what is ex works exw 
ex works exw is an international trade term that describes when a seller makes a product available at a designated location and the buyer of the product must cover the transport costs ex works exw is one of the 11 current incoterms international commercial terms a set of standardized international trade terms published by the international chamber of commerce 1investopedia jiaqi zhouunderstanding ex works exw ex works exw requires a seller to safely package goods label them appropriately and deliver them to a previously agreed upon location such as the seller s nearest port the seller must also help the buyer get export licenses or other required paperwork although the buyer must pay the actual fees for the documents once the buyer has the goods it is up to the buyer to cover any expenses and account for any risks that pertain to the goods risks could include loading the products onto a truck transferring them to a ship or plane dealing with customs officials unloading them at their destination and storing or reselling them even if the seller helps the buyer by loading the product onto a ship it s still up to the buyer to pay if anything goes wrong during the loading with ex works the seller can load the goods on the buyer s designated method of transport but is not required to do so all the seller is required to do is make the product available at a selected location while the buyer pays for transport example of ex worksex works costs are calculated by businesses that want to cut costs by removing the so called seller s value added for shipping for example suppose company a has priced a pair of printers from company b at 4 000 with an ex works shipping cost of 200 to save money company a finds a third party shipper to deliver the printers for 170 so to save the 30 on shipping they make an ex works deal with company b an ex works agreement differs from a free on board fob agreement where the seller covers the cost of getting its goods to a shipping terminal and pays all the customs costs to get them on board 2 meanwhile the buyer still has to pay to find contract and pay the shipping company as well as the customs costs incurred when the goods reach their country of destination in addition the buyer also pays the insurance costs ex works vs fobex works is the obligation on the buyer s part to incur the costs of loading goods for transport free on board fob is the term used to refer to the seller s obligation to load goods fob is used only for sea or inland waterway transport under fob the seller is responsible for delivering the goods on board the vessel nominated by the buyer at the named port of shipment the seller also handles export clearance the risk transfers to the buyer when the goods are on board the vessel and the buyer bears all costs from that point onward generally fob transfers ownership of goods to the buyer once they are loaded on the buyer s transportation method however there is a possibility that the seller might remain responsible for them during transport to the final destination this depends on the contract and the terms the buyer and seller have agreed on ex works places almost all responsibility on the buyer while fob requires the seller to handle more of the export process and initial transportation fob is generally more favorable to the buyer compared to ex works responsibilities under ex worksunder exw the buyer assumes most responsibilities once they collect the purchased goods from the seller some of the duties transferred include sellers in an exw agreement in contrast to buyers have very few responsibilities generally they are responsible for packing the goods to be loaded and transported and providing a place for the buyer to pick them up advantages and disadvantages of ex worksallows buyers to consolidate multiple purchasesability to anonymize a supplierleast expensive optionallows buyers to purchase in the domestic marketbuyer assumes all risk and costsneed a trusted representative in the country goods are purchased fromyou might pay more than intended if you re unfamiliar with the process and costsincotermsex works free on board and free carrier are all part of the international chamber of commerce s incoterms 1 they are used in international trade contracts to outline matters including the time and place of delivery and payment when the risk of loss shifts from the seller to the buyer and the party responsible for paying the freight and insurance costs the incoterms aren t actual contracts and don t supersede the governing law in their jurisdiction incoterms can be modified by explicit clauses in a trade contract incoterms were first established in 1936 and the current version incoterms 2020 has 11 terms 3 these are often identical in form to domestic terms such as the american uniform commercial code but may have different meanings additionally other countries and jurisdictions that govern import and export may have different methods of calculating duties on shipping based on their incoterms as a result parties to a contract must indicate the governing law of their terms 4