Ex Works
Ex Works (EXW) is an international trade term that describes when a seller makes a product available at a designated location, and the buyer of the product must cover the transport costs. Ex Works (EXW) is one of the 11 current Incoterms (International Commercial Terms), a set of standardized international trade terms published by the International Chamber of Commerce.
Definition: Ex Works (EXW) is an international trade term used to describe a situation where the seller makes the product available at a designated location, and the buyer must bear the transportation costs. EXW is one of the 11 standardized international trade terms published by the International Chamber of Commerce (ICC) under the Incoterms.
Origin: Ex Works (EXW) originated from the International Commercial Terms (Incoterms) first published by the International Chamber of Commerce (ICC) in 1936. These terms aim to standardize and simplify transaction terms in international trade, reducing misunderstandings and disputes caused by differences in trade practices across countries and regions. EXW is the most basic term, emphasizing that the buyer assumes more responsibility and risk.
Categories and Characteristics: Ex Works (EXW) is one of the international commercial terms, characterized by:
- Minimal seller responsibility: The seller only needs to make the goods available at their factory or warehouse to the buyer or the buyer's designated carrier.
- Maximum buyer responsibility: The buyer must bear all costs and risks from the seller's designated location, including transportation, insurance, and customs duties.
- Wide applicability: Suitable for all modes of transport but commonly used for land and short-distance transport.
Comparison with Similar Concepts: Similar concepts to Ex Works (EXW) include Free on Board (FOB) and Cost, Insurance, and Freight (CIF).
- Free on Board (FOB): The seller is responsible for loading the goods onto the buyer's designated transport, after which the costs and risks are borne by the buyer.
- Cost, Insurance, and Freight (CIF): The seller is responsible not only for loading the goods onto the transport but also for paying the transportation and insurance costs until the goods reach the destination port.
Specific Cases:
- Case 1: A Chinese manufacturer signs an EXW contract with an American buyer. According to the contract, the manufacturer makes the goods available at its factory to the freight company designated by the buyer. The American buyer bears all subsequent transportation, insurance, and customs duties.
- Case 2: A German machinery manufacturer reaches an EXW agreement with a French buyer. The manufacturer makes the equipment available at its German factory to the logistics company arranged by the buyer. The French buyer is responsible for all transportation and related costs from Germany to France.
Common Questions:
- Q: What modes of transport are applicable for Ex Works (EXW)?
A: EXW is applicable for all modes of transport but is commonly used for land and short-distance transport. - Q: Under EXW terms, does the seller need to handle export customs clearance?
A: No. Under EXW terms, export customs clearance is the responsibility of the buyer.
