How does the EXW Incoterm (Ex Works) work?
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 collected by the buyer. In terms of costs and risks, this incoterm requires a minimal obligation for the seller and more responsibilities for the buyer.
The EXW Incoterm is versatile in that it can be used regardless of the mode of transport chosen. However, the EXW Incoterm should not be used if the buyer cannot directly or indirectly complete the import procedures. Under such a circumstance, the FCA Incoterm should be used instead.
Seller’s obligations under the EXW Incoterm
- Delivery of goods and documents required
- Packaging and wrapping
Buyer’s obligations under the EXW Incoterm
- Payment of goods
- Inland transportation in the country of origin
- Customs at origin
- Exit charge
- International freight
- Arrival expenditures
- Customs on arrival
- Inland transportation at the destination country
- Payment of fees
Advantages and disadvantages of the EXW Incoterm for the exporter
The EXW Incoterm may be the most comfortable choice for exporters with little experience in logistics and international maritime shipping. Given that the only obligation the seller has is to ensure that the goods have been prepared properly for pickup, there is little consequence for the exporter.
But despite the low risk, the EXW Incoterm may not be the most competitive option for the exporter. If you to choose to only deal with the EXW Incoterm as an exporter, a buyer may decide to choose another supplier with a more attractive and simpler offer.
Advantages and disadvantages of the EXW Incoterm for the importer
Under the EXW Incoterm, the importer has nearly full control over the ocean freight shipment and is extremely competitive.
If you’re a seasoned importer, you can negotiate with your carrier and/or freight forwarder to get the best prices and shipping conditions for your logistical needs. With this control, you also have more negotiating power over your seller to try and get him to offer a more competitive rate.
Our advice is for you to operate under the EXW Incoterm only if you have experience in shipping. It is also important to be familiar with the ins and outs of the country of origin, ensuring that it’s safe and/or at least that your has presence in that country.