Incoterms: EXW Ex-works

Incoterms® EXW - Ex-Works

Using the Ex Works (EXW) Incoterm is among the lowest liability Incoterms for sellers. The basic premise means that the seller is responsible for having the goods packed and made available at the seller's premises. But what does that really mean, and how can today’s shippers better understand this term?

What Does the EXW Shipping Term Mean for Liability?

Using the EXW shipping term, the seller provides the goods to the buyer in a designated area, like a production site or warehouse. The buyer bears the full risk and costs from there to the destination - including the loading of the cargo and is responsible for all transportation. In addition, the seller is absolved of all liability for the shipment at the moment the buyer receives the shipment.

However, that doesn’t imply that a seller can make a half-hearted attempt to follow through on the shipment. After all, the buyer assumes the risk, but if the shipment is damaged due to negligence on the part of the seller in packaging or staging, the seller may still be at fault and subject to financial remuneration.

International trade can be complex as can shipping terms; ensure you use the correct trade term to minimize your risk. If the seller needs to take additional steps, such as filing handling export customs clearance or arranging transportation, this is not the correct Incoterm for the transaction. Remember the seller is not obligated to provide any further requirements and is only responsible for making sure the goods are packed and available at their premises.

Graph showing Incoterms Ex-works

The Pros and Cons of Using the Ex Works Shipping Term

Using the Ex Works incoterm for international shipping has obvious perks for the seller. In this situation, the seller has minimal responsibility. The goods must be made available and packed suitably and be available at a specified location.

The buyer, therefore, has the majority of the responsibility and is obligated to load the goods, follow export procedures/export licenses, manage transportation costs, and address any associated duties or needs in collecting the cargo, customs clearance and delivering the goods. Establishing who carries the risk/liability for loss or damage during loading is important.

Even though it sounds like the ideal solution for the seller, this term has some core benefits for buyers, including:

Increased cost control.
More flexibility in choosing a carrier.
Ability to better coordinate downstream or import proceedings.

The term also carries some disadvantages to the buyer, including:

Increased responsibility and costs.
Risk of miscommunication.
Greater chance of error in handling export requirements.

Of course, there’s another factor to consider that might be similar to the adage: the goodness of his or her heart.
Technically, the seller is not required to load the goods on the buyer's designated method of transport but can do so if they choose. The seller's only requirement is to make the product available at a selected location, it is the buyer's responsibility to pay for the transport. As a result, the seller may load some loads, such as those requiring advanced engineering and planning skills for lashing or securement, despite using this Incoterm.

Know When to Use EXW or Other Incoterms by Partnering With Crane Worldwide Logistics

With all Incoterms, it is important to understand the obligations of both the buyer and seller. There are eleven Incoterms covering international shipments, are you aware of all the different options? Free on board and free carrier may be of interest for your shipping process if you need shipment support. Regardless, our team can help you ensure you’re using the just-right Incoterm on every shipment. Request your quote from Crane Worldwide Logistics to get started.