FCA Incoterm (Free Carrier) - Use and Meaning
What is the FCA Incoterm (Free Carrier)
The FCA Incoterm or “Free Carrier” states that the seller must deliver the goods, ready for export, to the buyer’s chosen carrier at a specific agreed-upon location listed in the sales contract. This location can be a particular port or a carriers’ hub.
The seller is also responsible for all customs costs and risks. The risk is only transferred from the buyer to the seller once the cargo has been delivered to the buyer’s chosen location. Given the clear risk transfer point, FCA is the recommended Incoterm for containerized cargo.
The FCA Incoterm is versatile and can be used regardless of the mode of transport.
Seller’s obligations under the FCA Incoterm
- Delivery of goods and documents required
- Packaging and wrapping
- Inland transportation in the country of origin
- Customs handling fees at origin
- Origin charges
Buyer’s obligation under the FCA Incoterm
- Payment of goods
- International freight
- Destination charges
- Customs handling fees at destination
- Inland transportation in the destination country
- Payment of duties and taxes
FCA insurance
Under FCA, neither buyer nor seller is contractually obliged to purchase cargo insurance.
However, buyers and sellers often obtain their own insurance policies to cover the ocean freight portions they’re responsible for. Alternatively, one party can also purchase coverage that covers the entire transportation process.
When negotiating insurance terms, make sure to specify their conditions in the sales contract.
FCA as an alternative to EXW
Under certain circumstances, the FCA Incoterm may be a good alternative to the Ex Works Incoterm.
With EXW, the shipper is responsible for getting the goods ready for pick up at origin, but not for loading. It may be common practice for certain shippers to take the initiative to load the cargo but it is by no means guaranteed.
As a buyer, without this guarantee, you will have to arrange for your own loading services, which can be rather cumbersome to do from another country. A good alternative to this would be to have your goods shipped under FCA and specify a pickup address, which is also commonly known as FCA (named place).
This is a good workaround as shipping under FCA puts shippers in charge of loading the cargo.
If you’re still unsure if the FCA Incoterm is the right one for your ocean freight shipment, you may download our free ebook on how to choose the best Incoterm. Or, if you prefer, you may give us a call. Our import and export agents will be happy to advise you.
