Ex-works incoterms: what exw means and pricing [UPDATED 2022]
EXW Incoterms are one of the most commonly used terms in international shipping. EXW stands for “Ex Works,” which means that the seller delivers the goods to their warehouse and is responsible for loading them onto the buyer’s truck. This can be a great option for sellers who want to keep their costs down, as they are not responsible for transportation beyond delivering the goods to their warehouse. In this blog post, we will discuss EXW Incoterms in more detail and provide pricing examples so you can understand how this term works.
Ex Works EXW – Incoterms® 2020 Rules
The Ex Works (EXW) term translates to delivering goods to the appropriate name at the company’s location of operation, typically in a plant or in a warehouse.
Ex-works Incoterm: an introduction
Ex Works (EXW), a rule from Incoterms ® 2020, describes the shipment of goods from the seller at their business place normally at their plant, office, or storage. Initially, the buyer does not have to load the goods into trucks, and the shipments rest on the responsibility of the buyer. EXW also helps sellers because it doesn’t require freight until they leave their premises.
Advantages and Disadvantages for the Buyer
Advantage: For some conditions, EXW can offer the most practical method when shipping a product. Similarly, companies that buy in a certain country can use EXW when they want to combine products from different manufacturers. EXW in the current context is ideal, allowing buyers to export the goods for ONE export. A third advantage is that the buyer is able to conceal what the supplier of the product is. These ships can use the same EXW incoterm, or the exporter can also have corresponding names on the shipping document. If compared the cost of purchasing a particular product, EXW is usually cheaper than most other.
Disadvantage: The disadvantage of using EXW is that the buyer has to shoulder almost all the responsibilities and risks involved in shipping the goods. These include arranging for transportation, insurance, and import/export clearance. If the product is damaged during transit, the buyer will also have to file a claim with their chosen carrier. In most cases, the buyer will have to hire a freight forwarder to take care of all the details involved in shipping the goods. This can add significant cost to the overall price of the product. Another disadvantage is that buyers have no control over how the seller packs and loads the goods onto their truck. This can lead to damage or even loss of goods during transit. Finally, if the buyer is not familiar with import/export regulations, they may have to hire a consultant to help them with the paperwork. This can further add to the cost of the product.
The buyer’s role in EXW is that they must take delivery when the seller has made the goods available and has given their notice of this under A10. This usually will be when the goods are simply sitting on the seller’s premises and may well be before the buyer’s collecting vehicle arrives at the seller’s premises.
From the seller’s standpoint, EXW may not be a good choice if a letter of credit is involved. Because the freight forwarder follows instructions from the buyer, the seller may run into trouble satisfying the letter of credit. When using EXW, the seller may want to consider slight changes to the terms and conditions. For example: “If the buyer does not retrieve the goods within ‘x’ days of notification of their unsure of the process or costs involved in exporting a product, EXW could result in the buyer having to pay more than what they originally intended to pay. If your supplier is only willing to sell their products under EXW incoterms, your best option is to look for a 3rd party logistics company or freight forwarder who can assist you with the export. For example, if you are exporting from China, we can assist by nominating an entity to act as the exporter on your behalf. Under certain circumstances, our company can serve as an exporter to handle the export.
When should I use an EXW agreement?
Many businesses are choosing to use EW agreements when the seller cannot export or the buyer wishes to combine multiple shipments and export the goods under a single name. Another case where the buyer might prefer EXW is shipments by Air Express. Express courier companies usually collect goods from the destination of sellers and include every necessary transport and export formalities. So the buyer shipping goods via expedited shipping could make more money by changing their terms to the EXW. Some importers may establish offices in their countries to help them process their shipments in a less costly way.
Ex Works Responsibilities and Risks
Under the Incoterm 2020 rules, Exw indicates that the buyer is fulfilling his obligations when the product is delivered by the Seller normally at his or her location. The vendor must pack the items in the correct order. The purchaser is responsible for loading up and carrying all the goods to the destination and it must be done at a later time. Upon the delivery of goods, the risks or damages for the goods are transferred between the purchaser and the seller. The seller may assist the purchaser in handling a product when damage occurs during its transport.
Ex Works and Routed Export Transactions
While the U.S. Foreign Trade Regulations do not mention Incoterms and the new Incoterms 2020 rule does NOT address any specific country’s trade regulations, Ex Works is commonly utilized when making exports through routed routes. A routed export transaction occurs when the foreign buyer of the product contracts with a shipping agency or other agency for the export of the product to the U.S. This is a collaboration with incoterm EXW but could have other meanings including FCA (Freecarrier). Most American sellers use EXW for their risk reduction.
What do EX Works (EXW) mean in shipping terms?
The EXWork IncoTerm is an agreement where a vendor must make the goods available to a buyer in its warehouse or ship to maximize the buyer’s risk. The Buyer is responsible for the transport to the destination port. Ex Works is Incoterms used for all shipping types irrespective of mode and route of travel. In the terms described below, the Seller assumes the responsibility of the transporter once the shipment has been shipped to the shipping container and collected.
EXW Shipping Terms | My Responsibilities
When exporting products from China under EXW shipping rules, the duties of the importer are pretty straightforward. The cost is your responsibility as well as any arrangement or liability. We can take the cargo from your supplier to your home and deliver it back home . Honourocean makes the process easy. We may arrange the shipment, documentation, and handling of the goods and simply include the costs into our all-inclusive quotation if we can.
we can arrange all for you
The Advantages of Ex-Works Terms
When using these conditions the cost to ship the product is pure to the customer alone. Ex-works terms are also a useful method for the buyer to see how much the buyer is paying upfront. In case the item was shipped to the authorities the buyer controls the entire transport. Customers will also see the supplier in detail.
