Let’s talk about the logistics behind shipping, shall we? International shipping can be a confusing and challenging process for small business owners—especially those who are responsible for dealing with all of the details. But you don’t have to worry! EXW, one of the most important Incoterms, is easier than you think. Keep reading to learn everything there is to know about EX Works (EXW) Incoterms.
If you want to get the best deal on your international shipping, it pays to understand the different incoterms that are used.
One of the most popular choices is EX Works. This option is used when the buyer is responsible for the cost and risk of getting goods from where they’re produced to their final destination. In other words, no custom brokerage fees or any other costs or services associated with transporting a shipment will be covered by either party — these additional expenses are left as part of a negotiated contract between seller and buyer.
How Important is Ex-work?
Ex-works is one of the most popular choices, but how well do you really know it?
Ex-works can be a great choice if:
- you’re a small business and don’t want to spend money on shipping.
- your logistics partner has reliable shipping rates. For example, you can save money by choosing Ex-works if your freight forwarder has access to low-cost ocean freight rates. And even if they don’t offer discounted rates for ocean freight, there are many other reasons why using a freight forwarder makes more sense than just using an online international shipping calculator (e.g., credit card processing fees are included in the quoted rate and not charged as a separate fee later). So even though this isn’t technically an “incoterm,” it’s definitely worth considering when deciding which international transportation option fits best with your needs!
What does EXW mean?
EXW means that you are responsible for the cost and risk of getting the goods from where they are produced to their final destination.
It’s one of the most popular international shipping terms because it offers a simple, straightforward way for businesses on both sides of an export transaction to avoid unforeseen costs and delays at every step of getting products across borders. However, EXW only covers how much payment you owe when buying goods overseas; it doesn’t cover other important logistical details like who will be responsible for handling clearing customs once your shipment arrives in its destination country.
For those reasons, if you’re planning to import from abroad using EXW terms (or FCA or FAS), we recommljv,end reading up on our guide to Incoterms so that you understand how these logistics work before signing any contracts or making large purchases.
Ex-works means that you are responsible for the cost and risk of getting the goods from where they are produced to their final destination.
The seller pays for all costs to bring them to their location, but thereafter they become your responsibility. You also take on any risk related to transport, customs clearance and other risks associated with the delivery of the goods.
This means that you have to arrange for shipping or transport yourself, insurance, and any other services required such as customs clearance.
This incoterm only covers how much payment you owe when buying goods overseas.
You are responsible for paying the freight, import duties, and other charges related to delivering your goods.
This is a very common incoterm used when buying overseas.
The buyer is responsible for paying customs duties and any other tariffs on imported goods.
It says nothing about custom brokerage, insurance or any other costs or services associated with transporting a shipment.
EXW is free on board (FOB) term, which means that the seller is responsible for the goods until they are on board the carrier. It’s a popular choice for exporters who want to cut out moving costs at home; however, it can be tricky if you’re not sure what goes into shipping your items abroad.
EXW is also known as “ex works” or “ex factory.” It says nothing about custom brokerage, insurance or any other costs or services associated with transporting a shipment. For these reasons, FOB terms should only be used when there are no unexpected costs associated with shipping internationally and all parties involved understand exactly what their responsibilities are in terms of payment and delivery details from day one!
Read Also: Incoterm Explained in Details
When should I use an EXW incoterm?
It’s a good idea to use EXW when:
- You have an experienced logistics partner that knows the market, language and customs of the buyer’s country.
- You want to cut out moving costs at home.
- You want to avoid import duties, VAT and other taxes.
- Your goods are small enough that they can be shipped by air freight (which is usually more expensive than sea freight).
Generally speaking, Ex-works should only be used if you have a reliable logistics partner who can manage the shipping side of things for you.
EXW means the seller has to deliver goods at his cost and risk to the named place of destination and also bear all other transportation costs. The buyer bears no responsibility and pays no costs including clearing, handling, packaging or delivery ex works.
It is important that both parties agree on what is meant by “named place” before using this Incoterm. If you’re selling your products through Amazon FBA, then the warehouse where your products are stored is technically your “named place”. But if it were another online marketplace, then their warehouse might be considered their “named place” instead of yours—and that could mean extra fees for shipping!
Since there is no obligation on either party to handle any transportation beyond the premises of the seller, it’s common for sellers to use EX-WORKS as their preferred Incoterm. In this case, the buyer is responsible for paying for the goods and all other costs associated with transporting them.
An EXW term helps exporters by allowing them to cut out moving costs at home!
The EXW term is a great option for exporters who want to avoid paying for customs brokerage, insurance and freight charges.
This works by allowing the exporter to deliver goods to their customers without having to pay for these costs at home. This means that you can save money by not having to pay for customs brokerage, insurance and freight charges when shipping overseas.
The Incoterms Ex Works (EXW) is one of the most common and simplest international trade terms to understand. It can be used for all modes of transport, but it is especially well suited for shipments that will be picked up by the buyer at their factory or warehouse location. It requires a minimal amount of time spent on arranging logistics since all responsibilities are on the buyer’s side. However, because many risks fall under this arrangement, such as customs clearance issues or damages during transit, most traders prefer using other Incoterms like Free Carrier (FCA).