EXW terms, disadvantages to Buyer

Is Ex works (EXW) safe delivery terms for importer?

01. What are the demerits for importers under EXW delivery terms?  The below information explains about the disadvantages for buyers under Ex works terms of delivery:01.  The most disadvantages for buyer under EXW is that; high risks and costs are undertaken by the importer under movement of goods if delivery rule is EXW (ex-works).

 02.  Another drawback for importer under EXW is that the importer should have clear knowledge and experience in export country’s knowledge in export documentation, customs clearance, export taxes if any, rules and regulations of export required.  There are chances of meeting more expenses than estimated if delay in obtaining permissions, hike in export duties, port congestions or any other non anticipated circumstances. This is another disadvantage under EXW for buyer. 

03. If the buyer or his freight forwarder is not familiar with import documentation, import customs clearance, import government regulations on taxes and duties etc, there could be heavy loss for importer under EXW terms of delivery.   There are chances of costs more than anticipated expenses against import customs clearance, import documentation, import taxes and duties. This is another disadvantage for an importer under international business, if carriage of contract is EXW.

04. Since the risks and costs of pre carriage, main carriage and on carriage are under the risk of buyer under EXW, he cannot sue or raise dispute against safety of goods against supplier. This also is one of the demerits for importer under EXW terms.

05. Another drawback for importer under EXW is that the buyer is at the risk of damage and loss of goods during the loading process. Although the seller loads the goods as a common procedure, it is the buyer who bears the damage to the goods.

06.  The cost of export license and export inspection of goods if required is paid by the buyer but has no control as the buyer situates at his country.  This is another disadvantage for importer when delivery terms contracts  EX works. 

07. Under EXW, if the buyer fails to appoint a right freight forwarder, the costs and risks fall under him, as he cannot claim from the supplier. This is another demerit for buyer under EX works delivery terms.

08. Although the control over release of Bill of Lading /AWB control is with the importer, he may require the help of Exporter for which separate clause has to be added in contract of carriage between exporter and importer.  This is also treated as other disadvantages for importer, if contract of carriage is Ex Works.

 09.  Another disadvantage for an importer under Ex works (EXW) is that the unloading of goods at named destination is under the risk of importer under EXW.  Before unloading of goods, the importer has to make sure that there is no damage or loss of goods.

 10. Compared to any delivery rules, under EXW, the buyer undertakes high risks on movement of goods.  This is treated as most dangerous for importer under EXW terms.

The above details explain about the drawbacks for importers under EXW delivery terms. 

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