Ex works incoterm term (Ex-factory Price)

 Let us clear one thing at beginning the terms Ex-factory and E-works are similar.

There are various delivery terms in international shipping, ex-works is one of those and it is widely used.
Delivery terms or incoterms plays most important role in finalizing price of the commodity.
The name ex-factory is self-explanatory, it means from the factory.

In this case seller and buyer finalize the deal with incoterm ex-works and buyer issues Purchase order.
Once seller receives Purchase order from buyer they start the production of goods and after goods are ready they pack finished goods as per the requirement and keep all finished goods at their loading bay.
From this point all responsibilities are on buyer, buyer place vehicle and pick up the goods.

Let us understand this with one example.

Negotiation:
Buyer will issue 'Request for quotation' and seller will send quotation.
Let's assume seller has given the quotation including transportation of goods till destination port including insurance coverage which is known as CIF delivery.

But buyer found per unit cost is too high, while checking break up of price they found cost of goods is ok for them but freight & Insurance costs are high.
They discuss with some local freight forwarders and get the quotation for ex-works charges and Freight charges and they found charges of local freight forwarders are less than the charges given by the seller.
So they go back to seller and tell them they want ex-works price and request for revised quotation, seller revised their quotation and this time they share ex-works quotation and the same gets finalized by buyer. Buyer issues Purchase order.

Finished goods:
Once Purchase order is issued seller checks with planning and share one tentative readiness date (Ex-factory date) to buyer. Seller starts production as per the plan. One production is completed they pack the finished goods as agreed. Depending on the cargo packing can be of various type like bags, cartons, crates, pallets etc.
In case of agree commodities milling, processing, sorting, grading takes place instead of production.

After completion of packing, finished goods are kept at warehouse and seller gives confirmation on ex-factory date to buyer.

Ex-works operations:
Once buyer receive confirm readiness date or ex-factory date, they contact their local freight forwarders for container booking and share all details like ex-factory date, product details, quantity, measurements etc.
After receiving details freight forwarder contact their counterpart or agent at origin country.

Here let's discuss briefly about counterpart/agents.
Freight forwarders at destination country cannot perform all ex-works activities at origin country by their own sitting at another country, so they need someone at origin country/port to handle the shipments and arrange clearance, local transportation, container operation etc.
Some freight forwarders have their own offices at origin as well destination country where some freight forwarders doesn't have their own office but they have agreement with freight forwarders at origin country who handles all operations on behalf of them, they are called foreign counterpart or agent of local freight forwarders.

Coming back to ex-works operations local freight forwarder shares all details to their overseas agent/counterpart and their agent contacts  seller and ask for exact date and time of loading.
Simultaneously they place booking for containers and vehicles.
We have written a dedicated article on Container booking, you can click here to read.

On the day of loading overseas agent sends trucks or containers (as required) to seller's factory and they only arrange to load finished goods on given time and those goods are sent to port/cfs/icd for custom clearance.

Once custom clearance completed goods are loaded in the vessel in which slots were already booked by the overseas agent/ freight forwarder's counterpart.

Once vessel is sailed overseas agent starts following up with liners and other authorities  at origin for post shipment documents.
Transfer of documents happens as per agreed payment term.
We have written a dedicated article on Payment methods/ Payment terms, you can click here to read.

After vessel reaches at port of destination all activities are taken care by buyer & their appointed CHA.

This was the complete process of Ex-works delivery term.

We have written article on complete process of export shipments, if you want to read that article click here.

Also check other incoterms:

FOB (Free on Board)

CPT (Carriage paid to)

FCA (Free Carrier)

FAS (Free alongside ship)

CFR (Cost and Freight)

CIF (Cost Insurance & Freight)

CIP (Carriage & Insurance paid to)

DPU (Delivered at place unloaded) – This is new incoterm introduced in 2020

DDP (Delivered Duty Paid)

DAP (Delivered at Place)