FCA, or Free Carrier, is another Incoterm used in international trade to define the responsibilities of buyers and sellers.
Definition
Free Carrier (FCA) is an Incoterm that defines the responsibilities of the buyer and seller in a transaction where the seller delivers the goods to a specified location, which can be the seller’s premises or another named place. The key aspect of FCA is that the risk transfers from the seller to the buyer once the goods are handed over to the carrier or another party nominated by the buyer at the specified location.
FCA Responsibilities and Considerations
Here is a table summarizing the obligations of the seller and buyer under FCA Incoterms:
|
Obligation |
Seller’s Responsibilities |
Buyer’s Responsibilities |
|
Delivery |
Deliver goods to the carrier at the named place. |
Take delivery of goods at the named place and accept the transfer. |
|
Risk Transfer |
Risk transfers to the buyer once goods are handed to the carrier. |
Bear all risks from the moment the goods are handed to the carrier. |
|
Export Customs Clearance |
Responsible for export clearance procedures and costs. |
Responsible for import clearance, duties, and taxes. |
|
Transportation Costs |
Cover costs up to delivery at the named place. |
Cover costs from the named place to the final destination. |
|
Insurance |
Not obligated to provide insurance. |
Not obligated to provide insurance but may choose to do so. |
|
Documentation |
Provide necessary documentation for export and delivery. |
Provide necessary documentation for import. |
It can be used for any mode of transport, including air, sea, rail, and road.
The risk transfers from the seller to the buyer once the goods are delivered to the carrier.
The seller delivers the goods to a specific place, which can be their premises or another location agreed upon by both parties.
To better understand the definition, let’s model a scenario.
A Chinese company sold machinery to an American buyer. They agreed on FCA Incoterms, designating the place as the seller’s warehouse in China.
The seller prepares the machinery, clears it for export and delivers it to a carrier at its warehouse.
Once the machinery is handed over to the carrier, the risk passes to the buyer.
The buyer arranges for the transportation of the machinery from China to the United States, handles import customs clearance, and bears all costs from the named location to the final destination.
This arrangement ensures that the seller’s responsibilities and risks are limited to delivering the machinery to the carrier at their warehouse, while the buyer takes over from that point onward.
By understanding and implementing FCA, businesses can ensure smooth transactions and mitigate risks associated with the transportation of goods. Whether used for air, sea, rail, or road transport, FCA remains a popular choice for traders seeking clear and efficient terms in their contracts. Contact us to start your transportation journey.
04 Sep, 2024
