Incoterms: Ex-works (EXW)

Published by the International Chamber of Commerce, Incoterms are a set of rules created to regulate international trade and solve problems that arise from different trading practices and legal interpretations among countries. There are 11 rules in this set that are internationally recognized and can help guide traders when they sell and transport goods by identifying the type of shipment they have. For this blog post, we will dive into one of the rules of Incoterms: Ex-works (EXW).

What is EXW?

EXW is a shipping arrangement that can be for any transport mode. There are minimum obligations to the seller, who only has to make the goods packaged and available at the agreed destination, which is usually the seller’s warehouse or factory. 

The buyer then has to load the goods onto a vehicle for all export procedures and is responsible for all the risks that come with the process, such as transferring the goods or meeting customs laws. 

Advantages & Disadvantages of EXW

EXW works well, depending on whether you are a seller or a buyer. This rule benefits sellers the most since they have very few responsibilities like labeling the packages correctly or getting required paperwork for the buyers. Another advantage is that even if sellers are the ones getting the documents, buyers have to pay for them.

The buyers can also enjoy some benefits of EXW by having complete control over the whole shipment process. The total cost of the goods, shipping risks, and other elements are all clear to the buyer upfront, so there are no surprises later on. Buyers can ensure that they are getting the best deal possible, and do not have to worry about sellers adding additional charges. They can even contact individual companies to make necessary transport arrangements. 

However, because the buyers are in total charge, they are responsible for all the risks and additional costs as well. Buyers must take responsibility for all problems that arise from customs clearance and extra costs that come from getting an export license, paperwork, etc. As a result, if you are a buyer dealing with international transactions, we do not recommend this method since it presents many practical difficulties.

When to use EXW

If you want complete control over your shipment, we highly recommend using EXW. You can see the total costs of your goods and transportation, and can even negotiate with different providers to get the best deal possible. Remember, when working with a seller, buyers must always be clear and not pass by even the “smallest details.” If you are not thorough, you will likely encounter many conflicts later on. 

Work with Export Portal

At Export Portal, we are also using EXW to help businesses complete their global trade transactions safely. For more information, visit our site and take a look at all the benefits we have to offer!