of certain goods can’t ship its products. The buyer would then shoulder this responsibility.
EXW Meaning In Shipping
Overall, EXW in shipping means that a buyer agrees to handle the majority of the logistical costs of transporting the goods of a seller. With this Incoterms setup, the seller is only responsible for ensuring that its products are properly packaged and delivered to a designated pick-up point.
Since the buyer handles the shipping costs, it is capable of choosing the ideal freight forwarder. Here, it can negotiate the shipping price. It can also oversee the shipment and ensure that the products will be delivered safely.
EX Works Factory
Ex Works Responsibilities
Buyer:
- The buyer doesn’t have any responsibilities at this point of the process; it is not involved in the product packaging and handling until the goods reached their pick-up point
Seller:
- Package and label its products
- Deliver them to the designated pick-up points
- Provide correct and accurate information to the buyer for seamless customs regulation
Ex Works Charges And Prices
Buyer
- Processing costs for export licenses (if the seller doesn’t have this one)
- Costs related to the product handling
Seller:
- Cost of packaging and labeling of its products
- Cost of product handling until it will be delivered in its pick-up point
Ex Works Warehouse
Ex Works Responsibilities
Buyer:
- Check the products are properly stored and loaded
- Assess if the documentation requirements provided by the seller are accurate
- Coordinate with the warehouse manager and owner
Seller:
- Deliver the products to the warehouse with the guarantee that the goods are properly packaged and no visible damages
Ex Works Charges and Prices
Buyer:
- Costs of warehouse storage and handling
- Potential costs if the goods have been stored in the warehouse for periods beyond the contract
Seller
- Potential costs of sending the essential documents and information of the products to the buyer
Ex Works Insurance
Ex Works Responsibilities
Buyer
- The buyer handles the insurance for exported products and goods
- Buyers are required to acquire insurance (even if it is optional in some cases) to cover accidental damages
Seller
- The seller doesn’t have any obligations for acquiring insurance for the goods it provides to its buyer
Ex Works Charges and Prices
Buyer
- Cost of insurance
Seller
- The seller doesn’t have to pay for insurance fees and coverage
Ex Works Insurance
Ex Works Responsibilities
Buyer
- The buyer ensures that the packaging of the products meets export criteria and specifications
- The buyer requires the seller to use appropriate packaging for streamlined costing
Seller
- The seller handles the packaging of its products; this is among the key responsibilities
Ex Works Charges and Prices
Buyer
- The buyer handles the costs of additional packaging, if it is required by the freight forwarder and shipping company
Seller
- The seller handles the total cost of product packaging (before it will be delivered and picked-up for export)
Ex Works Delivery Terms
Ex Works Responsibilities
Buyer
- Secure the service of a reputable freight forwarding company for a secure and timely product delivery
- Ensure that the freight forwarder provides the ideal delivery terms and services
- Secure the necessary documents for customs regulations and inspections
Seller
- The seller has to load and deliver the products to their designated pick-up point
Ex Works Charges And Prices
Buyer
- Shoulder the costs of freight forwarding services
- Handle other expenses required for shipping the goods
- Ensure the payment of fees for customs clearance and export license
Seller
- Logistical costs of delivering the products to their designated pick-up point
EXW Customs Clearance
Ex Works Responsibilities
Buyer
- Ensure that the documents required by the customs are met
- Guarantee that the information provided by the seller is accurate
- Handle all the essential paperwork for in-bound and out-bound deliveries
Seller
- Compile the necessary documents and information for its products and submit it to the buyer
EXW Charges And Prices
Buyer
- Pay for the required customs fees
Seller
- The seller has no liability when it comes to paying for customs fees
EXW Export
Ex Works Responsibilities
Buyer
- Acquire a reputable freight forwarder that would pick up the goods declared on the warehouse
- Secure and compile the necessary export documents
Seller
- Ensure that the goods are delivered or available in the warehouse or factory for pick-up
- Guarantee that the items are in good condition, properly packaged, and correctly labeled
- Give the essential item information to the buyer
EXW Charges And Prices
Buyer
- Pay for the possible storage and warehouse fees
- Shoulder the expense of freight forwarder services that would handle the pick-up, shipping, and delivery of the products
Seller
- The seller has no liability for any export fees
EXW Freight
Ex Works Responsibilities
Buyer
- Get a trustworthy freight forwarding company that would manage the pick-up and shipping of the goods
- Provide the essential documents that the freight forwarder require
- Monitor the shipment of goods, from its pick-up point to its delivery
Seller
- Sellers have no obligations for freight and other logistical services
EXW Charges And Prices
Buyer
- Fulfill its financial obligations to the freight forwarder
- Negotiate with the freight forwarder for more streamlined fees and economically viable shipping options
Seller
- Sellers have no obligations for freight and other logistical services
EXW Import
Ex Works Responsibilities
Buyer
- Ensure that the importation of goods can pass customs clearance and inspection
- Secure a freight forwarder that has extensive experience in international shipping
- Provide the necessary documents and paperwork for importing goods
Seller
- Coordinate with the buyer when essential seller and product information are required by customs
EXW Charges And Prices
Buyer
- Pay the services of the freight forwarding company
- Shoulder any related customs fees–including potential penalties that may arise
Seller
- Sellers have no financial obligations for the importation of their goods
Common FAQs On EXW Works
What Is EXW Shipping On Alibaba?
Alibaba offers numerous shipping routes and modes of transport to perform and fulfill EX Works transactions. It provides complete EXW China coverage so that exporters from the country can ship their products locally and internationally through various pick-up points.
Notably, Alibaba merchants often bid for EXW Shenzhen and EXW Guangzhou contracts because of the extensive numbers of ports and freight forwarders in these areas. Zggship is among the top freight forwarders in China that can fulfill EX Works transactions.
CIF vs. Ex Works
In a CIF contract, the seller handles all the transportation risks and costs until such time their products reach their intended port. Meanwhile, the importer shoulders the responsibility of customs clearance and unloading of the goods.
FOB vs EXW
Free on Board (FOB) is a type of trade transaction that obligates the seller to deliver its products to a particular pick-up point.
Ex Works vs. FCA
In a Free Carrier (FCA) delivery, the seller is required to transport its products to a particular carrier that has been chosen by the buyer. In this contract, both parties should have a clear consensus as to where the products would be transferred.
