If your supplier has quoted you an ExWorks (EXW) price, you’re probably researching into what this means – and how much it costs. Today, we’re going to be walking you through EXW costs, explaining where and why they occur and, more importantly, what they could total. To jump straight into it, let’s tackle the first big question:
What do I pay for on EXW shipping terms?
Everything. When shipping on EXW incoterms, you are responsible for absolutely every cost from the factory to your doorstep. All your supplier has to do is make sure that your goods are available for collection from their premises.
If you’re unsure as to what exactly EXW shipping terms are, feel free to read our explainer post.
Costs you're responsible for on EXW
When you’re importing on EXW shipping terms, as previously mentioned, you’re responsible for every step in the process. Your supplier will literally package your goods, make them available for pick-up . . . and that’s it. For those of you who are unfamiliar with the importing process, we’ve made an infographic outlining (in very simplified terms) what happens.
In line with these steps in the process, your main costs are:
- Export documentation and licenses (if needed)
- In-land transport (trucking, etc.) to the outbound port
- Origin handling (loading/unloading trucks and loading the container)
- Outbound customs – and any associated costs (inspections etc.)
- Sea freight
- UK customs costs
- UK handling (unloading the container and preparing the shipment for delivery)
- In-land transport to deliver to your door
Any and all other costs picked up along the way are your responsibility. If something is wrongly declared to Chinese customs and you incur a fee, that’s your fee. If your supplier doesn’t have an export license and your goods can’t leave the country, you’ll need to buy an export license.
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How you're charged EXW costs
Fortunately, you aren’t expected to sort out all of the steps in the process – you use a freight forwarder to help you with that!
When you’re shipping via sea freight, you’ll need to hire a freight forwarder to organise the freight itself . . . but we can actually sort out everything for you. We have agents on the ground and extensive experience working overseas in China and elsewhere in Asia, EXW are easily arranged.
Unfortunately, there’s no one be-all end-all quote we can give you without asking our local agent for the exact costs for your specific shipment as the charges depend on a multitude of factors. A big variable is where in the world your goods are coming from. The services and prices in different locations all factor into our quote and change it; for example, shipments from India are subject to a Goods and Service Tax (GST) whereas shipments from China aren’t. However, even within China, the costs can vary from port to port .
Particular ports may require different documents to ship a certain product that can cause large fluctuations in exworks costs. Another example of this is clear in the collection costs. China is the size of Europe and imagine how expensive it’d be to truck your goods to the nearest port if your supplier is 1000km to the west of it! Your supplier may also have an export license in place for their products and this could save you hundreds of dollars compared to having to buy one. These are just a couple of examples of the variables but there are a few more too making a bespoke quote essential.
To demonstrate how we charge EXW costs and give you a rough idea of what you’ll be paying, we’ve created an example shipment from China. Here are the costs you’re looking at (on top of the sea freight and UK charges of a standard shipment on FOB terms):
These figures are estimates and subject to change depending on different factors, but a good overview of how you’re charged EXW fees; we organise all the services for you and include the cost in the single invoice that you’ll pay when the shipment is cleared through UK customs.
How To Organise EXW Shipping
EXW shipping sounds complicated and, compared FOB Shipping terms it is a bit more involved but that doesn’t mean that it has to be difficult or unachievable. You can use a shipping company like ourselves, experts who are familiar with the process and have agents or offices in your supplier’s country, to take care of everything for you. We organise and book everything, then charge it to you in one tidy invoice. Refreshingly simple, right?
As with all sea freight, you will require the essential documentation (such as an EORI number) to get your goods into the country. If you’re unsure as to what documentation you need to clear your goods through UK customs successfully feel free to read our post: What Documents Do I Need To Import To The UK?
Is EXW or FOB shipping cheaper?
Generally speaking, we recommend FOB shipping – your supplier will typically know their local climate and be able to save money on local costs such as delivery and customs. They also take their fair share of the risk. EXW usually comes out at a first similar figure (as all the costs have to be paid regardless of who pays them!) but for first time importers, it’s a lot easier to ship on FOB terms until you’re more familiar with the process and your supplier.
The difference in price between the two shipping terms shouldn’t be extortionate, however, and a lot of importers prefer the complete control of EXW costs over allowing their supplier to take care of anything and running the risk of hidden costs. Regardless of which shipping terms you’re using, we can help!
Hopefully, this post has clarified a few aspects of EXW shipping and its associated costs for you. If your supplier has offered you EXW terms and you want help controlling the costs and organising your shipment, feel free to contact us or grab a free quote.