What is FCA means?

 

FCA is a free carrier (…designated place)” means that the seller only needs to deliver the goods to the carrier designated by the buyer at the designated place and go through the export customs clearance procedures to complete the delivery.

 

It should be noted that the choice of delivery location has an impact on the obligations to load and unload at that location. The seller shall be responsible for loading if the seller delivers at its location, and is not responsible for unloading if the seller delivers at any other location.

 

The term can be used for various modes of transport, including multimodal transport. “Carrier” means any person in a contract of carriage that undertakes to perform the carriage by rail, road, air, sea, inland waterway, or a combination of the above, or by others.

 

If the buyer appoints a person other than the carrier to collect the goods, the seller shall be deemed to have fulfilled the obligation of delivery when the goods are delivered to this person.

The basic obligations of buyers and sellers of FCA TERM are divided:

 

  1. Seller’s obligations:
  • (1) At your own risk and expense, obtain an export license or other official approval documents, and when customs formalities are required, go through all customs formalities required for the export of goods.
  • (2) At the time and place specified in the contract, place the goods in compliance with the contract under the control of the carrier designated by the buyer, and notify the buyer in time.
  • (3) Bear all costs and risks before handing over the goods to the carrier.
  • (4) Provide the buyer with the delivery documents at their own expense. If the buyer and the seller agree to use electronic communication, all documents may be replaced by electronic data interchange (EDI) information with the same effect.

 

  1. Buyer’s obligations:
  • (1) At your own risk and expense, obtain an import license or other official documents, and when customs formalities are required, go through all customs formalities for the import of goods and transit through other countries, and pay relevant fees and transit fees.
  • (2) Sign a contract to carry the goods from the designated place, pay the relevant freight, and promptly notify the seller of the carrier’s name and relevant information.
  • (3) Bear all costs and risks after the goods are delivered to the carrier.
  • (4) Receive the goods and pay for the goods in accordance with the provisions of the sales contract.

 

FCA’s delivery conditions under different modes of transport:

Incoterms has made the following provisions on the delivery conditions of FCA under various modes of transportation:

(1) Railway transportation. When the goods are enough for a whole vehicle or a whole container, the seller shall be responsible for loading the vehicle or the container, and receiving it by the railway department, the delivery is completed; if the goods are not enough for a whole vehicle or a whole container, the seller shall deliver the goods to After arriving at the railway receiving location, the delivery is completed.

 

(2) Road transportation. If the delivery is made at the seller’s location, the seller shall deliver the goods to the vehicle provided by the buyer; if the delivery is made at the carrier’s location, the seller shall deliver the goods to the road carrier or its agent, and the delivery is completed.

 

(3) Inland water transportation. If the delivery is made at the seller’s location, the seller will deliver the goods to the ship provided by the buyer, and the delivery will be completed; if the delivery is made at the carrier’s location, the seller will hand over the goods to the inland waterway carrier or its agent, which will complete the delivery. goods.

 

(4) Ocean transportation. In the case of a full container load (FCL), the seller delivers the container to the ocean carrier;

In the case of LCL or non-container, the seller will deliver the goods to the place of origin and hand them over to the ocean carrier or its agent to complete the deliver

 

(5) Air transportation. Delivery is completed when the seller delivers the goods to the air carrier or its agent.

 

(6) Without specifying the mode of transport, the seller delivers the goods by handing over the goods to the carrier or its agent.

 

(7) Multimodal transport. Delivery is completed when the seller delivers the goods to the first carrier as specified in (1)-(6), depending on the circumstances.

 

 

Risk transfer under FCA term:

FCA is different from the three trade terms of delivery at the port of shipment. Risk transfer is not bounded by the ship’s rail, but by the time when the cargo is disposed of by the carrier.

 

This is not only true under other modes of transportation other than ocean transportation, even under ocean transportation, but the seller also completes the delivery when the goods are handed over to the ocean carrier, and the risk is transferred.

 

However, the FCA term is that the buyer is responsible for concluding the contract of carriage and notifying the seller of the name of the carrier and related matters in a timely manner so that the seller can complete the delivery task as agreed. However, if the seller is unable to complete the delivery on time due to the buyer’s responsibility, the time for the transfer of risk can be advanced as long as the goods have been assigned to the buyer.

 

 

Under the FCA term, the responsibilities and expenses of the seller and the buyer are divided:

FCA applies to all modes of transport including multimodal transport. The seller’s delivery location varies depending on the shipping method used. Regardless of where the delivery takes place, according to Incoterms 2010, the seller must, at its own risk and expense, obtain an export license or other official document and go through all customs formalities required for the export of the goods.

 

With the development of our global trade, more and more goods are exported and imported from various countries, and some can not be delivered at the port of shipment, but adopt the FCA term of local delivery and bill settlement.

