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Homework answers / question archive / Corporation ABC signed on a new, large distributor
Corporation ABC signed on a new, large distributor. This distributor is well versed in exporting from the US and prefers using their appointed trucking service to collect the goods from Corporation ABC’s warehouse in Los Angeles. They use an export agent to send the goods from the port of New York to their location in Tel Aviv, Israel. The buyer has agreed to pay additional costs for Corporation ABC to load the truck at Corporation ABC’s premises. The buyer will be responsible both for exporting out of the US and importing into Israel.
What INCOTERM should be used? Choose from FOB, DAP or EXW.
EXW stands for ex works. Under EXW shipping terms, the seller is not obligated to load the goods on the buyer's designated method of transport. Instead, the seller must make the product available at a selected location, and the buyer needs to transport the products at his own expense and risk.
In the instant case the distributor has his own arrangememnts to transport the goods from Corporation ABC's warehouse in Los Angeles, USA to their location in Tel Aviv, Israel. Further, the distributor will make additional payment to Corporation ABC for loading the goods on his truck at ABC's warehouse.
Hence, the INCOTERM to be used is EXW (Ex Works) since the risk, responsibility and expenses of transporting the goods from the seller's (Corporation ABC) warehouse till the buyer's premises have been borne by the buyer (distributor).
