Question

how to calculate ex works incoterm for shipments

Answer 1

Ex Works (EXW) is the Incoterms 2020 rule used to describe the delivery of goods by the seller at their place of business, normally in their factory, offices or warehouse. The seller does not need to then load items onto a truck or ship, and the remainder of the shipment is the responsibility of the buyer (e.g. overseas shipment and customs duty). EXW is therefore more favourable to the seller as they do not need to worry about the freight once it has left their premises. However it is vital to note that once the seller has informed the buyer that the goods for the contract are identified and set aside, the delivery has been made, the buyer bears the risk from that moment and is obliged to pay, even though the goods are still in the possession and physical control of the seller.

Example of Ex Works

Ex 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 that will deliver them the printers for $170. So to save the $30 on shipping, they make a deal with company B that is ex works.

IMPORTANT

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.