Ex-Works (EXW) is an international trade term, also known as an Incoterm, that defines the seller’s and buyer’s responsibilities regarding the delivery, risk, and costs associated with the transportation of goods. Ex-Works indicates that the seller’s obligation is fulfilled when the goods are made available at their premises or another agreed-upon location, and the buyer takes full responsibility for transportation, costs, and risks from that point onward.
Key points related to Ex-Works in supply chain and international trade:
- Delivery Point: Under Ex-Works terms, the seller’s responsibility ends once the goods are available for pickup by the buyer at a specified location, often the seller’s premises, factory, or warehouse.
- Transportation Responsibility: After the goods are made available, the buyer assumes responsibility for arranging and paying for transportation, insurance, and any other costs associated with moving the goods to the destination.
- Risk Transfer: Risk transfers from the seller to the buyer at the point of delivery. If the goods are damaged or lost during transportation, the buyer bears the consequences.
- Cost Allocation: The buyer is responsible for all costs incurred after the goods are made available, including transportation, customs duties, taxes, insurance, and any additional charges related to the delivery.
- Documentation: The seller is typically responsible for providing the necessary documents required for export, such as the commercial invoice, packing list, and export declaration.
- Applicability: Ex-Works terms are commonly used when the buyer has the resources and capabilities to manage the transportation logistics and associated costs independently.
- Risk and Control: Ex-Works provides the buyer with a high level of control over the transportation process, but it also places the onus of risk and compliance on the buyer’s shoulders.
- Clear Communication: When using Ex-Works terms, clear communication between the seller and the buyer regarding the point of delivery and responsibilities is crucial to avoid misunderstandings.
Ex-Works is one of several Incoterms used in international trade to define the rights and responsibilities of buyers and sellers in the context of transportation and delivery. It’s essential for parties involved in international transactions to clearly define the chosen Incoterm to ensure smooth operations and to allocate costs and risks appropriately.
Seller’s Responsibility Under EXW
- Preparing and placing goods at the buyer’s disposal
- Packaging and marking
- Preparing commercial invoice
Buyer’s Responsibility Under EXW
- Goods payment
- Duties and taxes payment
- Loading cargo in seller’s place
- Preparing export licenses and customs formalities
- Preparing import licenses and customs formalities
- Transportation of goods in the country of origin and destination country
- Customs handling fees in the country of origin and destination country
- Origin and destination charges
- International freight
Cargo Insurance in EXW
Cargo insurance is not required under the EXW Incoterm. However, it is standard practice in the industry for the buyer and seller to both get their own insurance to meet their respective responsibilities. It’s also uncommon for a buyer or seller to take responsibility for the shipment procedure and acquire insurance for the entire trip. In your sales contract, make sure to include the insurance terms and conditions.
