In addition to closing the deal between the buyer and seller, the two parties have to take into consideration the shipment of the goods including factors like the shipping cost and management of the inventories as they are in the process of being transferred to their destination. In case you are not aware, the shipment of goods involves several methods and not just one. Among the popular modes of shipment available for the parties are referred to as Incoterms EXW (Ex Works). If you are considering EXW but are not sure if they’re indeed good for business, then the short but informative blog I will share with you will shed light on the subject matter. In this blog, I will discuss the specifics of Ex Works and provide you the answers you need on how it can help you save costs and receive your goods in perfect condition. So without any further delays, let’s get right into today’s discussion…
Table of Contents
What is Incoterm?
Before we get answers on what Ex Works is, it is important that we briefly discuss the standards managing the said shipping condition which is called Incoterm. Again, it is a set of shipping conditions that buyers and sellers could use that could benefit their transaction as they attempt to complete the shipment. Incoterms is the acronym for International Commercial Terms and it governs foreign shipping trades such as Ex Works (EXW), Free On Board (FOB), and Freight Carrier.
What is Incoterms Ex Works?
As discussed, Ex Works, or simply EXW is one of the shipping conditions under the standards of Incoterms. The terms of Ex Works are that the seller bears the shipping responsibility up to the point where both parties have agreed to transfer the ownership of the goods. During the initial shipment, the seller shall bear the burden of shipment costs and other related risks that may come along the way as the goods are being shipped to the buyer. Now, the keyword here is the agreed destination. The goods don’t need to be delivered outright to the seller’s address. As long as the location of the point of transfer was stipulated in the shipping contract or bill of lading, then ownership should be transferred to the seller as soon as the items were provided at that point.
Responsibilities of Buyer Under Ex Works (EXW)
If you are not sure of the responsibilities that the buyers are going to assume after the transaction has been made, the following are the general guidelines of Ex Works that you have to take note of–
- Shipment Costs – as already have been established, the shipment cost shall be carried by the buyer
- Loading and Freight Charges – In addition to the shipping cost, the seller also has to take into account the loading and freight charges from the shipping origin. However, the seller no longer has the responsibilities after it was delivered to the agreed point
- Insurance – In general, insurance is covered by the seller unless there is an agreement otherwise
- Custom Import Fees – You also have to bear in mind the custom import fees since the goods are coming from international trade. At this point, the goods were supposed to have reached their intended place of delivery. Thus, the buyer might have to accommodate for expenses such as tariffs, duties, and documentation
- Custom Export Fees – From the point of delivery, the transaction must also include a stipulation for the exportation. Again, the buyer has no responsibilities over the custom import fees unless it was agreed otherwise
Final Thoughts
I hope the blog I prepared has provided you with the insights you need about Incoterms’ exw meaning and its implications in growing your business. As you see, Ex Works is advantageous to the seller because it gives them consumer protection as the goods are being delivered but most importantly, it is very cost-effective and will greatly benefit the business owner. On the other hand, it is beneficial to the buyer as well in the sense that they provide assurance for the maintenance of the good’s integrity and keep a good standing relationship with the seller that should aid them in return for more orders.
