What Is Ab werk preis?
The term "Ab werk preis," translated from German as "Ex-works price" (EXW), is an international commercial term, or Incoterm, that signifies the seller's minimal responsibility in a sales contract. Under an Ab werk preis agreement, the seller makes the goods available at their own premises—such as a factory, warehouse, or other designated location—and the buyer assumes nearly all costs and risks involved in transporting the goods from that point to the final destination. This arrangement places the vast majority of obligations related to international trade on the buyer, making Ab werk preis one of the most seller-friendly Incoterms.
History and Origin
Ab werk preis is part of the Incoterms rules, which are a globally recognized set of definitions for common sales terms in international commercial transactions. These rules are published by the International Chamber of Commerce (ICC). The first Incoterms rules were introduced in 1936, with subsequent revisions occurring periodically to adapt to evolving commercial practices and trade needs. The Incoterms aim to standardize the interpretation of trade terms, thereby reducing misunderstandings and disputes between parties in cross-border transactions. The International Chamber of Commerce provides the authoritative guidelines for these rules.,,
- Ab werk preis (Ex-works) means the seller's responsibility ends when goods are made available at their premises.
- The buyer bears almost all costs and risks, including loading, export clearance, main carriage, and import procedures.
- It is one of the most seller-friendly Incoterms due to minimal seller obligations.
- Ab werk preis can be used for any mode of transportation.
- The buyer needs comprehensive knowledge of logistics and local regulations to manage an EXW shipment effectively.
Interpreting the Ab werk preis
When a contract specifies Ab werk preis, it implies that the seller has fulfilled their obligation once the goods are packed and made ready for pickup at their designated location. At this precise point, the risk transfer from seller to buyer occurs. This means any damage or loss to the goods from that moment onward is the buyer's responsibility. The buyer is accountable for arranging and paying for all aspects of transport, including loading the goods, managing all export formalities, securing main carriage, and handling import processes, along with all associated transportation costs.,
Consider a scenario where a manufacturer of specialized machinery in Stuttgart, Germany, agrees to sell a machine to a buyer in Chicago, USA, under "Ab werk preis Stuttgart" terms.
- Seller's Responsibility: The German manufacturer ensures the machine is properly packaged and available for pickup at their factory in Stuttgart. They provide the commercial invoice and packing list.
- Buyer's Responsibility: The US buyer arranges for a trucking company to pick up the machine from the Stuttgart factory. The buyer's carrier is responsible for loading the machine onto their vehicle.
- Risk and Cost Transfer: As soon as the machine is loaded onto the truck at the factory, the buyer assumes all risk for the machine's condition and all further costs.
- Subsequent Steps: The buyer is responsible for coordinating the delivery from Stuttgart to a port, handling German export controls and customs, paying for ocean freight, arranging US customs clearance and import duties, and finally, transporting the machine from the US port to Chicago.
Practical Applications
Ab werk preis is frequently used in situations where the seller prefers to avoid any involvement with the shipping process beyond making the goods available. This is often the case with small businesses, manufacturers dealing with complex export regulations, or when the buyer wishes to consolidate multiple purchases from different suppliers in one country. For the buyer, choosing Ab werk preis can provide maximum control over shipping arrangements and potentially reduce the cost of goods sold by negotiating directly with carriers and managing the entire supply chain management process. However, buyers must be proficient in international shipping and aware of trade rules established by bodies like the World Trade Organization (WTO), which facilitates global trade through various agreements.,
#6#5 Limitations and Criticisms
Despite its appeal for sellers due to minimal responsibility, Ab werk preis comes with significant limitations, primarily for the buyer. The buyer takes on extensive responsibilities, including potentially complex export procedures in the seller's country, which can be challenging if they lack a presence or expertise there. This includes managing export declarations, licenses, and potentially being responsible for loading the goods, which might be difficult if the seller's premises have restrictions or safety regulations preventing external parties from operating equipment. Incorrectly handling export documentation can lead to delays or penalties. Cri4tics note that the Incoterms 2020 rules themselves suggest that EXW might be less suitable for international commerce compared to other terms, recommending alternatives when goods must cross national borders., Fo3r2 the buyer, the extensive responsibilities can lead to an increased total cost of ownership if not meticulously planned.
Ab werk preis vs. Free On Board (FOB)
Ab werk preis (EXW) and Free On Board (FOB) are both Incoterms, but they differ significantly in the allocation of responsibilities, costs, and risks between the buyer and the seller.
| Feature | Ab werk preis (EXW) | Free On Board (FOB) |
|---|---|---|
| Seller's Obligation | Make goods available at their premises. | Deliver goods on board the vessel nominated by the buyer at the named port of shipment. |
| Buyer's Obligation | All costs and risks from the seller's premises. | All costs and risks once goods are on board the vessel. |
| Risk Transfer Point | At the seller's premises. | When goods are on board the vessel at the named port of shipment. |
| Loading Responsibility | Buyer, typically (unless agreed otherwise). | Seller. |
| Export Clearance | Buyer (though seller assists with information). | Seller. |
| Suitable For | All modes of transport. | Sea and inland waterway transport only. |
| Buyer Control | Maximum control, maximum responsibility. | Significant control, less responsibility than EXW. |
The fundamental distinction lies in when the risk and responsibility transfer. With Ab werk preis, the transfer happens at the earliest possible point, at the seller's door. With Free On Board, the seller takes on more responsibility, including getting the goods to the port, clearing them for export, and loading them onto the vessel, at which point the risk transfers to the buyer.,,
##1 FAQs
What does "Ab werk preis" mean for the buyer?
For the buyer, "Ab werk preis" means they are responsible for all aspects of the shipment once the goods are available at the seller's location. This includes arranging transport, paying for all shipping costs, handling export and import duties, and managing all associated risks from that point onward.
Is Ab werk preis suitable for international shipping?
While technically usable for international shipping, the Incoterms 2020 rules often advise against using "Ab werk preis" for such transactions. This is because it places the burden of export formalities on the buyer, who may not have the necessary legal standing or practical means to complete them in the seller's country. Other Incoterms might be more appropriate for cross-border trade.
Does Ab werk preis include customs clearance?
No, "Ab werk preis" does not include customs clearance. Under this term, the buyer is solely responsible for arranging and paying for both export customs clearance in the country of origin and import customs clearance in the destination country. The seller's responsibility ends before any customs procedures begin.