International Business

What Does Ex Works Mean In Shipping Terms

Incoterms are much abbreviated!  Nowadays, there are so many commercial terms used mostly in international business. But, how many of them are we well conversant with? One of the popular commercial terms is Ex Works, synonymously known as EXW. It may also be called Ex Warehouse. However, what does it mean or what is the essence of this incoterm? No problem. Today, I am explaining the basic idea on this key commercial term for your easy understanding.

Ex Works‘ or EXW means that the seller delivers when the goods are placed at the disposal of the buyer at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. This term, thus, represents the minimum obligation for the seller, and the buyer has to bear all costs and risks unload in taking the goods from the seller’s premises. (Incoterms 2010)

The price under EXW contract represents the minimum since the goods are delivered at the seller’s premises. The price excludes all other expenses. The obligation or the seller is to make the goods available at his premises, i.e., works or factory.

 Here in Ex Works, the seller should bear all costs and risks in packing the goods, arranging for checking operations like checking quantity, measurements, weighing and counting, that may be necessary for the purpose of placing the goods at the disposal of the buyer. He should give reasonable notice to the buyer as to when the goods would be at his disposal. If the buyer so desires and at his risk, the seller may render assistance in getting, documents that may be required for exportation and/or importation of the goods.

In EXW, the seller is not responsible for loading the goods on vehicle provided by the buyer. If the parties the seller to be responsible for the loading of the goods on departure and to hear the risks and all the costs of such loading, this should be made clear by adding explicit wording to the effect in the contract of sale. The buyer has to bear the cost and risk involved in bringing the goods from the seller’s works to the desired destination. All costs, taxes, etc., both at the seller s country and the buyer’s country have to be borne by the buyer.

Documents required under Ex Works or EXW shipping termed contracts are: 

(a) Invoice

(b) Any other documents as required by the buyer.

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