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What is FCA Incoterms?

“FCA” shipping means free carrier shipping. In this type of shipping, the seller arranges most part, if not all of the export country stages (i.e. custom due, logistics within the export country, etc.). The buyer takes care of all other stages to the cargo’s final destination. The seller is responsible and liable for all processes in their country up until the cargo is delivered to the carrier at any named place, mostly a warehouse or terminal agreed by both parties. The buyer is responsible and liable for some tasks in the export country unless the designated delivery point is a terminal. This mode of shipping is recommended for containerized freight by the ICC.

FCA Terms

When a buyer wants to purchase goods from a foreign manufacturer and then ship them internationally, the FCA shipping is the most appropriate incoterm for such shipment.

When to use FCA Shipping terms

FCA shipping terms is good to use a buyer, because, as a buyer, nobody cares about your cargo as much as you. You are the one who wants your goods to arrive timely and safe. That means you are making decision on packing, route, the shipping line to use, and other key decisions based on the level of risk you are comfortable to take on.

Does FCA shipping affects cost of freight?

FCA shipping does not add or remove the cost of freight, the buyer handles freight cost as soon as the buyer get the goods to the agreed point.

FCA costs are sellers until the goods are parked into the sea freight container or the carrier’s vehicle at the agreed drop off point but not necessarily loaded on the ship/plane.

Who is benefits FCA term the most shipper or buyer

Therefore, it is adjudged that the FCA shipping put nearly all responsibility on the buyer. If the risk and responsibility is taken early enough in the chain of delivery by the buyer, then they tend to benefit the most. Invariably, we can say the shipper does not benefit from the FCA term as much as the buyer.

FCA Incoterms in shipping

Incoterms or International Commercial Terms are laid down commercial terms compiled by International Chamber of Commerce in relation to international commercial law. This Incoterms rules have been adopted by legal authorities, governments, and practitioners worldwide for the interpretation of terms commonly used in international trade. This rules was put together to remove uncertainties due to different interpretation of rules in different countries. So they are incorporated in sales contracts regularly around the world.

There are other types of incoterms such as

  • FOB (Free Onboard Vessel): Here, the seller is obligated to deliver the goods all the way to the port, clear such goods for export, and see to it that the goods are put into the shipment nominated by the buyer. As soon as the goods clear the vessel railings the buyer immediately assumes the risk on the merchandise. This term is mostly used for maritime and inland waterways transportation but not in container shipment.
  • FAS (Free Alongside Ship): In this case, the seller transports’ the goods all the way to the dock, to be close enough to be reached by the crane of the ship it will be transported in. It is also the sellers’ responsibility to get the goods cleared for export. FAS is mostly followed by a specific location name, for example FAS Chicago. FAS is mostly used for maritime and inland waterways transportation but not in container shipment. Goods sold as bulk cargo, like grain or petroleum products uses the FAS type of shipping.
  • EXW (Ex Works): Here, the seller will bring down the goods to the buyer at a specified place, and at a specified time. Ones the seller fulfills his obligation then the buyer goes ahead to load the goods to his truck, and clears the goods for export, and also bears all the risk involved in transportation. In simple terms, Ex Works translates into the arrangement taking the minimum risk and obligation for the seller and the maximum risk and obligation for the buyer. This applies majorly to rail, road, air and containerized transport.
  • Others are CFR (Cost and Freight), DAP (Delivered At Place), DDP (Delivered Duty Paid), DDU (Delivered Duty Unpaid), DAT (Delivered At Terminal), CIF (Cost, Insurance, Freight), CPT (Carriage Paid To), CIP (Carriage and Insurance Paid), DEQ (Delivered Ex Quay), DAF (Delivered At Frontier), DES (Delivered Ex Ship)

 

How incoterm FCA is different from other incoterms

But FCA is different from all these, but is in some way similar to EXW. But what makes it stand out is, the FCA represents an incremental increase in the obligation and cost to the seller.

The cover under FCA incoterm is on the buyer mostly. The seller is responsible for loading the goods onto the truck, and for export clearance, and once delivered, the buyer assumes all risk. The FCA is a rule of choice for containerized goods where the buyer arranges for the main carriage.