Hell, everyone, this is Gary, I am the international trade manager from Extripod. Welcome to “Extripod Academy”, This is “International Trade Basic Knowledge” Series, in this series, we will discuss the international trade rules, payment, transporation, organization, certification and country situation, i hope those knowledges can help your doing success in the international trade business.if you have any question realted those issue, you can leave comment or go to our website www.extripod.com to contact us. Our more connect as follow. If you like our channel, please also subscribe our channel. Thank!
Incoterms 2020 EXW — Introduction
Welcome back to “Extripod Academy”, this is the second video for “Incoterm 2020” Part . The animation you just saw that is Incoterm 2020 rules changes overview, from risk, transportation and insurance . The rules for international transport are defined by Incoterms. Due to many transport-related factors, such as risk transfer and allocation of costs. So i hope this animation can help you understand Incoterm 2020 better.
OK, Last time we talk about what’ the Incoterm 2020. So today we start to understand the rules. Incoterms rules are divided into four groups. One of the groups, E group, indicates that the seller places the goods at disposal of the buyer at a place named in the contract. We will talk about EXW from “Allocation of costs, Obligations, Delivery,Insurance and Transportation, at final i will give the conclusion for EXW. Hope you can understand well.
Incoterms 2020 EXW – Allocation of costs
At first, Let talk what’s kinds of allocation of cost from sell to buyer.
The seller bears costs of checking operations like checking quality costs, measuring cost, weighing cost, counting the goods, those cost all happen in the factory location; another are any additional costs related to the damage to the goods before delivery; Also including packaging and labeling costs, unless they are not required by the chosen type of transport.
The buyer bear costs related to import, export, and transit clearance formalities;
any costs related to the goods from the moment of its delivery following the contract by the seller;The buyer also need pay customs duties, taxes, and other charges, and any additional costs incurred by failing to take delivery of the goods; In addition, the buyer reimburses the seller for the costs incurred by providing to the buyer assistance with documentation for export, import or transit formalities.So those are the cost for both side, from seller to buyer.
Next Secotion, we talk about the obligations.
Incoterms 2020 EXW-Obligation
What are the seller’s obligations?
1. The seller’s obligation is delivers the goods to the place specified by the buyer, on the agreed date or within the agreed period.
2. The seller delivers the goods together with the commercial invoice in accordance with the contract of sale and any other evidence of conformity with the documents, which were mentioned in the contract , the contact can be in paper or electronic form).
3. At the buyer’s request provides the risk and cost of assistance in obtaining the authorization necessary for the export of goods.
4. Notifies the buyer of the date the goods are left at the buyer’s disposal.
5. Provides the buyer with all assistance in obtaining any documents necessary for completing export, import or transit clearance formalities.
6. The seller provides the buyer with any information necessary for obtaining insurance
The above are the seller’s obligation which mention in Incoterm 2020. What’s the buyer’s obligations?
What are the buyer’s obligations?
1. The buyer, at his own risk and cost, obtains documentation authorizing him to export and carry out all for export, import or transit clearance formalities.
2. Carries out all import, export and transit clearance formalities.
3. The buyer need Organizes the transport of goods from the place of delivery.
4. The buyer need Takes the delivery of the goods and provides the seller with evidence of having taken delivery.
5. that is the buyer need bears all the cost and risk of the goods, from the moment the goods are delivered in accordance with the contract
6. Final one, the buyer should Unloads and loads the goods in the export and import port.
So you can see, the buyer obligation is bigger than seller. If you wants doing EXW to save cost, you should clean those and have good solution for forwarder or agent, do to most cost are related the transport. A good forwarder or agent can help you finish this. OK let see the Delivery Issue.
Incoterms 2020 EXW- Delivery of goods
The moment of delivery of the goods is when they are placed at the buyer’s disposal in the previously named place, for example, factory, warehouse or on the premises, and the agreed time. Although not legally required, it is recommended to include a specific delivery point in the contract, not just the location. However, in the case of the EXW rule, the seller is not responsible for the loading of goods, as well as carrying out export clearance formalities. This is the delivery issue, ok let talk about the insurance and transport
Incoterms 2020 EXW- Insurance and Transport
By applying this rule, the buyer and the seller do not have to make a contract of insurance. How about the transport?
It appears that the EXW rule applies to any type of transport. Besides, the buyer covers all costs and organizes transport. However, the risk is transferred when the goods are at the buyer’s disposal on the seller’s premises.
