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EXW: Ex Works
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FCA: Free Carrier
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FAS: Free Alongside Ship
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If you are an exporter, you need to know how to choose the right Incoterms for your transactions. Incoterms are international trade terms that define the responsibilities and risks of the seller and the buyer in the delivery of goods. In this article, we will compare three common Incoterms for exporters: EXW, FCA, and FAS. We will explain what they mean, what are their benefits and drawbacks, and when to use them.
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- Yusuf GUMUS, LL.M.
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- peter verlinden Benelux Customs Manager at GEODIS
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1 EXW: Ex Works
EXW means that the seller delivers the goods to the buyer at the seller's premises or another agreed location. The seller does not arrange or pay for any transportation, insurance, customs clearance, or other services. The buyer bears all the costs and risks involved in moving the goods from the seller's location to the final destination. EXW is the most favorable Incoterm for the seller, as it minimizes their obligations and liabilities. However, it also shifts a lot of burden and uncertainty to the buyer, who may not have the expertise or resources to handle the logistics and legal aspects of international trade. EXW is suitable for sellers who want to avoid any involvement in the export process, or for buyers who have their own transportation and clearance arrangements.
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- Yusuf GUMUS, LL.M.
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EXW can be very unfavourable to the buyers in some cases e.g. As is known, according to the EXW terms, sellers are required to facilitate the paperwork for export clearance. If sellers’ information is inaccurate, the buyers are still responsible for the additional cost and results of delays. However, EXW can also bring benefits, for example, since the shipping costs and responsibilities are on the buyers’ side, this may allow them to control the entire shipping process to ensure the products are safe. This shipping method is favourable to subsequent local transportation. It may allow the buyers to better forecast the costs and avoid sellers charging a higher shipping fee
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See AlsoWhat Is an Importer of Record (IOR)? | Definition & FAQs | TecExIncoterms Explained: Trading globally, contracts and customs formalities – how incoterms can helpIncotermsInsightful
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### EXW (Ex Works): What Does It Mean?**EXW (Ex Works)** is a trade term where the seller makes goods available at their premises, and the buyer assumes all risks and costs from there. Here’s a quick breakdown:- **Seller's Responsibility:** Minimal; the seller's only obligation is to make the goods available at their location (factory, warehouse, etc.).- **Buyer's Responsibility:** The buyer handles all aspects of transport, including loading, shipping, customs clearance, and delivery to the final destination.- **Cost and Risk:** The buyer assumes all costs and risks once the goods are made available by the seller.At AetherWays, we provide expert guidance on EXW terms to ensure smooth and cost-effective logistics for your business.
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- Jeroen Den Haerynck Advocate for Fair Pricing in Fruit Trade
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Ex works should give the highest protection to the shipper. Because cargo is accepted as soon as loaded. If payment is also done same moment, the exporter has what he wanted and is paid what he asked for. Later payment includes weaker position of the exporter.
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- Ang Guowei Manager Customs Compliance Region Asia
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There may be negative impacts for sellers EXW is insisted. International buyers might not be able to handle the export formalities within the country of the seller for any reason (most commonly is they're not setup as a business locally). Sellers may consider competitors who are willing to take over export formalities as a threat. The seller should note as they're operating within the country and adhering to local regulations, they would have the need and capabilities to handle export formalities and build rapport with the local authorities. Negotiations regarding clearance arrangements could also be discussed and put into the sale contract to still have customer taking the clearance arrangements under the seller's entity.
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2 FCA: Free Carrier
FCA means that the seller delivers the goods to the carrier nominated by the buyer at an agreed location. The seller is responsible for the export clearance, but not for the import clearance or any further transportation or insurance. The buyer assumes the risk and cost of the goods once they are handed over to the carrier. FCA is a flexible Incoterm that can be used for any mode of transport, including multimodal. It allows the seller to control the export formalities and the buyer to choose the carrier and the route. However, it also requires clear communication and coordination between the seller, the buyer, and the carrier, especially regarding the delivery point and the transfer of documents. FCA is suitable for sellers who want to comply with the export regulations, but leave the transportation and insurance decisions to the buyer.
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- peter verlinden Benelux Customs Manager at GEODIS
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please do not forget that EXW is very dangerous regarding VAT. normally the exporter should invoice the VAT because there is no control whether goods leave the EU..
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- Kingsly Kwalar 𝙃𝙚𝙡𝙥𝙞𝙣𝙜 𝙘𝙤𝙢𝙥𝙖𝙣𝙞𝙚𝙨 𝙖𝙣𝙙 𝙩𝙝𝙚𝙞𝙧 𝙞𝙣𝙨𝙪𝙧𝙚𝙧𝙨 𝙬𝙞𝙩𝙝 𝙘𝙖𝙧𝙜𝙤 𝙧𝙞𝙨𝙠 𝙢𝙖𝙣𝙖𝙜𝙚𝙢𝙚𝙣𝙩 𝙖𝙣𝙙 𝙘𝙡𝙖𝙞𝙢𝙨 𝙧𝙚𝙘𝙤𝙫𝙚𝙧𝙮.
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Under FCA, there’s a new provision allowing the buyer to instruct the carrier to issue a transport document to the seller without the onboard notation, provided they have their own means of transportation.
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3 FAS: Free Alongside Ship
FAS means that the seller delivers the goods alongside the ship nominated by the buyer at the port of shipment. The seller is responsible for the export clearance, but not for the loading, insurance, or any further transportation. The buyer assumes the risk and cost of the goods once they are placed alongside the ship. FAS is a specific Incoterm that can only be used for sea or inland waterway transport. It is similar to FCA, but it requires the seller to bring the goods to the port and place them next to the ship, rather than handing them over to the carrier. This may involve additional costs and risks for the seller, depending on the port facilities and conditions. FAS is suitable for sellers who want to avoid the loading charges, but are willing to deliver the goods to the port of shipment.
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- Yusuf GUMUS, LL.M.
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In my experience FAS could be risky for the Seller, in some cases unexpected delays occur in arrival of the nomitaed vessel, however, the seller would still wait for the vessel to dock so that their obligations have been eventually completed. Plus, they will still need to assist the buyer in acquiring transport documents.I think it can be used where goods are deliverable straight to a loading dock but not advisable for liner services that use small ports.
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- Jeroen Den Haerynck Advocate for Fair Pricing in Fruit Trade
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An option that increases slightly the risk for the exporter. But at least the control over his cargo is in the exporters hand. But if not paid as soon as the cargo is delivered to the port, the exporter depends on the importer about what and how cargo arrived before being paid.
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4 Here’s what else to consider
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