Risk transfer: The seller's obligations end when the goods are made available to the buyer for pick up at an agreed delivery spot. This is often either the seller’s factory or warehouse.
Costs: The buyer is responsible for all the costs.
Responsibility: The buyer is responsible for everything.
There were no new changes in the EXW Incoterms 2020 compared to the 2010 edition.
When booking a door-to-door transport, you usually use Ex works as an Incoterm, which means that the buyer retrieves his purchased goods directly from the seller. EXW is, therefore, the term of delivery that is used when the recipient is responsible for all costs in connection with a transport which then applies, is also responsible for Carriage / Risks / Costs.
What one must keep in mind is that you have signed transport insurance because the risk passes to the buyer from the factory. The EXW delivery condition can be used for all types of transport i.e. sea, air, rail and road. The advantage, however, of using this term of delivery is that you as a transport buyer get control of all the costs in the transport chain. Sometimes the local costs can be added as an item on the commercial invoice and you may indirectly pay for the freight all the way anyway. When you place a booking under the Incoterm EXW on Adnavem, you choose freely between the suppliers that best suit you. Picking Ex Work, the price shown to you are Suppliers for Pick up, Customs clearance, Sea freight including Terminal handling on both sides, Customs clearance and delivery. You can choose your favourites throughout the chain.
When using Ex Works Incoterms, the buyer has the highest possible obligation, while the seller has the lowest possible obligation. The seller’s only obligations are to package the goods in suitable packaging, make them available to the buyer to pick up and inform the buyer when and where the goods can be picked up. The buyer’s obligations therefore begin at the first point of loading the goods where they will have to take care of the export clearance. If the buyer needs information from the seller to be able to perform the export clearance, the seller shall supply all the necessary information and documents, however at the expense and risk of the buyer.
If the buyer can’t uphold their obligations required when exporting using Ex Works Incoterms, they should consider picking another more suitable Incoterm.
The two main benefits of using Incoterms Ex Works for buyers are:
The Incoterms FCA and EXW look very similar on paper making it hard to sometimes distinguish them from each other.
EXW Incoterms is one of the most fundamental Incoterms. The seller's obligations basically only include making the goods available at their factory/facility for the buyer to be able to pick them up. In other words, using EXW Incoterms means that all of the costs and risks lie with the buyer before the goods have even been loaded and entered the transportation chain.
The FCA delivery terms is essentially only one step further than EXW shipping. Instead of only being responsible for making the goods available at the agreed upon location, the seller is also responsible for the costs and risks up until the goods have been delivered to the first carrier. This means that the seller is responsible for the export transportation to the carrier as well as the customs clearance of the goods, while the buyer is responsible for the remaining steps, costs and risks.
To summarise: risk and responsibility transfer with EXW shipping happens at an agreed upon spot before any type of loading or transport has begun. Using FCA shipping, the seller is responsible for the whole process, costs and risks up until the first loading has been performed.
Contact Adnavem for more information about EXW price, risk transfer and responsibilities.
Read more about the latest updates for Incoterms 2020.
You get full transparency.
You choose the suppliers that suit you in your transport chain.
You know who manages your goods and when. You can easily see what you pay and to whom.
You get full control.
You can easily see when your containers leave or come to port.
You can optimize your transport chain over time with the help of the data and knowledge you collect.
You pay less as you do not need any intermediaries, you do not pay for someone else to administer your transport. You simply pay directly to the parties who actually handle your goods.
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