What does EXW in shipping mean?  (2024)

FAQs

What does EXW in shipping mean? ? ›

EXW stands for Ex Works and is one of the 11 Incoterms® rules. It places minimum responsibility on the seller, who makes the goods available at a location, usually the seller's premises or another named place such as a factory or warehouse. The seller does not need to load goods or clear them for export.

Ex Works (EXW) is a shipping arrangement in which a seller makes a product available at a specific location, but the buyer has to pay the transport costs.

Under Ex Works (EXW), the buyer pays for all aspects of the shipping process. This includes loading charges, delivery to port, export duties and taxes, origin terminal charges, loading on carriage, carriage charges, destination terminal charges, delivery to destination, and import duty and taxes.

EXW stands for Ex Works, an Incoterm whereby the buyer of a shipped product pays for the goods when they are delivered to a specified location. FOB, or Free on Board, instead shifts the responsibility of the goods to the buyer as soon as they are loaded onboard the ship.

EXW, short for “Ex Works,” places most responsibility with the buyer. The seller is expected to have the goods ready for collection at the agreed place of delivery (commonly the seller's factory, mill, plant or warehouse).

Ex Works assigns the buyer with the risk for loss and damage to the goods during loading. Though the seller normally loads the merchandise as common procedure, under Ex Works, it is the buyer who's at risk if the goods are damaged during loading. At first, this scenario may seem preferable from the seller's standpoint.

EXW can benefit sellers, because they have minimum obligations in the transaction and therefore take on less risk. In some cases, EXW can also serve buyers by helping them save money on shipping costs, since they can shop around for a logistics provider.

Supplier Relationships: If you have a strong, established relationship with your supplier and trust their handling of the goods, you may be more inclined to choose EXW. FOB can be a better option if you are less certain about the supplier's capabilities.

Example of EX Works

For instance, suppose Business A has 100 generators to export to Business B. A charges $400 per generator plus shipping charges, whereas B offers $300 without shipping costs. If the importer can find a cheaper shipping cost deal than what A is offering, they mostly opt to handle it by themselves.

EXW – Ex Works

Ex Works is a trade term that means the buyer of the manufactured products is responsible for the shipping process from the moment it leaves the factory to when it arrives at its destination. Responsibilities include transfer fees, shipping cost, insurance, customs, etc.

What are the benefits of EXW? ›

To sellers EXW's advantage is obvious, that they only cover the minimum scope of responsibilities and costs. To buyers, the EXW agreement can also bring benefits. As the shipping costs and responsibilities are on the buyers' side, they can control the entire shipping process to ensure the products are safe.

Does EXW Incoterms include duties and taxes? When shipping under EXW Incoterms, the buyer is responsible for all import duty, taxes, & customs clearance. EXW requires the buyer to handle all aspects of the exportation, freight, and importation process. The seller is only responsible for export packaging.

With EXW, the seller has minimal obligations beyond making the goods available at their premises. In contrast, FCA requires the seller to arrange for transportation and ensure the goods are ready for collection by the carrier.

Incoterms EXW: Frequently Asked Questions (FAQs)

The seller's responsibility ends once the products are made available for pickup at their premises. The buyer must handle all aspects of loading, transportation, and any associated costs and risks from that point onward.

It is a widely used international shipping term. The ex-works price includes the value of all the materials used and all other costs related to its production, minus any internal taxes, which are, or may be, repaid when the product obtained is exported.

In an ExWorks arrangement, the seller is responsible for: Providing the goods or freight. Helping with key documents like commercial invoice, bill of lading or air waybill, export license, and certificate of origin.

To buyers, the EXW agreement can also bring benefits. As the shipping costs and responsibilities are on the buyers' side, they can control the entire shipping process to ensure the products are safe. The shipping method is favorable to subsequent local transportation.