EXW – what is it?
EXW, an acronym for “Ex Works,” is one of the Incoterms (International Commercial Terms) widely used in international trade agreements, including sectors like food, feed, and industry in which Foodcom S.A. operates. When a product is sold on an EXW basis, it signifies that the seller has fulfilled their obligation once the goods are made available for pickup at their premises or another named place (e.g., factory or warehouse). From that point onward, the buyer assumes all costs and risks associated with transporting the goods to their final destination.
Most common questions
1. What responsibilities does the seller have under EXW?
Under the EXW term, the seller’s primary responsibility is to prepare the goods for pickup, ensuring they’re adequately packed and ready for transportation. The seller must also provide the necessary documentation for the buyer to export the goods. However, the seller is not responsible for loading the goods onto a collecting vehicle; that responsibility is borne by the buyer unless otherwise agreed upon.
2. Who bears the transportation costs in an EXW agreement?
In an EXW agreement, all transportation costs post-collection from the seller’s premises are borne by the buyer. This includes freight charges, insurance, unloading, and further transportation, as well as any export and import duties or taxes.
3. What are the risks for buyers under EXW?
Under EXW, buyers assume the majority of the risks associated with transportation, including damage or loss of goods during transit. They also carry the burden of handling all export and import formalities, which can be complex and vary by country. Buyers must be well-versed in these procedures or work with knowledgeable partners to navigate these challenges efficiently.
4. How does EXW compare to other Incoterms?
Incoterms encompass a range of terms, each defining different obligations for sellers and buyers. Compared to other Incoterms, EXW places the least responsibility on the seller. Terms like FOB (Free On Board) or CIF (Cost, Insurance, and Freight) entail more obligations for the seller in terms of transportation and costs. It’s essential for both sellers and buyers to understand each term fully and choose the one most suitable for their specific transaction and logistical preferences.
