Ex Works (EXW)
This article is part of our blog series on the Incoterms® Rules, helping importers and exporters understand international trade terms. C J International is a full-service Customs Broker and Freight Forwarder.
Meaning of Ex Works
“Ex Works” (EXW) 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.
Ex Works Example
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
- licenses (if required)
- loading and unloading
- import Customs clearance
- 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.
Note: 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.
More Resources on the Incoterms® Rules
The International Chamber of Commerce (ICC) has provided a very helpful illustration of the Incoterms® Rules that you can download for free. It shows how in working down the list of terms, risk progressively changes from the buyer’s responsibility to the seller’s responsibility.
The Incoterms® Rules consist of 11 trade terms, which are divided into two groups.
Terms that can be used for any mode of transportation:
- EXW Ex Works
- FCA Free Carrier
- CPT Carriage Paid To
- CIP Carriage and Insurance Paid To
- DPU Delivered at Place Unloaded
- DAP Delivered at Place
- DDP Delivered Duty Paid
Terms that apply to sea and inland waterway transport only:
- FAS Free Alongside Ship
- FOB Free on Board
- CFR Cost and Freight
- CIF Cost, Insurance, and Freight
This blog series is intended to be a helpful introduction to international trade terms, not a comprehensive resource. C J International recognizes that the ICC is the only official source of definitions and explanations surrounding the Incoterms® Rules, and encourages our clients and the shipping community to consult iccwbo.org and their educational materials for further details.
Incoterms® and the Incoterms® 2020 logo are trademarks of ICC. Use of these trademarks does not imply association with, approval of or sponsorship by ICC unless specifically stated above. The Incoterms® Rules are protected by copyright owned by ICC. Further information on the Incoterms® Rules may be obtained from the ICC website iccwbo.org.