How does Importer benefited when contract of carriage is on EXW basis?
The below information is a part of our detailed explanation about the delivery terms under Incoterms 2020. We point out the functions of each delivery term, comparison of delivery rules each other, advantages and disadvantages from both exporter’s perspective and importer’s perspective.
The below details are about the EXW delivery terms and how does it functions as an advantage to the importer.
Let us chew over one by one below:
01. One of the most advantages for importer is that under EXW, buyer undertakes most of the risks and costs involved in movement of goods from seller’s place to buyer’s place. So, the profit margin ratio also would be high compared to other Inco Terms of delivery.
02. Another merit for importer under EXW is that in an export import business, buyer has complete control over movement of goods from the point of seller’s named place to final destination of buyer. The buyer supervises the local transportation (pre carriage), export clearance and taxes, main carriage, import customs clearance process and taxes and on carriage process.
03. One of the other merits for importer under EXW is that he learns and experiences government regulations in movement of goods, export procedures and taxes in exporter’s country which would be strength of buyer which he can utilize for all similar business transactions to increase his business. This is another advantage for buyer under EXW delivery rules. This is an advantage for buyer under EXW delivery terms.
04. One of the other advantages for buyer under EXW is that safety of goods can be ensured when the buyer undertakes total movement of goods from buyer’s place to seller’s place under EXW.
05. Another merit for importer under EXW is that the cost calculation at each point of movement of goods can be ascertained by buyer under EXW, which may help him for future transactions with similar delivery terms either with same seller or with other suppliers.
06. One of the other advantages for importer under EXW is that under EXW, the importer can build up a good relationship with the right and efficient freight forwarder, as the buyer is the in charge of pre carriage, export customs clearance, main carriage, and import clearance and on carriage process. The strength of such freight forwarder is an added advantage to strengthen his business. This is a merit for buyer under EXW.
07. Since the buyer undertakes unloading of goods under EXW, he can take maximum care to unload to avoid damage and losses. This is another comfort for importer under EXW in an export import business.
08. One of the other gains for buyer under EXW is that; since the cost of sale of goods is less under EXW, the foreign outward remittance amount would be lower resulting less foreign exchange flow from home country to foreign country.
09.Importer holds total control on shipping and release of Bill of Lading /AWB and other documentation. This is another advantage for importer if delivery rule is EXW.
The above information is about advantages for importers under EXW basis of delivery terms.
You may share below your experience and merits for buyer under EXW delivery terms under Incoterms 2020.