Delivery terms EXW

Ex Works — a fundamental term in international trade. It means "from the factory". This concept implies that the seller fulfills his obligations under the transaction when the goods are ready for dispatch at his plant or at some other predetermined place, be it a factory, warehouse, etc.

In its original sense, the term implies that all risks and costs associated with delivery are borne by the buyer. Namely, from the moment of actual receipt of the products by the seller or his representative, all responsibilities, risks of loss or damage, as well as costs arising after shipment of products/raw materials, pass to the customer.

Thus, EXW — this is a component of international trade necessary for understanding and properly regulating the relationship between seller and client. By setting up the correct understanding and use of this term, you can build a strategy for effective, successful business.

Exw Incoterms 2020: delivery features

EXW (Ex Works) under Incoterms 2020 means that the supplier fulfilled its obligations when the order was provided in its territory. It is ready to ship, but without export packaging or loading onto a vehicle. All further risks and costs for obtaining licenses, customs formalities, transportation to Europe, insurance are borne by the customer. In fact, EXW delivery conditions — the product delivery formula that is least binding for the seller. This concept is widely used in international transport (trade).

EXW delivery conditions: obligations of the supplier/buyer

From the point of view of the seller's responsibility, his main task is — preparation for shipment, notification of the client about the readiness of products. The supplier is under no obligation to pack or load it onto the buyer's vehicle.

The supplier must also provide the customer with all necessary documents that he may require for further export. These documents include:

• customs declarations;
• commercial accounts;
• export information packages;
• certificates of origin;
• installation and operating instructions;
• other necessary documentation.

EXW — this is an agreement. It states — the buyer compensates for any costs associated with receiving the order. This includes not only the physical receipt of products/raw materials from the seller's premises, but also the costs of transportation, insurance from the place of receipt to the destination.

As a result, the customer is responsible for all risks associated with delivery from the place of production to the place of final use. Even if problems arise during delivery, for example, damage to the shipment or delay, the customer — the party responsible for solving the problems that have arisen.

EXW Agreement — benefits for the supplier. After all, it bears virtually no risks after the prepared products are ready for shipment. However, under the terms of such an agreement, the buyer may need more funds to organize the delivery process and ensure the safety of the products during transportation.

What is EXW: delivery requirements

Ex-warehouse option — these are the conditions under which the seller prepares goods for shipment at his warehouse. From this moment further actions — transportation, insurance, loading, unloading, customs formalities — responsibility of the customer.

Another option, ex-warehouse of the buyer of the products, implies the following: after preparing for shipment at his warehouse, the seller undertakes to deliver them to the buyer’s warehouse. Informing the customer that products are ready for shipment becomes a key element in this process. From the moment of delivery to the buyer's warehouse, all further costs and risks associated with their transportation and use are transferred to the customer.

Under the terms of delivery ex-factory, the supplier undertakes to deliver raw materials/products to his enterprise (factory) and notify the client that the order is ready for shipment. This means, by analogy with ex-warehouse, all subsequent costs, risks associated with transportation, insurance, loading and unloading of goods, as well as with customs procedures, are borne by the buyer.

All three terms of delivery are defined in the Incoterms system, which facilitates international trade by making it easier to understand the obligations, costs and risks between buyer and seller. However, it is worth considering that in reality, most transactions require an individual approach, since each movement of goods is associated with certain costs and risks, which must be clearly understood and agreed upon by both parties. Of course, effective use of delivery conditions — transparent, understandable process. And ex-warehouse and ex-factory — this is assistance in international trade, predictability for both parties to the transaction.

Under the EXW supply agreement, the supplier undertakes to prepare the goods for shipment. Packaging of goods, in accordance with Incoterms, is not necessarily done by the supplier.

On the other hand, the buyer undertakes to independently pick up the products from the factory or other specified location. According to the EXW agreement, the event includes the entire process of transporting goods from loading to the final destination. The customer is responsible for insurance and customs procedures. In addition, all associated costs and risks, including the risk of damage or loss of goods, are borne by the customer.

EXW Agreement — this is a series of features. After all, the main part of the logistics work is shifted to the customer. However, this option may be preferable for customers who want to maintain control over the process of transportation and insurance of shipments. When the process is properly organized by a logistics company, the client saves money on the services of intermediaries, exchange rate differences, and insurance.