EXW Incoterm

Commerce

The EXW is a type of international trade incoterm in which the buyer must travel to a point established by the seller to collect the main merchandise in the sale.

The International Chamber of Commerce, in charge of the establishment of the different incoterms, considered the EXW commercial typology as one in which the good object of a commercial economic operation must be collected at a point designated by the seller.

The meaning of its acronym (in English: ex works) explains the way in which this type of incoterm is developed. The seller arranges his products in a specific location, such as warehouses, points of sale or directly at the plant or factory so that the seller can pick them up.

In a sense, an EXW assumes that so many costs related to the sale are borne by the buying agent. In other words, the risk of the operation falls mainly on this part of the commercial transaction.

This means that this is a common export option among exporting agents with few means or of smaller size, as in the case of SMEs.

Basic implications of an EXW-type trade agreement

The existence of a trade agreement that is governed by an EXW approach involves the following approaches:

  • It must be the purchasing party that assumes the cost of transport and insurance of the merchandise once acquired at the point of sale.
  • The seller assumes expenses related to the preparation and packaging of its products, although not its shipments or insurance, which are borne by the buyer.
  • It is an advantageous and inexpensive option for the seller, so these types of commercial actions tend to go hand in hand with low price levels.
  • An EXW is a type of agreement that, due to its nature, is carried out independently of the chosen means of transport. Others are only capable of being carried out by sea.
  • Possible duties or customs that may be incurred will be the responsibility of the buyer.

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