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Incoterm EXW

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

The International Chamber of Commerce, responsible for the establishment of the different incoterms, planet the commercial typology of the EXW as the 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 certain location, such as warehouses, points of sale or directly in the plant or factory so that it's the seller who picks it up.

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

This means that this is a common export option among export agents with few or smaller media, such as SMEs.

Basic implications of an EXW type trade agreement

The existence of a trade agreement that's 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 purchased at the point of sale.
- The seller assumes expenses related to the preparation and packaging of his products, although not of his shipments or insurances, that fall in the buying part.
- It's an advantageous and inexpensive option for the seller, so these types of commercial actions usually go hand in hand with low price levels.
- An EXW is a type of agreement that, due to its nature, is made independently of the chosen means of transport. Others are only capable of being carried out by sea.
- The possible tariffs or customs that may be incurred will be the responsibility of the buyer.

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