What is Ex Works (EXW)?
Ex Works (EXW) is one of the most commonly used Incoterms in international trade. It signifies that the seller makes the goods available at their premises or another named place (factory, warehouse, etc.), and the buyer is responsible for all costs and risks associated with transporting the goods to their final destination. Essentially, the buyer takes on all logistics responsibilities from the seller's location onwards.
EXW Incoterm Definition
The EXW Incoterm definition specifies that the seller fulfills their obligation to deliver when they have made the goods available for pickup at their premises or another agreed-upon location. This term places minimal responsibility on the seller and maximum responsibility on the buyer.
Financial Aspects of EXW
EXW Cost and Pricing
The EXW cost includes only the price of the goods as determined by the seller, without any transportation or additional shipping charges. This makes the EXW unit price typically lower than other Incoterms, as it does not encompass any shipping costs.
EX Works Price Meaning
EX Works price meaning refers to the price of the goods at the point of origin, without any additional costs for shipping, loading, or export duties. This pricing method allows buyers to see the base cost of the goods.
EXW Payment Terms
Payment terms under EXW can vary, but they often involve the buyer paying for the goods before they are made available for pickup. EXW payment terms must be clearly agreed upon in the sales contract to avoid misunderstandings.
Responsibilities Under EXW
Seller's and Buyer's Responsibilities in EXW
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Seller’s Responsibilities:
- Making the goods available for pickup at the agreed location.
- Providing the buyer with the necessary documents for collection.
- Ensuring the goods are ready for transport.
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Buyer’s Responsibilities:
- Arranging and paying for transportation from the seller’s premises to the final destination.
- Handling all export and import duties, taxes, and customs clearance.
- Assuming all risks once the goods are made available at the seller's location.
Logistics and Transportation
EX Works Shipping Term
EX Works shipping term means that the buyer arranges all transportation logistics from the seller’s location. This can include multiple modes of transport, depending on the distance and destination.
EXW Freight and Transport
EXW freight responsibilities fall entirely on the buyer. The buyer must arrange and pay for all transportation, including loading the goods onto the vehicle at the seller’s premises.
EX Works Tracking and Management
Tracking and managing an EX Works transport requires the buyer to coordinate with freight forwarders, carriers, and logistics providers. Effective communication is essential to ensure smooth transport from the seller’s premises to the final destination.
Risk Management Transfer in EXW Transactions
Under EXW terms, the risk transfers from the seller to the buyer once the goods are made available for pickup. The buyer must manage all risks associated with transportation, including damage, loss, and delays. It is crucial for the buyer to arrange adequate insurance to cover these risks.
Practical Examples and Case Studies
EX Works Incoterms Examples in Real-World Trade
- Automotive Parts: A manufacturer in Japan sells automotive parts to a company in Germany. Under EXW terms, the German company arranges for the pickup of the parts from the Japanese factory and handles all transportation to their warehouse in Germany.
- Electronics: A US electronics producer sells components to a buyer in Brazil. The US seller makes the components available at their warehouse, and the Brazilian buyer takes on all logistics responsibilities from that point.
