08 Challenges under FAS for exporter

FAS, Disadvantages to Seller

Is FAS safe for an exporter under contract of carriage in international business? What are the demerits faced by a seller when delivery rule is on FAS basis?

The major threats faced by an exporter under FAS delivery terms are as follows:

01. Under FAS delivery rules, the exporter undertakes only minimum risks  and costs for the movement of goods thereby his profit also may minimize under sale of goods. This is a weakness for exporter under FAS terms.

02.  Another disadvantage to exporter is that under FAS, the exporter does not have any control over main carriage, import clearance and on carriage of goods to final destination.  The tracking of shipping details is depended with the buyer as the buyer who undertakes main carriage and on carriage contract.

 03. The risks and costs involved under export customs clearance is under the responsibility of exporter under FAS delivery terms. So the exporter should be familiar with government rule and regulations on export process, taxes to export his product and other documentary process.  This is treated as a demerit for seller under FAS terms. The risks and costs involved due to the lack of knowledge are under the shoulder of seller under FAS terms. 

 04. Another disadvantage for exporter under FAS is that; since the seller transfers his risks and costs to buyer once goods are placed near the ship or barge, under FAS terms, the safety of goods cannot by monitored by the exporter till it reaches the final destination place of buyer in international business.

 05.  One of the main disadvantages for exporter when contract of carriage is under FAS terms is that, the costing at each point of movement of goods , say main carriage, import customs clearance expenses, destination port handling, on carriage to importer’s final destination etc. cannot be ascertained by the Exporter. So an exporter cannot undertake delivery rules of DAP, DPU, DDP etc, unless he learns and experience the import regulations and at buyer’s country. This is a weakness for seller under FAS delivery rules.

 06.  Another important demerit for exporter under FAS terms of delivery is that the main carrier is decided by the buyer under FAS terms, and thereby an exporter does not have any control over documentation, shipping details and further movement of goods.  So under FAS delivery rules, an exporter may lack to get shipping tracking information and other EGM data without asking the importer.


07. The unit cost would be less under FAS sales; thereby less invoice value of goods.  The exporter gets less foreign exchange.  Sometimes, the total invoice value of goods could be twice lesser than the actual delivery cost, if both buyer and seller situates too far. This is an advantage for seller under FAS terms.


08. Since main carriage is undertaken by the importer, the exporter may not have right to release Bill of lading or AWB from the main carrier, as such documents are required for the exporter for various statutory records and claiming export finance and incentives. This is also considered as another disadvantage for exporter under FAS contract of carriage.   (Incoterms 2020 explains suggestions to solve this issue).


The above details are about drawbacks under FAS delivery terms for seller. 

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