INCOTERMS-FCA

INCOTERMS 2020 | FCA – FREE CARRIER

May 28, 2021

FCA, short for “Free carrier”, means that the exporter has to deliver the goods to the importer’s collecting vehicle at the point of delivery, which can be at the exporter’s premises or another point that’s been specified in the contract of sale. If the delivery point is the exporter’s premises, then the responsibility of loading the goods on the vehicle belongs to the exporter. If the delivery point is another place than the exporter’s premises, the exporter transports the goods to the designated place/port and from that point on, unloading is the importer’s responsibility. At this point all the risks transfer to the importer. 

Why FCA instead of EXW?

First of all, I’d like to clarify that both Incoterms rules are employed for all modes of transport. The two obvious differences between them are that, FCA requires the exporter to load the goods on the carrier of the importer when the delivery is at its place and is liable for export clearance. As you’ll remember EXW doesn’t require the exporter to take any responsibility but to make the goods ready for loading on the transport vehicle at its premises.

As FCA is more workable for importers in that they avoid the risks of a foreign country’s unpredicted formal or informal practices, it’s generally preferred to EXW especially when the importer has no business background in that country.

Anything new with Incoterms 2020?

In the case that the agreed Incoterm is FCA and the main carrier is a vessel, there is a problem on the seller’s side. Especially when the L/C payment term is involved in the transaction, the seller, upon delivery of the goods to the buyer’s inland carrier, has to present the bill of lading with on-board notation to the bank so that it is paid. However, the forwarder doesn’t issue a b/l with on-board notation to the seller as the goods are still on the way to the port. On the other hand, the beneficiary bank expects the b/l with on-board notation to make the payment; otherwise it doesn’t pay to the seller. Consequently the seller fails to provide the b/l to the bank and doesn’t get paid.

The International Chamber of Commerce (ICC) brings a potential solution to this problem in Incoterms 2020. In the sales contract, the parties may agree that the buyer must instruct its carrier to provide the seller with a b/l with an on-board notation with which the seller can proceed smoothly. Yet, we cannot certainly say that the problem is completely solved, because in spite of the instructions of the buyer, it’s up to the carrier to comply with the instructions or not which may lead us to the situation in the previous version of Incoterms.

Udemy Course

Leave a Reply

Your email address will not be published.

INCOTERMS-EXW
Previous Story

INCOTERMS 2020 | EX WORKS – EXW

INCOTERMS-CPT
Next Story

INCOTERMS 2020 | CPT – CARRIAGE PAID TO

Latest from Incoterms

INCOTERMS-CIF

INCOTERMS 2020 | CIF – COST INSURANCE FREIGHT

CIF, short for “Cost Insurance Freight”, means that the exporter is obligated to deliver the goods to the buyer by placing them aboard the vessel which it paid for and cover the insurance as well. The exporter assumes all the costs of
INCOTERMS-CFR

INCOTERMS 2020 | CFR – COST AND FREIGHT

CFR, short for “Cost and Freight”, means that the exporter is obligated to deliver the goods on board the vessel arranged by the exporter itself. Until the goods are placed aboard the ship, the exporter bears all risks and costs of loading
INCOTERMS-FOB

INCOTERMS 2020 | FOB – FREE ON BOARD

FOB, short for “Free on Board”, means that the exporter is obligated to deliver the goods aboard the vessel designated by the importer at the agreed delivery port in the country of export.
INCOTERMS-FAS

INCOTERMS 2020 | FAS – FREE ALONGSIDE SHIP

FAS, short for “Free Alongside the Ship”, means that the exporter is obligated to deliver the goods by placing them alongside the vessel nominated by the buyer at the named port of shipment.
INCOTERMS-DDP

INCOTERMS 2020 | DDP – DELIVERY DUTY PAID

DDP, short for “Delivery Duty Paid”, means that the exporter is obligated to deliver the goods to the importer at the agreed delivery/destination point in the importer’s country and pay for all duties and taxes in both countries and, if any, transit
Go toTop

Don't Miss