EXW China

EXW Shipping from China: The Definitive Guide

Do you know EXW China can be a perfect Incoterm when importing from China?

Yes, I have used it before, and I think you should try it too.

But, when should you choose EXW shipping from China?

Well, I will explain everything about EXW China: from the basic definition, costs, risks, responsibility of each party and how it works, among other aspects.

Stay with me to learn more about EXW shipping from China.

What is EXW China Shipping?

EXW simply is a three letter code for EX Works.

It is an incoterm that you’ve probably come across many times when shipping or seeking to ship goods from China.

The word may only be a few letters long, but failure to understand its detailing can cost you dearly.

Why?

You may take on responsibilities and costs that you had not planned for in your shipping plan.

A single misunderstanding or misinterpretation of the term can cost your entire procurement process.

Thus, you have to know what this term means and what it entails.

So first, EX works is a shipping incoterm that places all risks and obligations on the buyer.

The term can be used in relation to any mode of transport, whether sea, air, rail or road.

An EXW quote often expresses the pure cost of goods without any other additional expenses.

How Does EXW China Work?

As I’ve said, EXW places full responsibility and risk of goods on the buyer.

Well, maybe not all of it, but the maximum obligation is on the buyer and least on the seller.

In other words, EXW mandates the seller to avail the goods at a named place of delivery.

From where you assume every other responsibility.

So whatever place is named after the EXW stamp is precisely where the seller will deliver the goods.

It is where they will exchange their goods for your money, nowhere else.

So if your supplier is based in Guangzhou, China, and their term of sale to you is EXW-Guangzhou city center.

Then, this means that the supplier is responsible for ensuring that the goods are only made available at the CBD.

And, that you have all the responsibility and liability for picking up the goods from this location.

Normally, the seller will only cater for the cost of packing the goods and availing them at the named place.

Risk and responsibility as I’ve said many times is passed onto you (the buyer) at this point.

Note, however, that when delivering the goods at the named place, the seller must have met all obligations of the contract.

Packaging and delivery have to comply with the terms of the contract.

Again, suppliers in China are clever.

Knowing that EXW shipping favors them, they always choose a delivery point that gives them the least amount of liability.

In many instances, they chose their warehouse.

So expect to often receive a quote reading EXW-my warehouse.

Pros and Cons of EXW China Shipping

Many importers like to buy under the term EXW because it provides them with full control over shipping.

Taken at face value, EX works may appear to be your best bet when you want to manage your own shipping.

You won’t have to worry about middlemen that charge exorbitant fees.

Nor, will you have to worry about poor handling and delays in the shipping process.

Remember though, appearances can be deceiving.

You need to be careful when buying under EXW as there are many disadvantages to it as there are advantages.

Let’s start with the advantages.

· Full control over shipping

Yes!

Buying under EXW allows you total control over how you ship the goods from China to the final destination.

You get to use your preferred mode of transport, freight forwarder, a carrier as well as your preferred insurance company.

You literally get to arrange shipping based on your own terms.

· Gives you the power to negotiate deals

EXW China gives you the negotiating power over your seller.

You can easily negotiate for the best prices and shipping conditions from your carrier, forwarder or broker.

This power allows you to try and convince your seller to offer you a more competitive rate for services you hire.

· Transparency

In EXW shipping, you receive full transparency of the cost of shipping.

This is because it gives the opportunity to arrange and manage your own shipping.

Here, there is no chance of the seller inflating the cost of shipping when building their own price.

· Versatility

You can buy under EXW regardless of the mode of transportation you intend to use for shipping.

EXW China works for all modes of shipping be it sea, air, rail or road.

These are the benefits of shipping under EXW terms.

Remember though that not all that glitters is gold as there is always a downside to everything.

In this case, pay attention to these potential pitfalls when shipping EXW from China.

· Customs clearance

Customs clearance procedures are not the easiest of processes when it comes to international shipping.

