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One of the most commonly used and fundamental Incoterms® is EXW (Ex Works). This Incoterm® places almost all responsibility for transport and risks on the buyer, while the seller's obligations are kept to a minimum.
What does EXW mean?
EXW stands for Ex Works and means that the seller's responsibility ends when the goods are ready for collection at the seller's location. From this point on, the buyer assumes responsibility for everything, including transport, insurance and customs clearance.
EXW is therefore a simple solution for the seller, because they only have to pack the goods and ensure that they are ready at the agreed location. For the buyer, it provides freedom and control over transport, but it requires the buyer to have experience with international freight.
Example: If a Danish seller delivers goods to a customer in Sweden under EXW, the buyer must arrange transport from Denmark to Sweden, pay export duties and take care of customs clearance in Sweden.
Responsibility with EXW
For Ex Works, all responsibility is transferred from the seller to the buyer once the seller has made the goods available to the buyer. This can be at the seller's factory or warehouse.
Seller's responsibility:
- Prepare the goods on time at the agreed location.
- Ensure correct packaging.
- Comply with agreed delivery times and other terms of transfer.
ATTENTION: The seller shall not load the goods/merchandise, but only make them available.
Buyer's responsibility:
- Arrange transport.
- Pay customs duties and taxes in the country of origin and destination.
- Assume all risk for the goods from the moment they are collected from the seller
EXW is just one of many Incoterms®. If you would like to learn more about other Incoterms® such as FOB, CIF and DDP, and get an overview of their responsibilities, you can read our post about all Incoterms® 2020.
Pros and cons of EXW for the seller
Pros:
- Low risk and responsibility, as you do not have to worry about transport or insurance.
- The costs are lower as there are no logistics expenses.
- The process is simple, allowing the seller to focus on production and quality instead.
Cons:
- Delays may occur if the buyer does not collect the goods on time. This may result in additional storage costs.
Pros and cons of EXW for the buyer
Pros:
- Full control over transport and can choose the shipping methods that best suit their needs.
- Savings can be made by negotiating directly with transport companies.
- Flexibility is high, as the buyer can use their own logistics partners to optimise the process.
Cons:
- The buyer must take care of complex tasks such as customs clearance and all transport. All risks, such as damage or loss of the goods, are transferred to the buyer when the goods leave the seller's premises.
ATTENTION: Small businesses or buyers trading internationally for the first time may find EXW challenging. This is because it requires a great deal of effort to coordinate all aspects of transport and customs.
To sum up
EXW is a good choice if the seller wants to have as little to do with transport and logistics as possible, and the buyer is prepared to take full responsibility for freight and risk.
Get an overview of the responsibilities under all Incoterms® 2020.
Frequently asked questions about Incoterms®
What does Ex Works mean?
Ex Works (EXW) is an Incoterm®. It means that the seller's responsibility ends when the goods are ready for collection at the seller's location (e.g. factory or warehouse). After this point, the buyer assumes all responsibility for transport, insurance and customs clearance.
EXW Incoterms® 2020 – what does it mean?
EXW (Ex Works) according to Incoterms® 2020 means that the seller is only responsible for making the goods ready for collection at their address. All responsibility for transport and risk passes to the buyer from the moment the goods are ready for collection.
What do EXW delivery terms mean?
Terms of delivery EXW means that the seller is only obliged to make the goods available for collection at their own location. The buyer is responsible for all further transport, customs clearance and insurance from the moment the goods are made available for collection.
What is the difference between EXW and FOB Incoterms®?
EXW (Ex Works) places almost all responsibility on the buyer, as they are responsible for arranging transport and bearing the risk from the moment the goods are picked up.
In contrast, FOB (Free On Board) means that the seller is responsible for transporting the goods to a ship and having them loaded, after which the buyer takes over responsibility for transport and risk. FOB gives the seller more responsibility than EXW.
What is the difference between FCA and EXW?
FCA differs from EXW in that under FCA, the seller is responsible for transporting the goods to an agreed carrier, whereas under EXW, the seller's responsibility is limited to making the goods available at their own location.
With FCA, the buyer has fewer tasks in relation to arranging transport compared to EXW.
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