Incoterms are standardized terms used within international trade to outline the exact delivery terms between a buyer and seller. Incoterms summarize who is responsible for loading and unloading, delivery, payment and insurance. So, who is responsible for these activities when the Free Carrier (FCA) term is selected?
FCA is the preferred term over Free on Board (FOB), which has been used for years. This is due to the fact that FOB is only applicable to ocean freight and intended for charter type cargo.
With the FCA term, the seller delivers the cargo to a named place, either an airport, marine terminal or other place where the carrier operates. A precise named place of delivery is extremely important to avoid any discrepancies. After the seller delivers the freight to the named place, the risk of loss is transferred to the buyer. The buyer assumes all risks and costs associated with delivering the goods to the final destination. This includes transportation costs as well as import customs fees.
The seller is responsible for the export packing, marking, labeling and the export customs clearance. The seller must provide the buyer with the export documentation such as the commercial invoice and packing list. The seller is also responsible for supplying the buyer with any security information needed for the import of the goods. Importers will need shipment information to complete Importer Security Filings, Japan’s Advanced Filing Requirement and denied party screenings. When applicable, the seller must also provide and pay for an export license, if required for exportation.
Typically, the buyer will contract the carriage of goods from the named place of delivery. However, the buyer can request the seller to contract the carriage, at the buyers risk and expense. The buyer must also pay the costs of any mandatory pre-shipment inspection, except when such inspection is mandated by the authorities of the export country.
The buyer and seller are not obligated to insure the goods under the FCA Incoterm. However, the important topic of cargo insurance should be outlined within the sales contract.