Ex Works (EXW)
This article is part of our weekly blog series on the Incoterms® Rules — we will be looking at a new term every Tuesday
“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.
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.
The International Chamber of Commerce (ICC) has provided a very helpful illustration of Incoterms® that you can download here for free. It shows how in working down the list of incoterms, risk progressively changes from the buyer’s responsibility to the seller’s responsibility.
Incoterms® consists of a total of 11 trade terms, which are divided into two groups.
Group 1 consists of terms that can be used for any mode of transportation:
• EXW Ex Works – today’s topic!
• 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
Group 2 consists of 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 advises 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.