EXW Trade Conditions in Air Transport

EXW is the acronym for Ex Work, which means Ex-Factory Delivery or Factory Price. This condition is known as a basic clause in Incoterm (International Trade Rules) for all modes of transport: air, inland waterway, sea….

Through the article with the topic “Learning About EXW Trade Conditions in Air Transport”, the Faculty of Logistics and International Trade will focus on clarifying the responsibilities of goods and costs of buyers and sellers when Import and export of goods by air. Let’s find out with VILAS!

Responsibility for the goods of the seller in an EXW agreement

The seller needs to ensure the following obligations:

Fully prepare goods according to the agreed contract, and provide necessary documents related to the goods.

Notification of time and place of delivery and delivery at the right place specified in the contract

Support buyers with issues related to export procedures when requested or specified in the contract.

Bear the costs, expenses and risks until the goods are loaded onto the buyer’s means of transportation.

There is no responsibility for loading goods and bears the cost of loading goods onto the means of transport designated by the buyer if not required in the contract.

Seller’s cost responsibility in EXW agreement

The seller needs to pay the following costs, including:

Costs for checking goods (quality checking, weighing, measuring, counting goods)

Packing and labeling goods.

The cost of bringing the goods to the designated delivery point if that point is not in the buyer’s warehouse.

Any costs incurred related to damage to the goods before delivery.

In particular, the seller does not need to pay costs related to transporting goods to the buyer’s final destination as well as costs related to import and export procedures of goods in the host country and the importing country. .

Buyer’s goods liability EXW agreement

The buyer needs to ensure the following obligations:

Pay for the goods as specified in the sales contract

Obtain export and import licenses or other official permits and customs clearance to export goods at your own risk and expense.

Carry out export and import procedures for goods

Decide on the method of transporting goods from the delivery point to the destination and fully bear the related shipping costs.

From the time of receipt of the goods at the designated delivery location, the buyer is responsible for all risks and costs arising from the goods.

Buyer’s cost responsibility EXW agreement

Buyers need to pay the following costs, including:

Domestic freight from the seller’s warehouse to the cargo terminal at the export airport.

Air freight to transport goods from exporting country to importing country (Air Freight)

Inland freight from the port of entry cargo terminal to the buyer’s final destination

Surcharges incurred at the departure/arrival airport (Local charge) pay for loading and unloading goods on the plane and other costs related to delivery at the cargo terminal and airport. This cost will be collected by the airline or logistics service provider in addition to the shipping fee

In addition, the buyer must organize and pay the cost of export/transit/import customs procedures required in the export/transit/import country, such as: export license /transit/import; Security procedures for export/transit/import; Check product, …

In addition, the buyer must reimburse the seller for all costs and fees paid by the seller in assisting the buyer in bringing the goods to their final destination.

Illustrative example

And to make the theory above more vivid and practical, let’s learn about the seller/buyer’s responsibilities for goods and costs through the following situation:

Company A has a factory located at N6 Street, Hi-Tech Park, Tan Phu Ward, Thu Duc City, Ho Chi Minh wants to export a shipment of 10 boxes of books under EXW conditions to Company B at the location. only 31A-32, Jalan E 1/3, Kawasan Perusahaan Taman Ehsan,Kepong, 52100 Kuala Lumpur, Malaysia by air. Goods details include 10 cartons, each carton’s dimensions are 41x38x24cm, total weight 166kgs.

Please refer to the tracking images of this shipment below: