What is Free Carrier (FCA)?
Free Carrier (FCA) is an Incoterms rule that applies to all modes of transportation—air, ocean, ground, or multimodal. It outlines two primary scenarios for delivery:
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Delivery at the seller’s premises: Here, the seller loads the goods onto the buyer’s transport vehicle.
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Delivery to another specified location: In this case, the seller delivers the goods to a designated place other than their premises.
Under FCA, the seller is responsible for loading goods onto the transport vehicle and clearing them for export. Once delivery is made according to these terms, the risk and costs transfer to the buyer.
Seller’s Responsibilities
When using FCA, the seller has several key responsibilities:
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Loading goods: The seller must load the goods onto the buyer’s transport vehicle or deliver them to another specified location.
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Export formalities: The seller is responsible for clearing goods for export and providing necessary transportation documents.
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Readiness for unloading: The seller ensures that goods are ready for unloading from their transport vehicle at the named place.
The seller’s role in export formalities is critical, as it ensures that all legal requirements are met before handing over the goods to the buyer. Once delivery is completed, the risk transfers to the buyer.
Buyer’s Responsibilities
On the other hand, buyers have distinct responsibilities under FCA:
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Arranging shipping: Buyers must arrange and pay for shipping from the named place to their final destination.
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Import customs formalities: Buyers handle import customs formalities, costs, and documentation.
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Accepting delivery: Buyers accept delivery of the shipment at the named place.
Managing these responsibilities requires careful planning and coordination to ensure smooth transit and compliance with local regulations.
Risk and Liability
One of the most critical aspects of FCA is how risk and liability are transferred from the seller to the buyer.
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Transfer of risk: Risk transfers from the seller to the buyer once goods are loaded onto the buyer’s transport vehicle or delivered to another specified location.
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Importance of insurance: Although not mandatory under FCA, insurance is highly recommended to mitigate potential losses due to damage or loss during transit.
Understanding this transfer of risk is essential for both parties to prepare adequately and consider insurance options.
Practical Applications and Benefits
Using FCA offers several practical benefits:
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Flexibility in transportation: Buyers can choose their preferred mode of transportation or carrier.
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Clarity in responsibilities: FCA provides clear definitions of delivery responsibilities and risk transfer.
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Global recognition: Being an internationally recognized term, FCA simplifies negotiations between buyers and sellers from different countries.
This flexibility is particularly beneficial when buyers have preferred carriers or logistics fleets that they trust more than those chosen by sellers.
Comparative Analysis with Other Incoterms
To better understand FCA, it’s helpful to compare it with other relevant Incoterms like EXW (Ex Works):
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Seller’s responsibilities: Under EXW, sellers have minimal responsibilities compared to FCA; they only need to make goods available at their premises.
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Risk transfer: In EXW, risk transfers immediately when goods are made available at the seller’s premises, whereas in FCA, it transfers upon loading or delivery to a specified location.
FCA is often preferred when buyers want more control over transportation but still need sellers to handle export formalities.
