Let’s look at the concept of “delivery” in EXW Incoterms 2020. The buyer must carry out export formalities, which can be problematic, but are there other potential problems that the rule does not explain?
There are indeed much more than just Customs problems, there are many real-world practical matters such as but not limited to the buyer providing personnel or its carrier’s personnel who are unknown to the seller but accessing the seller’s premises; no suitable security checks and induction training of those personnel before entry to the premises; the buyer or its carrier providing unchecked machinery such as a forklift within the seller’s premises; the potential deleterious effects upon the seller’s security, health and safety procedures, insurances; even their liability for potentially having people working in their premises who might not be paid legal wages. Have you ever seen these dealt with in an EXW contract?
“You have mentioned a very important point about EXW delivery. For example in Turkey we don’t use exwork for international trade. According to the Turkish customs law, exporter must do customs clearing. Another problem is loading problem and permissions which you mentioned.”
Excellent news, I would like to see EXW used only as a costing price point, nothing else. It should be the basis of calculating selling prices, in other words, EXW equals what has it cost me to have the goods produced, packaged and ready in my warehouse? Now depending on what Incoterms 2020 rule I will agree with my buyer I will have to add some or all of the extra costs such as export formalities, documents, local transport, terminal handling charges, freight, insurance etc.
Want to find out more about Incoterms® Rules 2020?
We have summarised the 11 Incoterms which have recently been revised by the ICC Incoterms Drafting Committee for 2020.
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