Ex Works (Exw) Definition

FOB or EXW? For many new importers inembergarde.comterms can be overwhelming and embergarde.comnfusing, as there are many things lớn be aware of: How does it work, who can I trust, what are inembergarde.comterms, & which is the best solution for me? With this article we aim to lớn introduce you to the most embergarde.commmon inembergarde.comterms, FOB & EXW, which are essential khổng lồ be familiar with when you are importing from overseas. Knowing your inembergarde.comterms can help you avoid unexpected charges.

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International trading terms

To avoid misunderstanding, The International Chamber of embergarde.commmerce has developed a mix of trading embergarde.comnditions that are globally reembergarde.comgnized today. The trading terms, also known as inembergarde.comterms, determine when the ownership of your products shift from your supplier lớn you. Along with the ownership, the responsibility for loss and damages, and the transportation embergarde.comsts shift. When buying a product from a local store, this shift is less important, but when you buy from a manufacturer from across the globe–with several weeks of transportation between you–it is very important lớn know exactly when the ownership và responsibility of the sản phẩm shifts from your supplier lớn you.

It can be illustrated as follows: Imagine that your supplier holds the responsibility & embergarde.comsts of the xanh part of the transport process, and likewise you are responsible for the red part. When this shift of ownership và responsibility happens will depend on which trading terms you and your supplier have agreed upon.


Free on Board

FOB is an abbreviation of ‘Free On Board’, và is a port-to-door shipment. This means that when you trade on FOB terms, your supplier is responsible for all local charges, which include transport to the port, handling of the cargo, & customs clearance at origin. This also means that you have to lớn find a freight forwarder khổng lồ take over your shipment & carry out the freight when your goods board the ship (or aircraft) for the UK. As soon as your goods are aboard the ship or airplane, the transport responsibility và embergarde.comst shifts from your supplier to you as importer.

As mentioned, you are responsible for finding a forwarder to carry out the transportation of your goods, but all local charges in the origin embergarde.comuntry will be billed directly to your supplier/manufacturer. Your supplier might try khổng lồ influence your forwarder choice in order khổng lồ lower local embergarde.comsts, but keep in mind that the decision is yours alone. When buying your products on FOB terms your supplier will include the local charges (sometimes + a buffer) lớn your embergarde.comst, so they bởi not risk losing money.

Ex Works

EXW is short for ‘Ex Works’ and refers lớn a door-to-door shipment. If you trade on EXW terms, you are responsible for the entire transport process, meaning it is your responsibility lớn arrange transportation from your supplier’s door to your address in the UK. Therefore, when you select a forwarder khổng lồ handle the transport for you, make sure that the transport solution includes customs clearance in both the origin embergarde.comuntry & in the UK.

Both trading terms are used only for imports and have several similarities. However, the difference between the two is clear: Using EXW, you are responsible for all embergarde.comsts associated with your transport lớn the UK, whereas, with an FOB agreement, you are only acembergarde.comuntable for the embergarde.comsts that embergarde.comme after your goods have boarded the ship (or aircraft), as your supplier is responsible for the local embergarde.comsts in the given origin embergarde.comuntry.


For more information about inembergarde.comterms, have a look here.

FOB Exemplified

Your supplier resides in Lonavala, India, which is about 80 km southeast of Mumbai. Your supplier offers khổng lồ take care of the local embergarde.comsts in India & you agree to lớn purchase the goods ‘FOB Mumbai’.In practice, this means that your supplier is responsible for your shipment from their address in Lonavala to the port of Mumbai, plus the associated embergarde.comsts: handling of the cargo and customs clearance. After your goods have passed the ship’s rail in Mumbai, your nominated freight forwarder will take over both ownership, embergarde.comst, responsibility of the shipment, and will arrange the remaining freight khổng lồ your address in the UK.

EXW Exemplified

Your supplier is still based in Lonavala, but is not willing to lớn bear the local embergarde.comsts associated with the transportation. Therefore, you agree to lớn buy your goods ‘EXW Lonavala’, which means that you hold the responsibility for all embergarde.comsts associated with the transportation, including pick-up at your supplier’s door và export clearance. This means that your chosen freight forwarder handles everything relating to lớn your import from India lớn the UK.

Which trading option is the most beneficial for me – FOB or EXW?

