What are the advantages and disadvantages of using EXW for exporters?

I struggle to understand this text, a) you can negotiate the prices, payment methods, quality standards despite of the Incoterm, why would EXW give more power on these contractual elements? b) under EXW seller doesn't 'deliver' goods, but makes them available for collection (should not even load goods into the vehicle, which is impractical!)

In my view, EXW (Ex Works) gives exporters great control and flexibility. Sellers can negotiate key details like price, payment, and delivery terms directly with buyers, without being bound by strict rules. This means they can tailor agreements to fit their needs and choose reliable buyers, reducing the risk of issues with transportation and delivery.

Advantages. Exporters can focus on their core business activities (production and quality control) without worrying about shipping and logistics. Exporters can better predict and control their costs, as they are not involved in transportation and other logistics. Disadvantages. Exporters have no control over how their goods are transported, which could impact the condition of the goods upon arrival. There is a risk that the buyer might not handle the goods properly, potentially leading to damage or loss.

You may have less responsibility for the export of goods. By choosing less responsibility, you are also losing control over the shipping process and comp-line. Choose wisely

Incoterms do not address title. In an EXW contract the risk transfers at the seller’s premises or at the agreed place before loading by the buyer, however, title transfer will depend on the contract and is typically linked to payment. Also, be aware that in quite some markets, EXW and FCA are misused, so as a seller, you might still be expected to load on the mode of transport provided to you by the buyer on your EXW sale. As to an inconvenient for the seller not mentioned yet: the buyer will control the transport and the associated costs, which will be priced in the sales contract with a margin. So as a seller, you could make a better deal by taking control of the costs of transport.

A third advantage of using EXW (Ex Works) for exporters is that it significantly minimizes their risk and liability in the transaction. Under EXW terms, the seller's responsibility ends once the goods are made available at the agreed location, usually the seller's premises. From that point onward, ownership and risk transfer to the buyer. This means that the seller is not accountable for any loss, damage, or delay that might occur during transportation or delivery. Additionally, the seller is not liable for any taxes, duties, fees, or charges that could be imposed by authorities or third parties in either the exporting or importing country. By limiting their involvement to the initial stage of the transaction.

? One disadvantage of using EXW is that it may limit market access. Buyers might be discouraged by the added responsibility of handling logistics, especially if they lack experience or resources. This could reduce the number of potential buyers, particularly in regions where logistics infrastructure is less developed or more challenging to navigate.

Advantages. Exporters can focus on local markets and leave international logistics to buyers with better resources and knowledge. Disadvantages. Relying on EXW can limit an exporter’s ability to reach international markets where buyers expect more comprehensive logistical support. Competitors offering more comprehensive terms might be more attractive to international buyers.

One of the main disadvantages of using EXW (Ex Works) for exporters is that it can limit their market access and competitiveness. EXW places significant responsibility on the buyer, requiring them to handle and pay for all export formalities, customs clearance, and transportation from the seller's premises to the final destination. This can be daunting for buyers, particularly those unfamiliar with the exporting country's regulations, procedures, or logistics. As a result, some buyers may be discouraged from purchasing under EXW terms, opting instead for sellers who offer more convenient and comprehensive Incoterms like FCA (Free Carrier), FOB (Free on Board), or CIF (Cost, Insurance, and Freight).

Another disadvantage of using EXW for exporters is that it can reduce their visibility and communication with the buyer and the intermediaries involved in the transaction. Under EXW terms, the seller's involvement ends once the goods are made available at the agreed location, leaving the buyer responsible for the subsequent steps in the export process. This separation can create a communication gap, as the seller may not be informed about the exact status, location, or condition of the goods once they leave the seller's premises. Additionally, the seller might not receive timely feedback, confirmation, or proof of delivery from the buyer or the carrier. This lack of visibility seller's ability to provide effective customer service!

Advantages. Less involvement in logistics means fewer touchpoints and less need for constant communication with the buyer. Disadvantages. Exporters have no visibility over the shipment once it leaves their premises, making it difficult to provide updates to buyers. Potential for miscommunication or lack of communication about the status of the shipment.

Under EXW terms, exporters have limited visibility and communication regarding the transportation of goods. Since the buyer manages the shipping process, the exporter might not receive timely updates on the shipment's status, leading to potential misunderstandings or difficulties in managing customer expectations.

A libera??o alfandegária no Brasil do Incoterm Ex-Works é de responsabilidade do comprador, contudo para que o seu despachante possa fazer o desembara?o aduaneiro o vendedor deverá habilitá-lo perante as institui??es governamentais (Siscomex). Potenciais riscos aos exportadores: 1) Responder legalmente como responsável pelas a??es do despachante do comprador credenciado. 2) Permitir o acesso a todas as suas opera??es, seja de exporta??o ou importa??o (dependendo do tipo da habilita??o concedida ao despachante do comprador). é necessário haver uma rela??o de extrema confian?a entre os envolvidos.

Advantages. Contracts under EXW terms are generally simpler and less detailed, focusing mainly on the availability of goods. Disadvantages. Lack of clarity about responsibilities beyond the point of delivery can lead to legal disputes if something goes wrong during transit. Different interpretations of EXW terms under various legal jurisdictions can lead to complications.

Generally speaking, from a purely customs and trade compliance management perspective, it is advisable to avoid the Ex-Works. Essentially, this creates obligations for an entity typically not established in the country of departure, leading to operational, fiscal, and documentary complexities (and this is by the way also true for the seller). Now, if within your company, Ex-Works is imposed (usually for tax or commercial reasons), it is crucial to assert forcefully and clearly that it is not a standard Incoterm, at least not recommended in best practices, and therefore requires extra preparation time or will lead to operational risks.

Do not use EXW, use FCA instead... Under EXW seller should not even load goods into the vehicle and how seller can ensure goods really left the country, when goods are handled by buyer's forwarder? How seller can prove correctness of zero rated VAT on the invoice to the authorities, if seller does not have the export declaration as is not being responsible for export formalities? How about other export formalities, like licensing, how is buyer supposed to obtain it without comprehensive product's knowledge (e.g. technical drawings and specs)?

I completely agree. I tell my clients all the time that ex-works and DDP should be avoided because they cannot be executed correctly for international shipments. I also think the people drawing up contracts with these terms are only thinking about tax and legal factors. They do not understand what these terms obligate their company to do from a logistics and customs compliance perspective.

When dealing with EXW (Ex Works) terms, it’s important to recognize that some countries have specific regulations and procedures that might be unfamiliar to foreign buyers and clients. Under EXW terms, all responsibilities, including transportation costs and export clearance, fall on the buyer. This can be challenging if buyers are not well-versed in the exporting country’s legal framework or logistical processes. Therefore, it’s advisable for buyers to conduct thorough research or consult with local experts to ensure compliance with all regulatory requirements when engaging in EXW transactions.

It is difficult to give a "one size fits all" answer. In the context of Europe's unified market for example, where trade regulations among EU member states are harmonized, opting for Ex Works (EXW) terms can be highly beneficial for businesses primarily operating within this region. EXW offers simplicity and transparency, allowing sellers to present clear product costs without additional logistics fees, and places responsibility for transportation and customs on the buyer, who may be better equipped to navigate the minimal trade barriers within the EU.