The EXW incoterm obliges you (the buyer) to undertake customs clearance procedures.

This includes obtaining paperwork, clearances and so on.

If you’re not a seasoned importer, you may be poorly placed to do this which may be problematic.

Also, getting around customs clearance involves a lot of paperwork and processes that can be incredibly daunting.

And, time wasting.

Unfortunately, with EXW, you will have to do this.

Unless if you decide to hire a customs broker, at your own risk and expense.

· Lots of expenses

Like in the above case, you have to deal with the difficulties of customs clearances.

If not, you hire a customs broker, at your own expense.

Apart from this, there are so many costs that you will have to undertake when buying under EXW terms.

There are instances where your seller may fail to provide you with licenses.

In this case, you will be forced to buy the licenses at your own costs.

If there is a need for inspection of goods, this too is at your own costs.

You see, such costs all added up can be a real strain on your budget.

· There is too much risk and responsibility

If the shipping vessels carrying your goods sinks or falls of the sky, you will pay for this loss.

If during customs clearances, additional charges accrue, you will pay for them.

If during loading (which may be done by the seller) something goes, it is your liability.

I mean, that is just EX-Works. You (the buyer) gets to bear 99% of the risks and responsibilities of the goods.

These are the pros and cons of buying under EXW.

So as you consider the advantages of buying under this term, pay attention to the above pitfalls too.

This way, you avoid regrets in future when you realize that you’ve actually spent on shipping a product than you can sell it for.

Seller’s Responsibility in EXW China Shipping

At this point, we understand that in EXW, the seller fulfills his responsibility when he delivers goods at the named location.

He’s not responsible for any other things like loading goods for transportation or their clearance for export from China.

For the seller, once he avails the goods at the agreed place of delivery that’s it.

Thus, EX Works represents minimum obligation to the seller.

And these obligations are;

1. Provide goods in conformity with the sales contract

The first obligation of the seller in EXW is to provide to the buyer goods that conform to the condition of the contract.

This means that the seller must provide a commercial invoice plus any other evidence of conformity along with the goods.

The evidence could be in hardcopy documentation or sent by mail, whichever is stated in the contract.

2. Licenses and authorization

The seller must, at the buyer’s request, risk and expense provide the buyer with an export license.

Plus, any other official authorization that may be needed by China export authorities.

3. Deliver goods as agreed

The seller must deliver the goods at the named location of a pickup as agreed; on time and on the agreed period.

If no place is named at the time of sale, the seller should choose an appropriate location to deliver the goods.

4. Risk-bearing

The seller bears all risks of loss and damage of goods up to when he delivers the goods to the buyer as agreed.

5. Costs

The seller must bear all the costs of availing the goods to the buyer at the named place.

6. Notice to the buyer

The seller must give you (the buyer) a timely notice as to when and where the goods will be delivered at the named place.

7. Quality control

The seller will bear the responsibility of checking, packaging and marking goods before delivery to the buyer.

He will pay for the costs of all checking operations necessary to deliver the goods to the buyer.

8. Other obligations

Upon your request, the seller shall assist you to obtain any documentation relevant for the exportation and/or importation of goods.

All these are at the risk and expense of the buyer.

The seller shall also provide the buyer, upon request, with the necessary information for procuring insurance.

This is of the seller’s, what of the buyer’s responsibility?

Buyer’s Responsibility in Ex Works Shipping

Well, while EXW incoterms place the minimum obligation on the seller, it places the maximum obligation on the buyer.

EX Works obliges the buyer to;

1. Pay the price

You should pay the price of the goods as per the EXW quote.

2. License and authorization

You (the buyer) shall obtain any licenses and authorization necessary for the export/import of goods.

You shall also carry out all customs clearances processes at your own risk and expense.

3. Delivery

EXW obliges you to receive goods as soon as the seller delivers them at the named place.

4. Risks

You are to assume all risks of loss and damage of goods once you receive items as indicated in no. 4 above.

