Selling ex works for many can be a relief, removing all forms of transportation responsibility on the goods. According to Paolo Federici, Managing Director of Fortune International Transports, the game is not worth the candle, and he tells it in his blog through a series of cases that will make you think about the hidden pitfalls in this practice.
1. You fail to get the customs export bill because the freight forwarder appointed by the client does not respond to reminders.
In case of a visit from the finance you will be forced to pay VAT plus a penalty by not being able to show a customs bill. To get a refund from the freight forwarder you will be forced to open a lengthy and costly legal case.
2. The truck bound for the port had an accident on the way and destroyed the goods.
Since the goods never arrived on board you will not be able to receive a “clean on board” bill of lading, and the foreign customer, although legally speaking he should pay for the goods, may be very reticent to do so. The letter of credit certainly will not be able to come to the rescue and will not give any kind of guarantee.
3. What about insurance?
Referring back to the previous case a further issue lies in the insurance, which will not reimburse you for the goods but the buyer. The worst case scenario could result in the customer not only not paying for the service but also receiving a refund for merchandise they never actually paid for.