Ex Works – What is Ex Works?
Ex Works is a trading scenario in which the Seller of the goods responsible for the production and packaging of the goods at their place of manufacture only. This is In contrast with Free Carrier Arrangements, in which the seller is responsible for clearing the goods through customs at the place of transport – ie a shipping port.
This then means that the buyer (and/ or any co-signers they have involved) is then responsible for the rest of the transaction proceeds. This liability includes aspects such as the loading and transportation of goods, unloading and final transportation.
With domestic trade, Ex-works is preferable to other liability arrangements. This is because, within the domestic market, the buyer is likely to have transport links/ existing supply chains that they may be able to use – potentially being cheaper than the seller’s preferred arrangement.
And this is the issue Ex works have in the international marketplace. The Buyer remember, is responsible for:
- Loading the goods at the factory
- Transporting to the port
- Clearing customs
- Shipment/ main transport
- Unloading of the goods at the destination port
- The final leg of the transport from the port to the buyer’s warehouse/ shop.
All of the above include many moving variables, that are costly for a business to arrange. For instance, the buyer will need to arrange the relevant licenses/ documents that are required for the goods to be cleared through customs and accepted for export.
Advantages and Disadvantages of Ex Works
Ex Works Price
The price of Ex Works – much like FCA – is obviously dependent on the journey that is required for the goods. However, the following costs are to be considered when applying an Ex-Works arrangement:
- Loading/ docking fees
- Shipping Costs
- Customs Duty
- Any relevant Taxes
- Warehouse Storage
Ex Works vs FOB and Free Carrier Arrangement
Ex Works mainly differs from Free on Board pricing (FOB) in that with FOB pricing, the seller will transport the goods to their nearest port or terminal. FOB requires the supplier to ship the goods to their port, handle goods at the port and clear customs.
Find out more about FOB Pricing here:
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