5. Costs

You (the buyer) shall pay all costs relating to the goods from the time you receive the goods from the seller.

If you fail to receive the goods at the time of delivery, you shall bear all costs relating to this failure too.

Unless if you had issued sufficient notice to the seller.

You shall also pay for all costs of transportation, duty, taxes as well as any other costs necessary for the importation of goods from China.

If the seller assists you to acquire export/import documentation at their own costs, you will reimburse him these costs.

6. Notice to seller

You (the buyer) should issue the seller with adequate notice in case you change your mind on when and how to pick the goods.

7. Proof of delivery

You must provide evidence to the seller indicating that you’ve taken the delivery.

8. Inspection

Unless otherwise agreed, you have to pay for pre-shipment inspection including those ordered for by China’s customs authorities.

9. Other obligations

You must cater to all the costs of obtaining customs clearance documentation.

You must also reimburse the costs incurred by the seller when helping you get information for insurance.

Generally, EX Works places the most responsibility and liability on the buyer.

So make sure that you understand what your obligations are under this shipping term to avoid confusion.

You can read this post for a detailed explanation on; EX Works responsibilities

How to Ship from China under EXW Terms

You now know what EXW means.

You also know your responsibilities when shipping under EXW.

But do you know how EXW shipping from China works?

Well, this is what I intend to show you next.

So stay with me as I explain the process to you step by step.

Step 1: Seller avails goods at the named location

The first step in EXW shipping from China is where the seller makes available the goods at the named place.

You will have to pick the goods from the seller at the named place.

Step 2: Pick goods for transportation to loading port

Once the seller delivers the goods at the named place, you pick them up as agreed.

Then, you will load the goods onto a transporting truck that will transport them to the loading port.

Step 3: Load goods into a transporting container

Whether you’re shipping FCL or shipping LCL if shipping by sea, you will need to load the goods into a transporting container.

This is if you didn’t load the goods when picking them up from the supplier.

Step 4: Clear goods with China’s customs

Your goods can’t leave the origin port in China without clearance from China’s customs authorities.

You need to seek this clearance having complied with China’s customs export rules and regulations.

Step 5: Goods in transit

After clearance, goods are loaded into a transporting vessel, and off they are shipped to the destination country.

This shipping can be done by sea, air, rail or road.

It all depends on your chosen mode of transportation.

Step 6: Customs clearance at destination

Once goods arrive at the destination port, you will have to clear them for entry into the destination country.

If you shipped LCL, you will have to unload the goods first before you proceed to clearance.

If FCL, you just clear the container as it is.

All you need to do is ensure that you have the right import documentation to avoid trouble with customs.

Step 7: Transport goods to final destination

When you’ve successfully cleared your goods with your country’s customs, you can now load them for transportation to final destination.

Depending on their volume, find a sizeable truck to help move the goods from the port to your warehouse or doorstep.

And voila! That is the process of EXW shipping from China.

Simple isn’t it?

And the best part is that you don’t have to handle all these processes if you don’t want to or if you don’t know how to.

You can hire experts,i.e., a freight forwarder and a customs broker to help you out.

That said, it’s time now to look at the costs of EXW shipping from China.

EXW China Shipping Costs – Who Pays for the Costs

So your supplier has quoted EX-Works for shipping your goods from China;

And, you’re probably wondering what costs are involved herein.

Well, stop worrying.

In this section, I am going to explain to you every detail of all logistics charges in EXW China.

So pay attention.

Firstly, I know the big question lingering in your mind; what do I pay for in EXW shipping from China?

Good question? Unfortunately, you pay for everything.

Yes! Everything.

The seller in EXW China has little to no obligations on costs, and risks.

All the seller has to do is ensure the delivery of goods at the named place.

If you didn’t provide a place of delivery, then the seller will pick a delivery point that is suitable.

From herein, you are responsible for all costs of delivering the goods from China to your destination.

What are the costs that you pay in EXW shipping?

They are quite a number of costs.

