Ex works (EXW)

Incoterms® 2020 in detail

The following article describes everything you need to know about the Incoterm “Ex Works” (EXW). In case of any questions or unclarities, do not hesitate to contact us.

Group E: Dispatch – Ex Works (EXW)

EXW indicates that the seller's responsibility ends when the goods are made available for pick-up at their premises or another named place (factory, warehouse, etc.). From that moment, the buyer assumes all costs, risks, and responsibilities associated with transporting the goods to their final destination.

The delivery place is the point where the seller simply puts the goods at the disposal of the buyer for collection. The contracting parties should precisely specify this place.

The risk is transferred from the seller to the buyer before the transport cycle even starts. The seller fulfils their obligation to deliver the goods no matter whether they arrive at their destination.

The E Group contains the rule with minimum obligations, risks and costs imposed on the seller. They do not undertake any obligations to load the goods into the buyer's means of transport nor to arrange the customs formalities for the export of the goods.

The EXW (Ex Works) delivery conditions apply to all modes of transport, including rail and air. Several modes of transport can be used in combination.

The use of EXW Incoterm is not recommended in international trade, because the buyer of the goods may find it difficult to carry out export formalities in the seller's country, and in connection with this, additional costs might arise – for example, the use of a customs representative.

The customs may sometimes ask the declarant for proof of the EXW price of the goods. It means the ‘clean’ cost otherwise known as intrinsic value, of the goods without any loading or transport costs. A document proving this value can generally be issued only by the seller of the goods.

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EXW – Seller Responsibilities and Obligations

The EXW delivery clause imposes very little responsibility on the seller of the goods – who only had to make the goods available (packaged according to the agreement) at a specified location, which is generally the seller's factory or warehouse.

The seller prepares the goods for handover to the buyer in the seller’s premises or territory (in the company, warehouse, etc.). The seller does not undertake any commitment to:

load the goods into the buyer's vehicles
arrange the customs formalities for the export of goods

At the buyer's request, and at the buyer's risk and expense, the seller should provide the buyer with all the necessary information which the buyer needs when organizing transportation, also concerning transport security requirements.

EXW Loaded

According to the terms of the contract, the seller may undertake the obligation to load the goods into the buyer’s vehicle. In this case, the abbreviation EXW is followed by loaded.

EXW – Buyer Responsibilities and Obligations

Under EXW Incoterm the buyer is responsible for loading the goods onto the means of transport. The buyer is also responsible for the export clearance, the transport and the import clearance of the goods.

The buyer separately pays the cost of loading the goods into the vehicle at the seller’s premises or territory, and the costs of transporting the goods from the place of dispatch to their final destination.

Advantages EXW

Seller

Low responsibility and risks, as the seller is only responsible for making the goods available at his plant or other agreed location.
No transportation costs.
No customs formalities.

Buyer

Greater control and flexibility.
Transparent costs, as the buyer knows the costs from the beginning, for transport, insurance and customs clearance and can therefore plan the costs better.

Disadvantages EXW

Seller

Limited influence on shipping, as the seller is not responsible for transportation and therefore cannot prevent difficulties in delivery.
Possible ambiguity, as possible damage or loss occurs, leading to uncertainty.

Buyer

Higher costs and risks, as the buyer is responsible for insurance and customs clearance and the overall costs and risks may be higher.
Logistical challenges, especially for someone with little experience.
Possible delays and complications as the buyer bears the risk related to transportation and customs clearance.

How ALS can support you in navigating the complexity of international commerce

ALS is an innovative, neutral, and globally active customs broker. We operate as a unified entity, where every member of our team, from your dedicated contacts to our board of directors, is committed to meeting your specified needs.

We are here to guide you through the proces of international trade. Whether it’s speaking to one of our sales team, or requiring further guidance with our consultants, we offer everything to help facilitate your complete end to end customs. By law we are not able to provide you with advice on which Incoterm you should use. However, we can provide you with information which you can use to make your decision.

Sources

Incoterms® 2020

Herre, J., & Tilberg, O. (2022). ICC Guide to Incoterms ® 2020. ICC.

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We are here to guide you through all matters of international trade. Whether it’s speaking to one of our sales team, or requiring further guidance with our consultants, we offer everything to help facilitate your complete end to end customs.