FCA Term of Delivery, a simplified tutorial

 The information provided here is part of Export Import Training course online


FCA  Terms of Delivery, a simplified tutorial.

 

FCA Term of Delivery, a simplified tutorialOne of many email messages receiving   to me is a request of writing articles on Inco terms in simple and easy to understand.   Here you can learn about FCA term of shipping delivery in simple explanation.

 

FCA means Free Carrier, introduced as per international commercial terms in 2010.  FCA is used for both air and sea transaction.  FCA terms of delivery also can be used for inland movements of shipments.  Normally the term FCA should be followed by a named location.

 

FCA terms has mainly been designed to meet the new generation requirements of  multimodal transport, commonly used on container transport movement  as RO/RO (roll on – roll off) used by trailers and ferries.  However, if the supplier of goods can not undertake the export formalities either directly or indirectly, FCA terms are suited for such sellers.

 


In FCA terms of delivery, the export cleared goods are delivered by the seller to the carrier at the said named and defined location mentioned in the contract.  From that point of location, the expense  up to buyers premises is paid by the buyer.   Please note, the terms ‘export cleared goods’ does not mean that the goods were cleared  by carrying out export formalities either directly or indirectly.

 

The term FCA has been derived from the basic principle of FOB terms, except some changes in obligation of seller on delivery terms that the fulfillment to deliver goods ends at the point of location mentioned in FCA terms, and not up to the main carrier used for final destination.

 

Normally, the seller’s assistance is required under FCA terms to act on behalf of buyer at buyer’s risks and expenses, especially under the shipments at dry ports where in rail transport and air transport involve.  In such cases, apart from the seller, the buyer manages with the help of a nominated freight forwarder or his other representative.


In an FCA terms, who decides carrier of goods? Can the seller deliver goods to the carrier which he decides?  
As per FCA terms, the right to finalize the carrier of goods is vested with the buyer. The seller can deliver goods to the buyer designated carrier only.

 

Who pays transportation on FCA terms of delivery?
Since the carrier is nominated by the buyer, the cost of transportation under FCA terms is paid by the buyer.  The seller arranges to load the goods to the buyer’s nominated carrier.

 

Who pays insurance under FCA terms of delivery?
Since the risk of goods is with the buyer under FCA terms from the point of delivery by the seller, the responsibility to arrange insurance is  with the buyer of goods.

 

When is FCA terms opted commonly?
FCA terms are  commonly used on container transport movement  as RO/RO (roll on – roll off) used by trailers and ferries. If the buyer can not carry out the export formalities, either directly or indirectly, FCA terms are opted in such business transactions also.

 

What would be the location, if no place has been mentioned in FCA terms?
In a FCA terms of delivery, if no location has been mentioned, the seller may choose the location where the buyer’s nominated carrier can take the materials into their custody.

 

Detailed articles about Inco Terms of Delivery under export and import of International business  have been mentioned in  separate category – INCO TERMS – in this web site.  You can click here to read.

 

  
I hope, I have explained the FCA terms of delivery in simple and easy to understand mode.  Do you have different thought on FCA terms of delivery.  Comment below:

 

 

The above information is a part of Import Export Training course online




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Comments


Sandy Chew: If the price is FCA on board export carrier, which the Buyer agreed to pay transportation from Seller's warehouse to the Port of Loading, then shouldn't the liabilities incurred in port, i.e. like port charges and etc... be the responsibility of the Seller to bear? The Buyer will only be liable for the transportation cost i.e. rail & freight. So how do you term this? FCA - FOB?

susmita golam: If the price is FCA on board export carrier, which the Buyer agreed to pay transportation from Seller's warehouse to the Port of Loading, then shouldn't the liabilities incurred in port, i.e. like port charges and etc... be the responsibility of the Seller to bear? The Buyer will only be liable for the transportation cost i.e. rail & freight. So how do you term this? FCA - FOB?

surya: Hai All the above points relating to FCA are good. But as per my opinion if the named place is Load Port then it is the seller or exporter responsibility to complete all the process like inland transportation from his warehouse to port, customs formalities and paying load port charges by him. Only the freight charges has to pay by the consignee or buyer which is equal to FOB terms For example if the named place is some third party warehouse then from that place to port the transportation charges and all other load port charges and export formalities charges has to bear by the buyer or consignee kindly confirm that what i mentioned above is correct and if anything wrong please send response Awaiting for your response Best Regards Surya

richard: We are a UK based exporter of goods, customers typically taking 1 or 2 pallets worth of product. historically we have shipped these via a carrier and charged our customers accordingly. We are however now seeing a number of customers wanting to arrange their own shipping. in some cases this gives us a dilemma in treatment of VAT, because as we are now no longer responsible for the shipping process we have limited evidence that the goods were actually exported. ( to be VAT free they need to have left the country within a time period.) we have been advised in these cases to ship FCA, as by taking the responsibility for export customs clearance we have a stronger case that the goods were leaving the country. what we have not been advised is how we arrange the customs clearence. Any suggestions would be welcomed! With thanks, Richard

Bernard: under FCA terms, is it permissible to send carrier invoice to origin address even though consignee responsible for payment?? thank you

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