EXW,Ex Works under Inco terms 2020

EXW (named place)   EX WORKS (named place) Incoterms 2020

As mentioned above, any Inco terms carries with three letter word followed by named location.  The EXW stands for Ex Works.  ‘Works’ derived from the meaning of Factory where the goods are produced.  Means at the place where goods are manufactured. (The manufacturer’s premise/ Seller’s Premise).  Later, ICC modified the definition by adding ‘named place’ meant any named place at Seller’s premise.

Ex works terms of delivery is used under all modes of transport.   The Seller manufactures, packs goods and places his goods at his premises for the disposal of buyer for further movement to Buyer’s premises.   In other words, the responsibility of seller to move goods ends after placing the goods at his premises.  Under EXW delivery rules, the buyer is responsible for export documentation process; export customs clearance procedures, loading port formalities, main carriage process, import customs clearance process and on carriage process till goods reaches his premises.  Under EXW terms of delivery, since the risk and cost of delivery of goods ends at Seller’s premises, the safest mode of delivery for an Exporter is EX Work’s term of delivery.  The profit margin of each shipment also can be determined immediately up on discharging his responsibility by place the goods at his premises for the disposal of buyer for pre carriage stage. 

Insurance under Ex-works may be arranged either buyer or seller as per mutually agreed Sale Contract.

As per my experience for the past 30 years in Import Export trade in practice, although the risks passes from seller to buyer after placing goods at seller’s premises under EXW terms,  the exporter normally supports importer to help in movement of goods at all stages, especially in exporter’s country, as a part of business relationship each other.  Under Ex-works terms, the buyer should have proper knowledge and experience to handle the goods at exporter’s country especially the regulatory obligations of export customs clearance process.    Usually, a reliable freight forwarding agent is appointed by buyer at seller’s country.

Here, one question arises: The risk of customs clearance at load port in exporter’s country is with Importer.  Since the buyer situates in another country, there are limitations to handle customs clearance process at exporter’s country.  If any delay occurs, who is responsible?  The answer is, Inco Terms are rules not Law. Here, the export customs formalities are carried out legally under an Act.  So, the buyer and seller has to mention in their Sale Contract,  clearly about the risk in delay if occurred at regulatory part, here export customs clearance delay. 

Compared to other Inco terms delivery rules, the price of sale of goods minimize up to that level under Ex-Works terms of delivery of goods, in turn less risks and costs on delivery of goods.Click here to read about Ex-works, FOB,FCA,CPT,CIP,DAP,DPU,DDP,FAS,CFR and CIF  under INCO TERMMS 2020

EXW - Ex Works (named place)

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