Ex Works EXW Incoterms®  2000 ... The sales term used by sellers who “don't really export…"
… and buyers who take total control of all risk, transport, clearance etc.

 IMPORTANT ANNOUNCEMENT

The International Chamber of Commerce (ICC)has issued the latest revision of International Commercial Terms,Incoterms® 2010 effective 1 January 2011

The Incoterms® rules are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods. First published in 1936, Incoterms® rules provide internationally accepted definitions and rules of interpretation for most common commercial terms.

It is worth noting  that all contracts made under INCOTERMS® 2000 remain valid even after 2011.Although using Incoterms® 2010 is recommended after 2011, parties to a contract for the sale of goods can agree to choose any version of the Incoterms rules after 2011. It is important however to clearly specify the chosen version INCOTERMS® 2010, INCOTERMS® 2000 or any earlier version.

The Incoterms® rules are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods. First published in 1936, Incoterms® rules provide internationally accepted definitions and rules of interpretation for most common commercial terms.

They help traders avoid costly misunderstandings by clarifying the tasks, costs and risks involved in the delivery of goods from sellers to buyers. Incoterms® rules are recognized by UNCITRAL as the global standard for the interpretation of the most common terms in foreign trade.


Ex Works... The sales term used by sellers who “don't really export…"
… and buyers who take total control of all risk, transport, clearance etc.

EXW
EX WORKS
(... named port of shipment) Incoterms®  2000  

Group E Departure

The definition of EX WORKS (EXW)

"Ex works" means that the seller delivers when he places the goods 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 involved in taking the goods from the seller's premises.

However, if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale.

This term should not be used when the buyer cannot carry out the export formalities directly or indirectly.

In such circumstances, the FCA term should be used, provided the seller agrees that he will load at his cost and risk.

Check out the Implications for Various Stakeholders of Using Ex Works (EXW)

What are the Implications for the Seller?

As indicated above, the seller has minimum obligations and risk.

In fact, if we look at Ex Works in practical terms, we see that the seller, in one sense, is not really the exporter. The only thing the seller is required to do, is to make the subject goods available at his premises. The seller does nothing actively to range for the transportation, the export formalities required by the government of the export country, or any documentation or other arrangements for the export.

The seller is not required to even load the goods on the collecting vehicle. So, by implication, if anything untoward was to happen to the goods whilst been loaded onto the collecting vehicle, and the goods were damaged or destroyed, the seller would not be liable for those events.

What are the Implications for the Buyer?

As we see from the definition, and the item above relating to the seller, that the seller has minimum obligation under this incoterm.

Therefore, the reverse applies to the buyer. The buyer has maximum obligation and risk under Ex Works (EXW). To control and mitigate all risks involved in picking up the goods from the seller's premises, arranging the clearance for export, transport to the country of the buyer, Customs clearance, paying appropriate duties and taxes in the importing country and delivering the goods to the buyer's premises, then the best option for the buyer would normally be to use the services of a freight forwarder.

What are the Implications for Shipping Lines and Airlines?

If the buyer were to arrange the transport of their goods directly with a Shipping Line or Airline, the main implications are, that as the Buyer will be paying the freight, the Bills of Lading or Air Waybills will normally be made out “Freight Collect” and the freight charges will be collected at the port of discharge or place of destination.

If the Shipping Company or Airline has concerns about payment default of the freight charges at the port of discharge or port of destination, due to economic or country conditions, they may require the freight to be “prepaid” at the port of loading or place of receipt.

The buyer would then need to transfer this payment to the overseas country.

What are the Implications for Road & Rail Carriers?

In the majority of cases, it is most probable that where road and rail carriers are involved in the transportation of the goods within the country of the seller and/or also the country of the buyer, they will normally be contracted by the freight forwarder who would normally be organising the total transportation involved.

In some instances, where there is the ability to utilise road or rail transport between countries, the road or rail carriers may indeed organise the total transport between seller and buyer.

What are the Implications of for Freight Forwarders?

Were a freight forwarder has been contracted by the buyer to organise the complete process of picking up the goods from the seller's premises and the delivering them to the buyer's premises, there will be a number of elements involved that the freight forwarder will need to plan, organise and execute. They include:-

- Pick up the cargo from the seller's premises.

- Deliver the goods to the appropriate international conveyance (vessel, aircraft, train or truck)

- Arrange export permits etc where required.

- Arrange the appropriate export Customs clearance.

- Organise appropriate transport documents (bill of lading, air waybill, consignment note etc.)

- Arrange appropriate Marine insurance where required.

- Arrange appropriate import permits, licenses etc., where requiescat.

- Arrange Customs and quarantine clearance in the importing country.

- Pay appropriate Customs duties and taxes where required.

- Arrange the delivery of the goods to the buyer.

What are the Implications of Ex Works (EXW) for Insurance Companies?

Provide the appropriate insurance certificate or policy as required by the buyer or agent of the buyer, such as a freight forwarder or customs broker.

Key Points for Ex Works (EXW)

The Seller has minimum obligation.

The Buyer has to bear all costs and risks involved in taking the goods from the seller's premises.

Freight Facilitators would normally mark their transport documents “Freight Collect.”

Click here for the revised EXW Ex Works - Incoterms® 2010

This Rule should be read in the context of the full official text of the rules which can be obtained from the ICC BusinessBookstore.

Click here for a list of all the 11 Incoterms 2000 Rules

Click here for a list of all the 13 Incoterms® 2010 Rules

Click here for the Made Easy e-Guide to Incoterms® 2010 Rules with its unique “Quick Reference Format”