Or let me just say that you pay for all possible costs that will accrue from the pick-up point in China to your final destination.

These include;

· Handling costs in China

See, once your supplier avails goods at the agreed point of pickup, they do nothing else.

You will need to organize a transport mechanism from the pick-up point to the loading port.

Labor costs for loading the goods into the transporting vehicle are your responsibility.

The same applies to the cost of transporting goods to the origin port and container loading.

Other services that may accrue during this inland transportation are also on you.

These include inspection and loading supervision.

· Export documentation and customs clearance

While the seller provides the export license, you’re expected to file all other paperwork needed for export from China.

This means that you will have to pay for the costs of acquiring these documents.

If you choose to hire a customs broker to help with these, well and good.

Just remember that all costs related to this are on you.

Again, you can get a customs broker to help with the clearance process, but at your own cost.

You’re also responsible for the cost of customs clearance in China as well as any other outbound costs.

i.e.  Inspection and loading supervision costs.

· Freight

Whether you’re using air, water or rail to ship the goods from China, all freight costs are yours to bear.

Freight cost, note, is the cost of transporting the goods from origin port in China to your destination port.

It is the amount you pay to the shipping company transporting the goods.

Additional costs on freight are also yours to bear.

These include surcharges, port fees etc.

· Customs clearance at destination

Like you did in China, you will also cater for the cost of clearing the goods through customs at your destination country.

This is whether you do it yourself or hire a customs broker to do it for you.

· Destination handling and delivery

Once clearance of goods at destination port is complete, you will need to transport them to the final destination.

The cost of this transportation, as well as all other costs that you may pick up along the way, are yours to bear.

You will also pay for the unloading of the goods once they reach your final destination.

· All other costs incurred along the way

From China to destination, any costs that may accrue during this time are also your responsibility.

So basically, you should be well prepared when shipping under EXW terms.

Because as you can see, there is a lot that you need to take care of when it comes to costs.

And that is not all; you’re also required to handle the paperwork for exportation/importation of goods from China.

EXW Paperwork when Shipping from China

As you may have noted, customs play a critical role in the successful shipping of goods from China under EXW.

As such, you need to ensure full compliance with the export/import rules and regulations when shipping from China.

Part of this compliance is the paperwork.

You’ll need to submit a number of documents to customs as part of the customs clearance process.

Failure to which you may experience difficulties and delays getting your goods through customs.

So, which documents do you need for EXW shipping from China?

i. Commercial invoice

The commercial invoice is the most important document in this trade.

It details the items you’ve bought, the quantity and the price at which you’ve bought them.

More importantly, the commercial invoice indicates contract terms agreed upon between you and the seller.

Every detail in this document is critical to customs clearance.

So you must ensure that all the information needed herein is clearly and truthfully indicated.

Otherwise, you may run into issues when trying to clear your goods for export/import.

ii. Export license

To ship from China, you need to present a valid export license to customs both in China and at the destination.

And as per EXW terms, your supplier should help you get this license.

Remember that you must have this document for China’s customs to authorize the shipment of your goods.

iii. Packing list

As trivial as it may sound, a packing list is an essential document in international shipping processes.

You will need this list to show customs what you’re really exporting/importing from China.

The document note, details the quantity, volume, and a number of goods that you’re shipping.

So make sure that along the commercial invoice, the seller also issues a well-detailed packing list.

iv. Bill of lading/air waybill

A bill of lading for ocean shipments and an airway bill for air shipments is a document that you must have.

Without this, shipping the goods from China and receiving them at the destination might be problematic.

The document is usually issued by the company transporting the goods from China.

It acts proof that goods have actually been loaded aboard a carrier vessel.

For this document, you need to keep copies. The original document should be with the person handling customs clearances.

Well, these are the four main documents that you will need for EXW shipping from China.

Note that you may need additional documents,i.e., inspection and origin certificates among others.

But these will depend on the goods you’re shipping as well as the shipping destination.

