Ex Works (EXW) is a common international trade term used to define the point on a contract when a seller’s contractual obligation to make a product ready for collection and delivery has been fulfilled. This shipping arrangement specifies that the seller has to make a product available at a designated location, with the buyer incurring the cost of transportation and taking on the risk of the goods between that point and the final destination. Typically the seller is only responsible for the product up until they hand it over once the buyer arrives to collect their goods.

EXW is one of the rules of Incoterms, a set of 11 globally accepted trade terms set by the International Chamber of Commerce for international and domestic trading purposes, including Importer and Exporter responsibilities and transport arrangements. EXW requires minimal responsibilities from the seller, as the buyer is responsible for managing the entire shipping process from pick up to delivery at their end.

When using Ex Works shipping terms, the buyer is responsible for taking on all of the risks, including cargo loading; picking up the goods from the seller’s premises; transport insurance, customs clearance and all other related costs until the merchandise reaches its final destination.

When EXW terms are used, buyers have the freedom to arrange their own transport, reducing the risk of delays. However, this shipping arrangement puts more pressure on buyers as they are responsible for the entire shipping process, including selecting the shipping method, which adds additional costs, managing inventory, and meeting all customs regulations.

Overall, Ex works offers buyers greater flexibility, as they are allowed to make their own shipping arrangements and usually incur fewer costs than when using other Incoterms. It is important to note that before setting up an EXW agreement, buyers must consider the risks and extra costs associated with arranging the entire shipping process.