 

According to the terms of FCA, the division of costs borne by buyers and sellers is the same as the division of risks, and both are based on the delivery carrier. That is, the seller bears the relevant expenses before the goods are handed over to the carrier, and the buyer bears the expenses incurred after the goods are delivered to the carrier. However, the costs incurred by the buyer entrusting the seller to handle some matters within the scope of its own obligations (such as the conclusion of a contract of carriage), as well as additional costs caused by the buyer’s fault, shall be borne by the buyer.

 

 

Advantages of FCA (Free Carrier):

  • Cost-effective Incoterms as most fees are charged to the buyer.
  • No need to worry about customs clearance and legal documents.
  • Everything is according to the contract of carriage.
  • All costs, risk factors, and damages are the responsibility of the parties.
  • Your shipment can be accurately tracked through this period.

Disadvantages of FCA (Free Carrier):

  • No obligation under the insurance policy.
  • The seller must bear the cost of all documentation duties and other taxes.
  • Both buyer and seller are responsible for delivering the product to the designated location
  • Both parties must measure during shipping

 

 

Summary of FCA term FAQ:

 

Who pays for shipping fees on an FCA incoterm agreement?

According to Free Carrier or FCA Incoterm, the buyer is responsible for all shipping costs, but the seller is responsible for paying customs clearance and delivery to designated docks and warehouses

 

Does FCA include customs clearance?

According to FCA Incoterms, the seller is responsible for export duties, taxes, and customs clearance and the buyer is responsible for import duties, taxes, and customs clearance.

 

Who is responsible for export clearance in FCA shipments?

The export declaration in FCA transportation is handled by the seller, and the seller is obliged to complete the export declaration formalities before the goods are handed over to the buyer’s carrier.

 

Seller’s obligations include the following:

  • Make sure the goods are in a deliverable condition.
  • Prepare commercial invoices and documents.
  • Obtain necessary export licenses and formal customs procedures.
  • Deliver the subject matter of the agreement to the carrier.
  • Pay for pre-shipment inspection.
  • Send proof of delivery to the buyer.

 

Under the FCA terms, is the sea freight to be paid or prepaid?

Generally speaking, the FCA term sea freight is collected, Buyers will use their own forwarders to arrange sea freight from the port of origin to the port of destination.

 

FCA vs CIF

CIF is a shipping term that means cost, insurance, and freight.

Under this arrangement, the exporter bears the transportation costs, insurance, and freight of the goods and route to the buyer’s destination. In CIF, the goods are delivered to the point of shipment and the cost of customs duties and export processes and inspections are paid. The seller bears the cost until the goods are loaded. At this point, the buyer’s obligations begin.

In addition, the FCA obliges the exporter to deliver the subject matter of the agreement to the carrier designated by the importer.

Furthermore, the exporter is obliged to ensure that the goods are ready for export upon delivery.

Seller is not obligated to pay the buyer for shipping costs or bear the risk and shipping costs.

 

Under CIF TERM, the seller’s responsibilities are:

  • Bear the cost of shipping the goods.
  • Pay for insurance to protect the condition and value of the goods.
  • Obtain export clearance and licenses for products.
  • Cover the cost of damaged or destroyed goods.
  • Check the shipment to make sure it is in a deliverable condition.

 

FCA vs FOB

  • Both terms FCA and FOB belong to Group C terms, and contracts concluded under these terms are all shipping contracts. The basic principle of division of responsibilities between buyers and sellers is the same.

 

  • The main difference between FCA and FOB is the applicable mode of transportation, the location of delivery, and the transfer of risk.

 

The FCA term is applicable to various modes of transportation, and the delivery location depends on the different agreements of different transportation methods. The risk division is that the seller transfers the goods to the carrier; the FOB term is only used for sea and inland water transportation, and the delivery location is at the port of shipment, the risk division is based on the ship’s rail at the port of shipment; in addition, there are differences in the burden of loading and unloading fees and the use of transport documents.

 

 

FCA VS Ex-works

FCA suppliers are required to deliver to the designated delivery location

Ex-works buyer’s forwarder is responsible for picking up or loading the goods

FCA buyers do not need to pay customs clearance and delivery to the designated delivery location

EXW Expenses from the supplier’s warehouse until the goods arrive at the port of destination are borne by the buyer.

 

 

Difference between FCA Shipping term and CIP

CIP stands for Carriage and insurance paid to, In CIP the seller is responsible for packing, loading, and transporting the goods and is also responsible for paying the insurance amount as per the contract, in FCA the seller or buyer is not required to pay the insurance amount anywhere

 

The difference between FCA and CPT

CPT stands for Shipping Pay To and the seller is responsible for paying all charges until the product is delivered to the designated location, which is roughly the same as FCA.