Shipping FCA Incoterms 2020

FCA Incoterms 2020 : A Few Quick Points

  • Free Carrier (FCA) Incoterms can be used for all modes of transport.
  • Risk transfers from seller to buyer when the carrier collects the cargo either after the goods are loaded on the arriving transport at the seller’s warehouse or when the goods are ready for unloading from the seller’s transport at an agreed place
  • The buyer must arrange for carriage to the agreed destination (named place)
  • The buyer must pay for transport costs to the agreed destination (named place)

When FCA is used in a contract, the named place is mentioned. For example, if a company in Vietnam is selling on FCA terms to a company in India and the buyer has agreed to collect the goods from the seller’s warehouse – the sales contract should at least mention:

FCA (Seller’s warehouse address, Vietnam, Incoterms 2020)

Shipping FCA Incoterms: Delivery & Transfer of Risks

Delivery in one of two places – at the seller’s warehouse or at an agreed place. In most instances delivery would take place when the cargo is handed over at the seller’s warehouse, when the goods are loaded on the buyer’s transport. It is highly advisable to define the point of delivery as accurately as possible in the sales contract.

… highly advisable to define the point of delivery as accurately as possible in the sales contract, as there may be conflicts in understanding …

Shipping FCA Incoterms: Insurance

There is no obligation for the seller to buyer insurance cover for the shipment.

Shipping FCA Incoterms: Carriage

The buyer must arrange and pay for carriage from the point of delivery to the named place of the destination. The buyer must abide by laws and meet all obligations relating to transport security regulations.

Shipping FCA Incoterms: Customs clearance

The seller must meet the obligations of export Customs clearance and the buyer must manage import Customs clearance. This would mean that respective parties responsible for export/import have to manage and pay for all formalities like licenses, security checks, inspections and other document submissions as required.

Shipping FCA Incoterms: Delivery/transport documentation

The seller must provide the buyer with any required proof that delivery has been made.

Shipping FCA Incoterms: Packaging & Marking

Seller must ensure and pay any costs related with ensuring that the cargo is delivered in acceptable condition. This would mean the seller has to pay for quality checks, weighing operations and/or counting etc. The seller must package the goods at the seller’s cost.

Shipping FCA Incoterms: Cost allocations

The allocation of costs between buyer and seller are as follows:

Buyer:

  • Any additional insurance cover requested
  • Any costs involved in obtaining documents for import clearance
  • Duties, taxes and other costs related to import
  • Any costs incurred due to a failure to give reasonable notice to seller when it is agreed that the buyer is allowed to choose the time for departure from origin or receiving at destination
  • Transport and insurance costs to the named place
  • Transport security related costs

Seller:

  • Cost of providing usual proof of delivery
  • Duties, taxes and other costs related to export
  • Any costs involved in obtaining documents for export clearance

Shipping FCA Incoterms: Notices

  • The seller must use the usual methods to notify the buyer that delivery has been made
  • The buyer must give the seller enough notice time to deliver the cargo at the buyer’s chosen time (if agreed that the buyer can choose the time)

What is Bill of Lading with on-board notation?

Under FCA terms, transportation providers typically have no interaction with the seller. However, the seller may still require timely access to a Bill of Lading for purposes such as getting paid on a letter of credit.  Under FCA terms, both buyer and seller can agree that if required, the buyer will instruct the carrier to issue an on-board Bill of Lading to the seller.

We have a more comprehensive article on Incoterms 2020 that you can find here.

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