Incoterms are standardized terms used within international trade to outline the exact delivery terms between a buyer and a seller. Incoterms summarize who is responsible for loading and unloading, delivery, payment and insurance. However, when the Free Carrier (FCA) term is selected, who is responsible? 

The Free Carrier (FCA) term places most obligations on the buyer and the minority of obligations on the seller. The FCA term also applies to all transportation modes.

FCA has become the preferred term over Free on Board (FOB), which was commonly used in the past. The FCA designation has grown in popularity primarily since FOB is only applicable to ocean freight and intended for charter-type cargo. 

General Responsibilities Under the FCA Term

With the FCA term, the seller delivers the cargo to a named place, whether it be an airport, marine terminal or another place where the carrier operates. A precisely named place of delivery is essential 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, including transportation costs and import customs fees. 

Seller Responsibilities Under FCA

The seller is responsible for:

• Export product packing, marking, labeling and the export customs clearance
• Providing the buyer with the export documentation, such as the commercial invoice and packing list
• Supplying the buyer with any manufacturer, product or shipper information needed to complete Importer Security Filings and denied party screenings
• Providing and paying for an export license, if required, for exportation of the product, when applicable

Buyer Responsibilities Under FCA

Typically, the buyer will be responsible for the following:

• Contracting the carriage of goods from the named place of delivery; however, the buyer can request the seller to contract the carriage at the buyer’s risk and expense
• Paying 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 critical topic of cargo insurance should be outlined within the sales contract. 

Contact our team to learn more about Incoterms or read our newest blog post – Incoterms 2020 Explained.