Ex Works (EXW)
This Incoterm means the seller will make the goods available to the buyer at a named place, usually the seller’s factory or warehouse. The buyer must make the arrangements to collect the goods, at the buyer’s expense and risk, and to clear the goods for export. When making a purchase under Ex Works, most of the responsibilities and risk of transportation fall on the buyer.
Consider the following hypothetical shipment to help explain the responsibilities for the buyer and the seller under Ex Works.
The buyer is a children’s clothing retailer. The purchase agreement with Children’s Garments, Inc. reads “$3,500, Ex Works, 123 Shanghai Road, Shanghai China, 1000 girls 100% cotton woven sweaters.” Under the term Ex Works, the seller makes the sweaters available for the buyer (at the named place) packed and ready for export.
All risk and costs from the seller’s named place to the final destination are the buyer’s responsibility. Those costs would include picking up the sweaters at the seller’s named place, air or ocean transportation costs – whichever the buyer chooses as the method of transportation, export clearance, inspections, licenses if required, insurance, loading and unloading, import Customs clearance and delivery to a destination specified by the buyer. The seller has no obligation to provide any of the services named under the agreed upon Ex Works terms. The buyer is liable if the sweaters are lost, stolen or destroyed after they leave the seller’s warehouse, which makes having cargo insurance so important to the buyer.
Ex Works may be the simplest term of sale to understand because the buyer is responsible for all costs and risks, and the seller is responsible for none of the costs and risks.