EXW is one of the most commonly used Incoterms and defines the shipment with full responsibility and burden on the buyer.
Essentially, the seller does not have to worry about anything. Or does he? In fact, choosing this type of transportation can lead the sender to encounter more than one problem, as they have no say in the organization of the shipment, which is managed by others. They also have to deal with unfamiliar and constantly changing freight forwarders for pick-up, who are not interested in them but solely focused on satisfying the receiving party at the destination.
So, what are the hidden risks to consider with Ex Works?Â
1 – ResponsibilityÂ
The first thing you need to know concerns responsibilities.Â
Since the seller is responsible for loading the goods onto the buyer’s means of transport, they will be listed as the shipper on the road transport document (CMR).Â
This means the seller will have to sign the CMR and, therefore, assume all the obligations typically associated with the shipper of the transport. These obligations include legal requirements as mentioned in the civil code (Articles 1689 and 1684) and the specific obligations of the CMR (which, in some cases, may be in a foreign language).Â
But the possible complications don’t end there.Â
2 – Potential irregularities and customs authorities
Regarding the management of export customs formalities, they always imply that the seller is also listed as the exporter on the customs document (the customs declaration) and thus becomes the sole party responsible in case of any irregularities (technical or tax-related) with the customs authorities.
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3 – Limited choice
The Ex-Works shipment stipulates that it is the buyer who chooses the freight forwarder responsible for organizing and managingthe entire shipment. Consequently, the forwarder willbe chosen based on the buyer’s “convenience,” not necessarily taking the seller’s needs into account.
Here’s how it works in practice:
The selected freight forwarder will activate their office or agent in the seller’s country. At this point, it will bethe second forwarder who contactsthe sender on behalf of the seller.
The problem lies precisely here.
In these cases, the relationship between the seller and the freight forwarder is often “essential and detached.“ This is because the forwarder‘s attention is entirely focused on the consignee at the destination. As a result,the sender’s needs are set aside, creating a situation of discomfort or even dissatisfaction.
That‘s why Ex-Works is not always the most cost-effective choice. As always, it depends on the circumstances, and a good freight forwarder is the one who analyzes the situation to propose the best shipment, not necessarily the cheapest one
For over 30 years, Punto System has been the architect of transportation sought after by companies that recognize the value of well-designed international shipments. Entrust your next shipment to us, find out how we can make a difference
