Importing and exporting cargo is happening daily, but it always creates some confusion. It is difficult to divide who’s responsible when issues appear. To alleviate this problem, the International Chamber of Commerce built the incoterm.
FCA is a common incoterm that is used to sign a sales contract and it stipulates the responsibilities and obligations that buyers and sellers need to bear. It is easy to have an obligation dispute if you do not know how FCA works. You will get detailed information about Free Carrier in this guide and help you deliver the cargo smoothly.
What is the FCA definition?
FCA is a Free Carrier. It stands for the transfer of shipping risks. The delivery is finished after the seller delivers the cargo to the named place by the buyer and handles clear customs.
Generally speaking, if the location for transportation is at the seller’s factory, the risk is transferred once the cargo is given to the first carrier. If the cargo location for delivery is at another place (airport or the seller’s business location), the seller is only responsible to deliver the cargo to the place designated by the buyer; the risk is transferred to the buyer.
I list an example to help you understand it. The seller’s factory is located in Shenzhen, but the named delivery place by the buyer is Guangzhou. The seller has the liability to ship cargo to Guangzhou and deliver them to the buyer’s carrier. The shipping risk is transferred to the buyer. The buyer needs to find a freight forwarder to ship cargo from its origin to the importing country and pay for the loading and customs clearance costs.
Who pays for FCA shipping?
There will raise the question of who pays for the freight cost when using the FCA. As mentioned above, the buyer often pays for the main freight cost as they are the responsible party.
The cost buyer will pay includes all the shipping costs from the designed location by the buyer at the origin to his warehouse at the destination. But not include the customs clearance fee.
The seller needs to pay the customs clearance fee. If the named place is not at the factory, the seller needs to pay for the trucking fee from the factory to the named place.
What are the benefits of FCA?
The benefit for the buyer
The buyer has greater control and frees the customs clearance documents burden. The buyer can choose their preferred freight forwarder and shipping method to deliver the cargo. And this will help them to save some money and avoid shipping delays.
The benefits for the seller
1. This arrangement is good for the seller. FCA is friendlier to the seller. The risk will be transferred to the buyer early once the cargo is delivered to the carrier designated by the buyer. It means that the seller is not responsible if the cargo is damaged from the designated place to the destination.
2. Early settlement time. Once the cargo is delivered to the carrier designated by the buyer, the shipping documents or designated documents issued by the carrier can be used to deliver to the bank, so that the loan can be recovered as early as possible and the risk of exchange collection can be reduced.
How to divide the responsibility in FCA?
The responsibility of the seller
1. The seller needs to offer goods in compliance with the contract, commercial invoices, and other relevant documents.
2. The seller needs to get the export license and clear the customs.
3. The seller has no responsibility for the insurance contract.
4. The seller must deliver the cargo to the named place at the agreed time.
5. Undertake all the risks before the cargo to the carrier.
The responsibility of the buyer
1. Arranging cargo shipping from the origin to the destination.
2. If the designed place is not at the factory, the buyer needs to unload the cargo by themselves.
3. Pay for pre-shipment inspection and shipping costs.
4. The buyer hasthe responsibility for the insurance contract.
What is the difference between FCA and EXW, FOB?
FCA vs. FOB
The difference between FCA and FOB is their concept. FOB means that the seller is responsible for loading the goods safely and punctually on the ship designated by the buyer. Once the goods are loaded on the ship, the buyer bears all risks. FCA only needs to deliver the goods to the place designated by the buyer. Secondly, FCA is applied to all modes of transportation, but the FOB is just applied to those shipped by sea.
FCA vs. EXW
In the incoterms of EXW (Ex-works), the seller transports the cargo to the buyer at his factory or warehouse. The buyer needs to arrange to deliver the cargo to his premises and pay for all the shipping costs.
The difference between them is the received cargo’s place, one is at the seller’s factory, other is the seller’s factory or named place by the buyer. And the risks borne by both parties are also different.
FCA vs. DDP
DDP incoterms are that the seller assumes the responsibility of shipping and pays for all the costs. The seller needs to deliver the cargo from the factory to the named place by the buyer. Under this shipping incoterm, the buyer is relaxed and waits for the cargo to be delivered on time.
FCA vs. DDU
DDU is Delivered Duty Unpaid. The seller is responsible to ship cargo from the factory of origin to the buyer’s factory or warehouse. The seller has no responsibility to clear the cargo customs.
What should I pay attention to when using FCA?
1. The boundary of risk divisions
The risk is transferred once the cargo is placed on the first carrier.
2. Different delivery locations have different requirements
If the delivery location is at the factory, the cargo delivered is finished after the goods are loaded on the transportation provided by the carrier. If the named place is at another place, the seller has no responsibility to unload it.
3. Contract of carriage
In general situations, the contract is signed by the buyer and they always find a freight forwarder to finish it. But in the other situation, the contract can is signed by the seller. In both cases, both parties bear the same responsibilities and risks.
Enjoy the FCA service from Airsupply
FCA suits all shipping modes and is the common incoterm. As the above speak, the buyer and seller bear different obligation for exporting. The exporting process is complex and customs clearance needs many requirements. Whether you are, the buyer or seller, it is an ideal choice for both sides to find a reliable freight forwarder to do it.
Airsupply is a reliable freight forwarder company. We have more than 10 years of freight experience; we are familiar with the process of exporting and ensure the safe transportation of goods. We offer air, sea, and rail freight all over the world. Additionally, not normal goods, we also have many channels to export sensitive cargo such as e-cigarettes. Contact us through the button below.