Remember,

You can always hire a licensed customs agent to help you complete all of the paperwork necessary to get through customs smoothly.

And if you find that EXW is not the best shipping incoterm for you, there are other options that you can consider.

Allow me to tell you about these options in the next section.

EXW China vs. Other Incoterms 2010: Know a Better Option for You

So you think that EXW is not the best incoterm for shipping your goods China?

Very well then.

There are other incoterms that you can consider.

However, before you consider any of these options, you have to sure that they are better than EXW.

This is why in this section, I will compare each of them with EXW based on their pros and cons.

I believe that this way, you’ll be able to make an informed decision when choosing a shipping incoterm from China.

1) EXW China vs. FOB Shipping

FOB is usually the next best alternative for buyers who are not sure of whether to buy under EXW or not.

This is because unlike in EXW, FOB terms reduces the burden of cost and risk for the buyer.

A FOB pricing means that the seller will transport the goods to the nearest port or terminal, not their premises like in EXW.

Once at the port, the seller will additionally clear with China’s customs, and load the goods onto the transporting ship.

It is only after this that you will assume any obligations pertaining the shipment.

The problem with FOB shipping from China, however, is that it is only available for sea freight.

This means that if you’re considering other freight options,i.e., air or rail, FOB might not be an option for you.

2) EXW China vs. FCA Shipping

If you’re concerned on whether or not you’ll be able to complete the import procedures for EXW shipping from China, then I suggest that you opt for an FCA pricing.

This is because,in FCA shipping from China, the seller handles export clearance.

Also, risk and responsibility of goods transfer from seller to buyer once export cleared goods are delivered at the name place.

The named place could be your forwarders warehouse, a transport hub or a terminal.

So generally you won’t have to worry about export clearance in China when shipping FCA.

The only thing you’ll worry about is how to transport the goods from the port in China to your country.

And, a little on how to clear with your country’s customs.

3) EXW China vs. CPT Shipping

Carriage paid to (CPT) means that the seller bears the costs of delivering goods to the named place.

Under this term, the seller loads goods clear them for export and hand them over to a named carrier for shipping.

He, however, is not responsible for ensuring the goods against the risk of loss and damage from the carriage point.

Compared to EXW, is it better?

Well, unless you have a representative at the destination port, CPT shipping from China isn’t your best option.

The lack of a representative at the destination port may lead to you incurring additional costs in terminal handling fees.

Chances are also that your forwarder may involve a third party agent to handle the goods at the port.

This, to be honest, may leave you with inflated costs that you may find very hard to challenge.

4) EXW China vs. CIP Shipping

Carriage paid to (CIP) is quite similar to CPT shipping.

The only difference is that CIP obliges the seller to pay for freight and insurance of goods up to the named place.

Note that risk and responsibility of goods from here transfer from seller to the consignee of goods.

In CIP, the insurance for goods has to be 10% more than the contract value.

Considering EXW vs. CIP, I would say factor in your shipping needs.

The insurance bit in CIP may be tempting, but take note that suppliers often go for the minimum insurance covers.

This may not conveniently cover your goods against all risks.

Such that if an unprecedented event occurs and goods are lost or damaged along the way, you have to incur huge losses.

In other words, if you are confident of managing your own shipping, opt for EXW.

But if you like the terms of CIP, then opt for it but ensure that you obtain additional insurance coverage.

This is especially if the goods are of high value.

5) EXW China vs. DAT Shipping

There are two major differences between EXW and DAT shipping.

The Delivered at Terminal incoterm requires that the seller arranges for freight from their premises to the destination port.

The seller is also responsible for clearing the goods through the Chinese customs for export.

Once goods arrive at the destination port, risk and responsibility transfer to you (the buyer).

Although, the seller is still obliged to unload the goods at the terminal.

This means that you’ll only be responsible for charges that accrue after unloading the goods at the terminal.

The challenge with DAT lies in the fact that you’ll use two different freight forwarders at two critical points.

