Incoterms FCA: Free Carrier
Named Place Requirement: Place of Delivery
Buyer must clearly specify the precise point of delivery in the contract of sales or carriage.
Under the shipping terms for the FCA Incoterms (short for “Free Carrier”), the seller is responsible for export clearance and delivery of goods to the carrier at the named place of delivery.
Unless otherwise agreed upon, the seller is only responsible for loading the goods if the seller’s place of business is the named place of delivery.
A carrier is any person or company who undertakes the carriage, such as a shipping line, airline, trucking company, railway or freight forwarder.
FCA Shipping Incoterm Obligations
- Goods, commercial invoice and documentation
- Export packaging and marking
- Export licenses and customs formalities
- Pre-carriage to terminal
- Delivery to named place of delivery
- Cost of pre-shipment inspection
- Proof of delivery
- Payment for goods at price agreed upon in sales contract
- Unloading from arriving means of transportation
- Loading charges
- Main carriage
- Discharge and onward carriage
- Import formalities and duties
- Cost of pre-shipment inspection (for import clearance)
The FCA (Free Carrier) law mandates that the seller delivers the products to the buyer or its carrier at the seller's premises, load them onto the collecting vehicle, or transport them to another premises (usually a forwarder's warehouse, airport, or container terminal) without unloading them from the seller's vehicle. The seller must complete any export-related paperwork, and any import-related paperwork must be completed by the buyer. This makes it a step elevated over the mostly ineffective EXW in that the seller is now in charge of physically transferring the items, with risk only passing to the buyer once delivery has been achieved. This concept is effective for land transportation within Europe and Central Asia since the truck that picks up the products frequently also transports them to their destination. Despite being suggested as an alternative to FOB for cross-ocean container shipments, this regulation is primarily impractical for them. This is because, in such loads, the buyer only wishes to assume responsibility for product damage or loss after the products have been shipped. They don't want to be exposed to the possibility of dealing with any issues in the exporting nation. The 2020 revision added a new need for the buyer to direct its carrier if approved. To produce a board bill of lading, however, although having good intentions, this decision has yet to be well considered. Provision and its enforcement will be unsuccessful. Delivery will still occur when the seller hands over. Products to the buyer's carrier for delivery. The vendor is not required to place the items if something were to happen to the items between delivery and boarding the ship, and despite being at the risk of the buyer, the reality of such a sale is that not only would the vendor board bill of lading, however, the purchaser would not see the commodities as exported and decline to pay. This new clause was largely inserted to address the seller's need for letters of credit. Still, an unforeseen result would be that, typically, the seller would wind up being designated as the shipper on that bill of lading, subjecting them to obligations that they were not aware of or willing to accept. The sole clause in the Incoterms® 2020 regulations call for a party to advise a carrier while offering the other party no direct recourse if the carrier fails to follow the instructions.
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Any excerpts quoted from the Incoterms® 2020 rules are the copyright of the International Chamber of
Commerce. Source: ICC website. The full text of the 2020 edition of the Incoterms rules is available at
https://2go. iccwbo.org/. The word “Incoterms” is a registered trademark of the International Chamber of Commerce.