In international trade, EXW (Ex Works) is one of the most basic trade terms. In Chinese, it is usually translated as ""Ex-factory"" or ""Ex-factory price"". Let’s take a closer look at this important trade condition.
EXW (Ex Works) literally translates as ""ex-factory price"" or ""delivery from factory"", which is the lowest requirement for sellers in international trade terms. Under EXW trade conditions, the seller only needs to prepare the goods at its own location (such as a factory or warehouse) and notify the buyer that the goods can be picked up, which completes the delivery obligation.
According to the latest version of Incoterms 2020 (Incoterms 2020), EXW stipulates that the seller must:
- Prepare the goods at the designated location
- Provide a commercial invoice that meets the contract requirements
- Bear all costs and risks before the goods are ready
- Usually the seller's factory or warehouse
- The specific location must be clearly specified in the contract
- The buyer needs to arrange the pickup and subsequent transportation by himself
- When the goods are ready at the designated location
- When the buyer receives notification that the goods are available for pickup
- When the agreed pickup time arrives
| Seller Responsibility | Buyer Responsibility |
| Prepare goods that meet the specifications as agreed | Pay on time |
| Provide appropriate packaging | Arrange pickup by yourself |
| Issue commercial invoice | Responsible for export customs clearance procedures |
| Provide relevant documents required by the buyer | Shipping and insurance borne |
| Notify the buyer that the goods can be picked up | Apply for import license |
| Pay all taxes |
EXW’s advantages and disadvantages
| Advantages | Minimum seller risk | - No export formalities - No shipping risk - Clear scope of responsibility |
| The lowest cost to the seller | - No shipping charges - No insurance charges < span style=""font-size: 14pt;""> - Customs clearance costs are borne by the buyer | |
| Simple price calculation | - Only the cost of the goods itself is calculated - No need to consider transportation variables - Quotes are more transparent | |
| Suitable for factory direct shipment | - Especially suitable for inland factories - Easy to arrange production planning - More flexible inventory management | |
| Disadvantages | Buyer assumes full risk | - Need to handle all logistics links - Bear the entire transportation risk< br /> - Larger scope of responsibility |
| Unable to control the export process | - It is difficult for the seller to control the export time - May affect the progress of foreign exchange collection< br /> - Incomplete statistics | |
| May affect buyer's purchasing intention | - The buyer has a heavier burden - Requires strong logistics capabilities< br /> - Overall costs may increase |
EXW (Ex Works), as the most basic international trade terms, has clear division of responsibilities and simple operation. It is especially suitable for sellers who are new to international trade. Although EXW provides the seller with minimal liability coverage and risk, the buyer needs to bear greater logistics responsibility, so the advantages and capabilities of both parties need to be carefully weighed when choosing EXW terms. Want to learn more about international logistics knowledge and professional trade advice? Welcome to continue browsing Fuuffy Information and Blog to get more practical logistics information and industry trends!
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