This can lead to confusion.

Also, since they are handling a fair share of the shipping, suppliers tend to inflate the DAT pricing.

6) EXW China vs. DAP Shipping

While DAP shipping from China relives you (the buyer) of the burden of handling the shipping process, it is not the best alternative to EXW.

This is because usually, Chinese suppliers tend to have a hard time arranging shipment in other countries.

There are often high chances for mess up when shipping under the DAP term.

In my opinion, I’d rather you ship DAT than shipping DAP.

The former favors both parties in the contract.

The seller bears responsibility for where he has more strength in, the export country.

And you (the buyer) bears responsibility for where you are stronger in, your import country.

7) EXW China vs. DDP Shipping

Delivered duty paid is the exact opposite of EX Works.

Whereas EXW places the minimum responsibility on the seller, DDP shipping gives them maximum responsibility.

In DDP shipping, the seller arranges the entire shipment including handling clearance at the importing country.

This is usually a major problem as most countries do not allow forwarders to complete customs clearance procedures.

Also, unless your supplier is experienced in acting as an importer, there may be problems getting the goods through customs in your country.

Another pitfall to DDP shipping from China is that suppliers tend to inflate rates.

So if you are inexperienced in the shipping from China process, I’d rather you opt for EXW and get a reliable forwarder to help you handle the shipping.

By the way, if you’re considering DDP shipping, the DDP pricing is usually a clear reflection of the landed costs.

Comparing the DDP pricing to the market prices of the goods you’re importing should be enough to tell you if you should ship under the DDP incoterm or not.

That is all, and at this point, I understand that settling on an incoterm to ship under may be very confusing.

But if you carefully consider the pros and cons, you should be able to settle on a term that is suitable for your supply chain needs.

And if you end up choosing EXW incoterm, ensure that you compare EXW quotes from different suppliers before making a pick.

This is because often importers rush to taking an EXW offer only to realize that the cost of transportation inflates the total landed cost of the product by over 50%.

Such a pity!

If you’re choosing EXW, compare rates form different sellers.

Then, consider the cost of transportation from China to your final destination.

If it makes sense, go for it, if not you can consider any of the above alternatives depending on your shipping needs.

If you’re still unsure about this, you can contact us; we will be glad to help.

JMS EXW Shipping Services

Now,

When discussing the process of EXW shipping from China, I told you that you needn’t handle everything on your own.

Well, I meant that.

You see unless you’re a seasoned importer, navigating through the process of shipping from China can be a challenge.

And even you’re seasoned in this, at some point you may need the help of a professional freight forwarder.

This is where JMS comes.

We are a professional, reliable and highly trusted freight forwarding company based in China.

In the freight forwarding and logistics industry, we have more than ten years of hands-on experience.

This means that we can handle any kind of shipping under the EXW incoterm.

We can also ship using any mode of transport. You just choose and let us do the work.

Besides, as customs clearance tends to be an issue for most importers, we assure you that we can handle this for you.

As your forwarder, other than setting up all shipment arrangements on your behalf, we can also act as your customs broker.

As your customs broker, we will ensure that your goods from China get smoothly through both the export and import processes.

So if you’re shipping with us and are worried about customs clearance, just include additional customs clearance in your booking.

It doesn’t matter if you’re shipping FCL or LCL, just do this in your booking to allow us to maneuver through the import customs easily.

Basically, what we are offering you is a fast, reliable and affordable EXW shipping from China.

When you work with us, we will ensure that we maintain your supply chain expenses at a minimum.

We want you to make a profit regularly so that you can make us your trusted freight forwarder.

Conclusion

Well then, at this point I can only hope that this guide has been of help to you.

I believe that now you can confidently say YES or NO to an EXW quote knowing your reasons are valid.

If your supplier quotes EXW and finds that you need help to maintain a low cost of operation, please contact JMS.

We will arrange and set up everything regarding shipping and charge it back to you reasonably.