The seller delivers the goods together with a commercial invoice in accordance with the contract of sale and any other evidence of conformity with the documents specified in the contract.
So those are the main content of EXW rule. If you want see the all content from A1 -A10 and B1- B10, you can go to our website check all text content.
What the final conclusion?
Incoterms 2020 EXW–Conclusion
Incoterms EXW expects that the buyer will carry out export clearance formalities. Unfortunately, this is not always possible. Due to the drawback of this rule, more and more entrepreneurs opt for the FCA Incoterms delivery terms, and EXW Incoterms is mainly used for transactions within one country. The rules are similar in terms of operating principles. The difference is that in the case of FCA, the seller is obliged to carry out custom clearance formalities in his country.
E Group only have this rule, so next video we will talk about the FCA. OK, if you have any suggestion, please leave your comment under this video, we will choose and some to reply. If you think my content is ok, please subscript our channel, move your finger to support us, let us do more useful video to help you growth in international trade business. All text content you can find in our website. Thanks for your watch and see your next time!
A1 GENERAL OBLIGATIONS
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
B1 GENERAL OBLIGATIONS
The buyer must pay the price of the goods as provided in the contract of sale.
Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
The seller must deliver the goods by placing them at the disposal of the buyer at the agreed point, if any, at the named place of delivery, not loaded on any collecting vehicle. If no specific point has been agreed within the named place of delivery, and if there are several points available, the seller may select the point that best suits its purpose. The seller must deliver the goods on the agreed date or within the agreed period.
B2 TAKING DELIVERY
The buyer must take delivery of the goods when they have been delivered under A2 and notice given under A10.
A3 TRANSFER OF RISKS
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2,with the exception of loss or damage in the circumstance described in B3.
B3 TRANSFER OF RISKS
The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.
If the buyer fails to give notice in accordance with B10, then the buyer bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery, provided that the goods have been clearly identified as the contract goods.
The seller has no obligation to the buyer to make a contract of carriage.
However, the seller must provide the buyer, at the buyer s request, risk and cost, with any information in the possession of the seller, including transport-related security requirements ,that the buyer needs for arranging carriage.
It is up to the buyer to contract or arrange at its own cost for the carriage of the goods from the named place of delivery.
The seller has no obligation to the buyer to make a contract of insurance. However, the seller must provide the buyer, at the buyer s request, risk and cost with information in the possession of the seller that the buyer needs for obtaining insurance.
The buyer has no obligation to the seller to make a contract of insurance.
A6 DELIVERY/TRANSPORT DOCUMENT
The seller has no obligation to the buyer.
B6 DELIVERY/TRANSPORT DOCUMENT
The buyer must provide the seller with appropriate evidence of having taken delivery.
A7 EXPORT/IMPORT CLEARANCE
Where applicable, the seller must assist the buyer, at the buyer´s request, risk and cost, in obtaining any documents and/ or information related to all export /transit/import clearance formalities required by the countries of export/transit/import, such as:
•security clearance for export /transit/ import;
•pre-shipment inspection; and
•any other official authorisation.
B7 EXPORT/IMPORT CLEARANCE
Where applicable, it is up to the buyer to carry out and pay for all export /transit/import clearance formalities required by the countries of export/transit/import, such as:
•export/ transit/import licence;
•security clearance for export/transit/import;
•pre-shipment inspection; and
•any other official authorisation.
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing counting) that are necessary for the purpose of delivering the goods in accordance with A2.
The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.
The buyer has no obligation to the seller.
A9 ALLOCATION OF COSTS
The seller must pay all costs relating to the goods until they have been delivered in accordance with A2. other than those payable by the buyer under B9.
B9 ALLOCATION OF COSTS
The buyer must:
a) pay all costs relating to the goods from the time they have been delivered under A2;
b) reimburse all costs and charges incurred by the seller providing assistance or information
under A4, A5, or A7;
c) pay, where applicable, all duties, taxes and other charges,as well as the costs of carrying out customs formalities payable upon export; and
d) pay any additional costs incurred by failing either to take delivery of the goods when they have been placed at its disposal or to give appropriate notice in accordance with B10. provided that the goods have been clearly identified as the contract goods.
The seller must given the buyer any notice needed to enable the buyer to take delivery of the goods.
The buyer must, whenever it is agreed that the buyer is entitled to determine the time within an agreed period and or the point of taking delivery within the named place, give the seller sufficient notice.