By Jennifer Chang    Photo：CANVA

In international trade, Incoterms are important guidelines for both parties to confirm the responsibilities, costs, and risks of a transaction. Among them, FOB (Free On Board), FAS (Free Alongside Ship), and FCA (Free Carrier) are three common delivery terms. While they are similar in terms of the delivery method, there are significant differences in the specific provisions and risk allocation. Choosing the appropriate term should be based on the needs of both parties and the mode of transportation.

1. FOB (Free On Board) 

FOB is a term specifically used for sea or inland waterway transportation, which stipulates that the seller is responsible for delivering the goods to the designated port of shipment and loading them onto the vessel specified by the buyer. Once the goods pass the ship's rail, all risks and responsibilities immediately transfer to the buyer. This means the seller bears the costs of transportation to the port of shipment, including customs clearance, export procedures, and loading fees, but the risks during transportation are assumed by the buyer. The buyer is then responsible for arranging the subsequent sea transport, insurance, unloading port fees, and import customs clearance.

The key feature of FOB is that the point of risk and responsibility transfer occurs when the goods are on board the vessel at the port of shipment. This is particularly suitable for buyers who wish to have higher control over the transportation process. The seller bears the costs up to the port of shipment, while the buyer is responsible for the shipping, insurance, and unloading arrangements, ensuring that the risks during transportation are reasonably allocated.

2. FAS (Free Alongside Ship) 

FAS is similar to FOB, as both are terms used for sea transport, but the main difference lies in the specific delivery location. Under FAS terms, the seller is required to deliver the goods to the designated port of shipment and place them alongside the vessel, rather than directly loading them onto the ship. Once the goods are placed alongside the ship, all risks and responsibilities transfer to the buyer. The buyer is then responsible for arranging the loading of the goods, shipping costs, insurance, and import customs clearance.

FAS is typically used for bulk cargo or special transportation needs, where the goods may require special handling rather than standard container shipping. This term is particularly suitable for buyers who wish to control the loading process themselves, as after the goods arrive at the port of shipment, the buyer assumes responsibility for all loading arrangements.

3. FCA (Free Carrier) 

Compared to FOB, FCA is a more versatile term that can be applied to sea, air, land, and even multimodal transportation. Under FCA terms, the seller is required to deliver the goods to the carrier or a designated location specified by the buyer, and complete the export customs procedures. Once the goods are delivered to the specified location, all risks and responsibilities transfer to the buyer, who will then bear the risks and costs of subsequent transportation.

FCA offers greater flexibility, especially for situations involving multiple modes of transport or dispersed delivery locations. This term is particularly advantageous for buyers who need to control processes across various stages of transportation. The buyer can choose the transportation route and carrier to ensure the safe and smooth delivery of the goods to the destination.

The differences between FOB, FAS, and FCA lie in the delivery point and the timing of the transfer of risk. FOB focuses on delivering the goods onto the ship, with the risk transferring to the buyer once the goods are on board; FAS involves delivery alongside the ship, with the buyer responsible for loading the goods; whereas FCA offers greater flexibility, allowing delivery at the seller's premises or another specified location, giving the buyer control over multiple stages of the transportation process.

Choosing the appropriate delivery term should be based on the needs of both parties and the mode of transportation. In sea transport, FOB and FAS are commonly used for bulk cargo, while FCA applies to various transport methods, especially when goods need to undergo multimodal transport. Understanding the differences between these terms helps to better arrange logistics, control costs, and allocate risks, ensuring the smooth completion of international trade.

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