The EXW trade terms clause belongs to the international economic law and is a term of international trade, which means that the seller delivers the goods at the factory or warehouse, that is, as long as the seller loads the goods on the car sent by the buyer in his own factory or warehouse, the delivery is completed obligation.
EXW trade terms is the abbreviation of ex-works, which is an international trade term for “ex-works delivery”. It means that the seller is responsible for delivering the ready goods to the buyer or the designated freight forwarder at its location, that is, the workshop, factory, warehouse, etc., but usually is not responsible for loading the goods on the vehicle prepared by the buyer, and does not bear the transportation fee and subsequent export. Customs declaration, that is to complete the delivery.
Issues that should be paid attention to when using the EXW trade terms:
(1) The delivery point within the designated delivery location should be stated as clearly as possible after the EXW term. If no specific delivery point has been agreed upon at the named place of delivery and more than one delivery point is available, the seller may choose the most convenient delivery point for him.
(2) The seller does not need to load the goods on any means of transport that comes to receive the goods. If the seller assists the buyer in loading, FCA should be used.
(3) When customs clearance is required, the seller does not need to go through export customs clearance procedures. The seller is obliged to assist the buyer in export procedures only at the buyer’s request and at the risk and expense of the buyer. Therefore, the term should not be used and FCA should be used when the buyer cannot directly or indirectly carry out export formalities.
(4) When the buyer makes a request and bears the risks and costs, the seller is obliged to provide the buyer in a timely manner or assist the buyer to obtain relevant documents and information related to the import and export of goods, including safety information. The buyer, on the other hand, bears only a limited responsibility to provide the seller with information about the export of the goods.
Advantages and disadvantages of EXW trade terms
In Ex Works, the importer is responsible for all risks and costs from the point and time when the goods are made available to them.
Therefore, diligence and thorough planning are necessary.
EXW trade terms can be complicated and tricky for buyers shipping from China.
This is because they still require authorization or communication from the supplier to clear the merchandise through customs.
Alternatively, hand over the documents to a shipping partner during transit.
For sellers with insufficient knowledge of shipping from China to the US, ex works shipping may be the best option.
Considering that the sole responsibility assumed by the seller is to ensure that the goods are properly packed for delivery to the buyer’s disposal.
The impact on suppliers is minimal.
But no matter how the risk is reduced, the EXW clause may not be the most economical choice for the seller.
When you decide to use EXW Incoterm alone as a supplier, the buyer may choose another seller who is more attractive and easier to deal with.
Who handles the customs clearance process in EXW trade terms?
Technically, the entire responsibility for shipping the goods rests with the buyer from the outset.
Therefore, any other activities involved in receiving the goods are the buyer’s obligation.
In short, the buyer is the party that simultaneously handles import and export declaration procedures under EXW trade terms.
Suppliers only provide necessary customs clearance documents, such as commercial invoices and packing lists.
However, at the buyer’s request, the seller can again assist in the customs clearance process at the buyer’s expense.
Also, as a buyer, you can seek reliable freight forwarding services to assist you in simplifying the customs clearance process.
