Do you know what is EXW Incoterms? What differences between EXW and other handelsvoorwaarden,  EXW Incoterms are frequently used in international logistics. However, many people may not have a deep understanding of it, leading to some complications in the import and export processes. So, in this article, we’ll explore the EXW Incoterms for you.

Wat zijn EXW Incoterms?

An EXWorks Incoterm is a special deal between a seller and a buyer that makes the buyer take on most of the risks and jobs. The seller only has to have the things ready for the buyer at their building or loading place. After the buyer gets the stuff, they have to do everything else, like getting it to the boat or plane and taking it to its final stop.

Ex Works is an Incoterm used for all forms of shipping. In this term, the buyer assumes all responsibilities of the shipment from the cargo packed in export packaging and collected.

EXW Incoterms means the buyer must arrange all transport, and export documentation, cover all freight charges, and fulfill the importation and delivery process when the goods are collected from the seller’s property, and the risk is transferred to the buyer.

Buyers are responsible for all risks and responsibilities, we advise newbies and buyers unfamiliar with exporting to use a logistics company to avoid errors and other costs associated with shipping and transporting the goods.

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What are Sellers Responsibilities with EXW Incoterms Agreements?

When using EXW, the seller doesn’t have many jobs. All they have to do is make sure the things are packed up and ready to leave the country. Most of the time, this means the things are already in special boxes for sending away. After that, the seller just needs to have the things in a spot where the buyer can come and get them.

What are Buyers Responsibilities with EXW Incoterms Agreements?

Once the buyer gets the things from the seller, they have to do everything else. These jobs include:

  • Paying to load the things onto a truck or other vehicle at the seller’s place so they can go to the boat or plane.
  • Bringing the things to the starting point for sending away.
  • Getting all the papers and paying any fees to send the things out of the country.
  • Paying any fees at the starting point.
  • Putting the things on the boat or plane.
  • Paying for the trip on the boat or plane.
  • Maybe getting insurance to protect the things in case something happens to them.
  • Paying any fees at the ending point.
  • Unloading the things from the boat or plane at the ending point.
  • Paying any fees to bring the things into the new country.
  • Bringing the things to their final stop.

Advantages and Disadvantages for the Buyer

Advantages

Sometimes, EXW is the best way to send things. For example, if a company always buys things from one country and wants to put things from different sellers together, EXW is good. This lets the buyer send everything as one big group instead of separate groups.

Another good thing about EXW is if the buyer doesn’t want people to know who they’re buying from. They can use EXW and put a different name on the papers that say who’s sending the things.

When you buy products, EXW (Ex Works) is usually the least costly way to do it. Sometimes, sellers get money back from taxes on what they send abroad. If getting this refund is key to their profits, FOB (Free on Board) might turn out cheaper for both buyer and seller. But most of the time, EXW will be the lowest price because sellers don’t need to do much extra.

If your company buys things often from one country and has permission to export, EXW could be perfect. But be aware: EXW can carry big risks. So, it’s wise to let a reliable company handle everything for you.

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Countries like China, known for top-quality yet affordable products made for their home market, show why EXW can be great for buyers. If a seller doesn’t have export skills, EXW lets foreign buyers shop locally and handle exports themselves.

Many manufacturers in such countries only focus on making great items for their own people. They don’t bother getting export permits or selling abroad. Smart shoppers can find these hidden gems, enjoy their low local prices, and seal deals with EXW terms.

Disadvantages

EXW: Low Cost, High Risk for Buyers

EXW (Ex Works) can tempt buyers with its low unit cost compared to other trade terms (Incoterms). But there’s a catch: the buyer faces much higher risks and expenses.

The main issue? With EXW, the buyer shoulders every risk and cost connected to exporting, transporting, and importing the goods. Most trade agreements split these responsibilities between buyer and seller, but EXW is the only term where the seller doesn’t need to load, deliver, or export the cargo to the starting point.

On its own, having a trustworthy seller handle loading, delivery to the origin terminal, and export isn’t too risky. However, since these actions happen in the seller’s country, not the buyer’s, any problems must be managed by a competent local partner. And if, for some reason, the goods can’t leave the starting country, the buyer takes the hit – because ownership has already changed hands.

If a buyer is unsure of the process or costs involved in exporting a product, EXW could result in the buyer pay more costs.

If your supplier is only willing to sell their products under EXW incoterms, your had best to look for a 3rd party logistics company or freight forwarder to assist export. For example, if you are exporting from China, we can assist an entity to act as the exporter on your behalf. Under some circumstances, our company can serve as an exporter to handle the export. It is important for you to communicate with forwarding agent and ask them whether or not they have the right export licenses to act as the exporter.

Exw
EXW

When to Use an EXW Incoterms Agreement?

Many businesses choose to use an EXW agreement when the seller can’t export or when the buyer wants to bundle multiple shipments and export them together.

Another reason a buyer might choose EXW is for Air Express shipments. Express couriers usually pick up the cargo from the seller’s location and handle all transport and export procedures. Thus, buyers shipping via express may save money by switching to EXW terms.

In some cases, experienced importers may establish offices in the export country to streamline their shipments. However, unless there’s a valid reason for the buyer to prefer EXW, most sellers familiar with international trade will offer different Incoterms.

EXW Agreements for China Importing: Are They a Good Idea?

When importing from China using Air Express, EXW is a good option.

In other cases, when a buyer travels to China to purchase goods directly from markets, such as Yiwu Market, En Guangzhou-markt, most sellers will quote EXW and expect the buyer to arrange pickup and export.

We might think EXW is cheaper than FOB because the unit price can often be lower. But, EXW requires the buyer to organize inland shipping and all export documents. Once factoring in these added charges, the cost difference is often negligible, or more expensive than merely shipping FOB.

The best benefit of EXW is the buyer has full view and control over the cost of logistics.

As the leading Chinese expert, we’re experts at incoterms on behalf of our clients.

FCA Vs EXW Incoterms

Risk Transfer:

In FCA, when the goods are handed over to the first carrier, risk transfers, are not just made available as in EXW.

Export Formalities:

Under FCA, the seller is responsible for export clearance. Under EXW, the buyer has to handle export formalities.

Suitability:

FCA is generally more suitable for international shipments as it accounts for export requirements. EXW might complicate international deals, the buyer needs to manage export processes.

FCA is more balanced and suitable for international trade, EXW can be simpler but places more responsibility and risk on the buyer.

FOB Vs EXW Incoterms

Risk Transfer:

In FOB, the risk transfers when the goods are loaded onto the vessel at the port of shipment. In EXW, is when the buyer picks up the goods from the seller’s premises.

Export Formalities:

Under FOB, the seller is responsible for export clearance, whereas under EXW, is the buyer.

Control and Costs:

FOB gives the seller more control over the export part of the shipping process but the sea freight and further transportation on the buyer. In EXW, the buyer has all control and responsibility right from the seller’s premises.

FOB is more favorable for buyers in terms of managing risks associated with loading and shipping, especially for larger, overseas transactions. EXW can reduce the seller’s liability.

Conclusie

Now, you know the EXW Incoterms, and its pros and cons, it is suit for exporters to reduce the risk, if you have any questions about other trade terms, please do not hesitate to Neem contact met ons op, we are a professional expert on trade terms.

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