ExWorks Incoterm 2020 Rule - Key Changes & Updates
When shipments come to market there will be more problems. The buyer has the obligation to clear the products and only a company from such countries can export. Add in potential GST issues for sellers to be charged as they would be seen as exporters. Hence, EXW, as described under Incoterm 2020, is virtually inconceivable.
Is Ex Works or Free on Board Better?
Goods delivered EXW are generally less expensive for FOB. The cost to the supplier would be borne by the supplier for transport, processing, or clearance. EXW terms are often less risky, as the supplier must provide goods prior to their arrival.
Tell me the difference between EXW and FOB?
EXWH is a term whose use is to pay a shipping price for delivering shipments at specified locations. Free or Freeboard shifts responsibilities to the consumer as soon as the product is loaded into the vessel.
What does EXW delivery mean?
Exp Works is an ancillary contract in which a seller pays when a shipment has arrived in a specific place for delivery of the goods or service. FOB, or Free onboard, shifts the responsibility to the buyer immediately after loading the cargo onboard the ship.
International trade-terms exw
When you agree to ship goods under the Ex Works terms, you’re agreeing to ship the goods at your own expense from your location to the buyer’s premises. The buyer is responsible for loading the goods onto their transport and assumes all risks and costs from that point on. This includes any risks associated with delays in transit, damage or loss during transport, and any customs or import duties that may be levied.
So, when should you use Ex Works terms? Ex Works terms are typically used when the buyer is experienced in importing goods and is comfortable with assuming all the risks and costs associated with that. If you’re selling to a first-time buyer, or to a buyer who isn’t familiar with importing, you might want to consider using a different Incoterm, such as FOB (Free on Board). This is because FOB terms shift the responsibility for transport and all associated risks and costs to the seller, which can help to protect you.
Do you have any questions about Ex Works terms? Leave a comment below and we’ll be happy to answer them!
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Shipping Costs
Ex Works trade agreement. The buyer wants to pick up the products in two weeks, and the seller must have the products ready for transport. However, the buyer is responsible for all of the further costs associated with delivering the goods to the home. The buyer pays for all the transportation costs, and if the products get lost along the way, the seller is not liable. The buyer covers all costs from the seller’s door to the final destination.
Delivered duty paid(DDP)
When you agree to ship goods under the DDP terms, you’re agreeing to ship the goods at your own expense from your location to the buyer’s premises. The buyer is responsible for loading the goods onto their transport and assumes all risks and costs from that point on. This includes any risks associated with delays in transit, damage or loss during transport, and any customs or import duties that may be levied.
One advantage of DDP terms is that they can help you keep your prices low. This is because the buyer is responsible for all shipping costs, so you don’t have to factor those into your price. Another advantage is that it allows the buyer to see exactly how much they’re paying for the goods, without any hidden costs.
However, there are some disadvantages to using DDP terms. One is that you, as the seller, are responsible for ensuring that the documentation is accurate and complete. This includes providing all the necessary information for export clearance. If there are any delays or problems with customs or import duties, you, as the seller, will be responsible for those.
Another disadvantage of DDP is that it can be riskier for the seller. This is because you are essentially handing over the goods to the buyer once they’re loaded onto their transport. If there are any problems with the transport, or with delays in transit, you as the seller will be responsible.
So, when should you use DDP terms? DDP terms are typically used when the buyer is experienced in importing goods and is comfortable with assuming all the risks and costs associated with that. If you’re selling to a first-time buyer, or to a buyer who isn’t familiar with importing, you might want to consider using a different Incoterm, such as FOB (Free on Board). This is because FOB terms shift the responsibility for transport and all associated risks and costs to the seller, which can help to protect you.
contact to get DDP freight
other Incoterms 2020 rules here:
FCA (Free Carrier)
FAS (Free Alongside Ship)
FOB (Free On Board)
CFR (Cost and Freight)
CIF (Cost, Insurance and Freight) CPT (Carriage Paid To)
CIP (Carriage and Insurance Paid To)
DAP (Delivered At Place)
DPU (Delivered At Place Unloaded) DDP (Delivered Duty Paid)
Buyers Responsibilities
The buyer assumes all risks and liabilities once they collect the goods from the seller. These responsibilities include the following:
- Loading Charges: Loading the cargo at the location of the pickup so that the goods can move to the port for export.
- Delivery to Port/Place: Transporting the goods to the port of origin, to begin the export process.
- Export Duty, Taxies & Customs Clearance: All export documentation, and paying any duty to export the cargo. The buyer must rely on their own methods of export. arrange Customs Clearance with buy’s export license
- Origin Terminal Charges: The buyer is responsible for paying all fees at the terminal.
- Loading on Carriage: The responsibility associated with loading the cargo onto the carriage.
- Carriage Charges: All freight costs associated with moving the cargo from port to port.
- Insurance: While not required, insuring the freight to protect against damage, theft, or loss.
- Destination Terminal Charges: All charges associated with fees charged by the destination port and terminal. When the cargo arrives at the destination port the terminal charges fees to unload the shipment from the vessel and transfer them throughout the harbor.
- Delivery to Destination: The costs associated with transporting the cargo from the destination port to the final destination.
- Unloading at Destination: The costs associated with unloading the cargo from the final carrier once the goods have arrived at the destination.
- Import Duty, Taxes & Customs Clearance: All duty and taxes associated with importing the cargo into the destination country.
