What Is Ex Works

Well, if you are into shipping or your business is related to import exports, then it is good to pick up some shipping and payment terms that will help you get an idea of what your customer or supplier is saying. Now today I am going to hand you the meaning of EXW or Ex Works in a silver platter. So if you intend to be in international business and import exports, then do pay attention.

Ex Works simply means this:

If you decide to buy 10 million dollars worth of plastic widget from me, and you prefer to arrange your own transport, then I will quote you my plastic widget, Ex Works or Ex Factory. Quoting you Ex Works means that the price you get from me only includes the price you pay for the finished goods I have produced in my factory. The transportation costs and other expenses related are actually yours to bear. So if you buy ex factory, you need to factor in other costs involving transportation mostly, before taking that figure as your net cost.

So when the full quantity of plastic widgets are completed, then you just simply arrange your own transportation and have the goods delivered from my factory, warehouse, or site.

Simple isn't it?! Sometimes, when a buyer is hurrying you for price estimation, quoting EX WORKS will help to give them an estimated price and costing reference for their projects. You should always let them know that your price is EX Works and not Delivered, FOB or CNF which I will go through with you later on.

Ex Works pricing is also more accurate as an indicator of the product's price in any region as your perception of the local price of that product is not affected by the transportation cost.

In some cases, customers want you to quote Ex Works because they are not so sure about the status of their projects yet. By the time they want to buy, the transportation costs may have fluctuated beyond their current estimation.

So always be very clear in your terms and conditions when quoting your customer or buying from a vendor. Don't surprise your customer later with a much higher price when you factor in the transport. If transportation is going to cost a bomb, be sure to let the customer know in advanced. Don't ever surprise them especially if the goods being dealt actually command very little margin. Also, as a buyer, it is your responsibility to find out what are the potential transportation charges that are likely incurred so you need not be surprised or get a heart attack when you find out that transportation just inflated 60% to your total cost. It could happen to you.

Ok folks, remember, EX WORKS or EXW is buying based on a price quoted to you without transportation or delivery to your site. It just means you buy at a price where the manufacturer has the limited duty for producing and placing the finished goods at his factory or warehouse, and then you collect it with your own transporter.

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