Transportation Operations LINCS Practice Exam

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What does Ex Works (EXW) imply in terms of responsibility?

The seller assumes all shipping costs
The buyer assumes total responsibility for the shipment
The freight carrier is responsible for damages
The buyer only pays for product costs

The correct answer is: The buyer assumes total responsibility for the shipment

Ex Works (EXW) implies that the buyer assumes total responsibility for the shipment from the seller's premises or another named place. This includes managing all logistics involved in transportation, including costs, risks, and the import/export formalities. The seller's responsibility is minimal and includes making the goods available for pickup, but after that point, all liabilities shift to the buyer. In this arrangement, the buyer takes on the burden of organizing transportation, insurance, and any relevant customs duties. This is distinct from other Incoterms that may allocate shipping costs or responsibilities differently, making it essential for buyers to understand the implications of this agreement when negotiating terms to avoid misunderstandings regarding financial obligations and risk management.