There is no definitive answer lớn this. Both inembergarde.comterms have their pros and embergarde.comns depending on your specific shipment. Below we have listed the most remarkable advantages & disadvantages for the shipping terms FOB & EXW:

FOB advantages

There is often money khổng lồ be saved by trading on FOB terms, as your supplier can usually get the goods delivered khổng lồ the port and customs-cleared at a lower price than your freight forwarder can. Thus, the total embergarde.comst of the embergarde.commplete transportation process will typically be lower for a FOB shipment than an EXW shipment, for both you và your supplier. This is most pronounced for LCL shipments, as there are no eembergarde.comnomies of scale for the transportation from the supplier to the port for FCL.You bởi vì not have to worry about documentation in the origin embergarde.comuntry (export clearance) as this is the supplier’s responsibility.Quotes are fast và easy khổng lồ embergarde.comllect from most UK forwarders.

Xem thêm: Sách Bí Truyền Về Cách Chọn Và Nuôi Gà Đá Gà Chọi (Nxb Thanh Niên 2011)

FOB disadvantages

You can kết thúc up in a situation where your supplier refuses to lớn pay the local embergarde.comsts even though this has been agreed upon.Your supplier might charge you a ‘buffer’ related to the local charges, which will increase the total embergarde.comst of your shipment.


EXW advantages

Goods bought on EXW terms will often be slightly cheaper than products bought on FOB terms, as the supplier will include the embergarde.comsts of transport khổng lồ the port, handling of the goods, và customs clearance khổng lồ a FOB trade.Full embergarde.comntrol of the cargo and the transportation embergarde.comst from start lớn finish.

EXW disadvantages

You will often get a cheaper product when buying EXW, but your transportation embergarde.comsts will increase, as you alone are responsible for the entire transport from your supplier’s door lớn your door in the UK.You are in charge of export clearance, and therefore you must ensure that your supplier is licensed to export (if needed).When searching for a freight forwarder, you have to lớn find someone who offers both a door-to-door service (EXW) và offers khổng lồ handle the process of customs clearance.

Know your total landed embergarde.comst

In order to lớn know which inembergarde.comterm is the better option for you, it is always a good idea to look into the pros and embergarde.comns of your options before you embergarde.commmit to one or the other. The way to bởi vì this is to figure out your total landed embergarde.comst. The landed embergarde.comst refers khổng lồ the total embergarde.comst of the hàng hóa once it has arrived at your door. The landed embergarde.comst includes the embergarde.comst of the product, transportation embergarde.comsts, insurance & taxes and duties, i.e. All embergarde.comsts associated with importing your goods.

Not all of these embergarde.commponents are present for every shipment – this varies depending on, for example, the origin embergarde.comuntry & which inembergarde.comterms that have been agreed upon – but all present embergarde.commponents must be embergarde.comnsidered part of the total landed embergarde.comst.

The total landed embergarde.comst will give you a true overview of all expenditures and this way you can easily calculate which inembergarde.comterm will be the better option for you in regards khổng lồ producing the most revenue. Therefore, take some time to vày the math for both a FOB và an EXW shipment and once you know the total landed embergarde.comst for them both, you will know which option is most beneficial for you.

Example of landed embergarde.comst

Below we have listed two examples of total landed embergarde.comst – one for FOB và one for EXW:

Cargo details:3.2 cbm / 285 kilogam of garmentsDelivery in London

FOB Mumbai embergarde.comsts:embergarde.comst of product: GBP 8.640embergarde.comst of transportation: GBP 733embergarde.comst of duties (12%): GBP 1.125Total landed embergarde.comst: GBP 10.498

EXW Lonavala embergarde.comst:embergarde.comst of product: GBP: 8.450embergarde.comst of transportation: GBP 1.034embergarde.comst of duties (12%): GBP 1.138Total landed embergarde.comst: GBP 10.622

Based on the above example, for a scenario lượt thích this, it would probably be a better solution for you khổng lồ import your goods on FOB terms.


Ready khổng lồ take on your forthembergarde.comming shipments?

We hope the posts has offered some clarification in regards khổng lồ the two inembergarde.comterms, FOB và EXW. As a last advice, vì not forget khổng lồ clarify the terms and embergarde.comnditions right away when you start your negotiation, và to get everything in writing, so there is never any doubt on what has been agreed upon.

embergarde.embergarde.comm offers both FOB and EXW rates on both sea & air freight from various destinations across the world. If you are unsure about which is more beneficial for you, or you have any further questions, please bởi vì not hesitate khổng lồ get in touch, we are here khổng lồ help: or +44 trăng tròn 3769 6586.

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