Understanding Incoterm Ex Works (EXW)
What is Ex Works?
Seller is responsible for making the goods available at the seller’s premises. Buyer bears the full risk from there to destination.
It can be used for any transport mode or when there is more than one transport mode.
» minimal risk & responsibility
» no transportation costs
» ONLY have to make the goods available, packaged them the right way at a specific place – usually the seller’s factory or warehouse
» responsible to collect goods from seller, load onto a vehicle (even though seller may be better at doing this)
» responsible for all export procedures, transportation arrangement and costs involved
» have better control of the supply chain
» may enjoy cheaper purchase price (as seller saves on transportation costs and the hassle)
In many cross-border transactions, Ex Works may bring about several practical issues.
Supposedly, the seller may still be involved in export documents and customs clearance and should not leave everything to the buyer.
Although the seller is not obliged to load the goods or undertake export procedures, if the seller “provide assistance”, it is still at the buyer’s risk and expense.
Here’s a simple video that summarizes the incoterm Ex Works: