What Exactly Is a Free Carrier (FCA)?
A free carrier is a commerce phrase used when a seller is responsible for delivering items to a buyer-specified destination. In trade, “free” indicates the seller must transport goods to a defined location for carrier transfer. Carriers usually have to go to airports, cargo terminals, warehouses, and other areas. It may be the seller’s office.
The seller covers shipping costs and takes the loss risk until the carrier delivers the goods. At this moment, the buyer assumes full accountability.
Workings of Free Carrier
Commercial traders can utilize FCA shipping words to describe any transportation point, regardless of the number of modes involved in the shipping process. The issue must be in the seller’s country. The vendor must securely convey the products to that facility. The carrier might be a vehicle, rail, boat, or plane.
Upon delivery to the stipulated port or territory, the seller passes responsibility for the goods to the carrier or buyer. The liability transfer merely requires the seller to deliver to the chosen destination. While not required to unload goods, the seller may be responsible for clearing them for export outside the US if the goal is their premises.
The vendor handles export details and licenses within FCA shipping rules, so the customer doesn’t have to. However, the buyer must provide transport. After items arrive at the carrier and title transfers, they become an asset on the buyer’s balance sheet.
Many experts advise international traders to consult a trade attorney before employing any trade word in a contract.
FCA Terms
International transportation contracts sometimes include condensed trade terms or terms of sale, including cargo details. This may involve delivery time, payment, risk of loss transfer, and freight/insurance cost responsibility.
The most prevalent trading terms for delivering things are International Commercial Terms (Incoterms). The International Chamber of Commerce (ICC) publishes Incoterms as globally accepted standards. These words are similar to domestic ones, like the Uniform Commercial Code (UCC), although their official meanings may differ.
Incoterms like ‘free carrier’ (FCA) are common. It is an international delivery standard. The ICC updates Incoterms every ten years and added FCA shipping terms in 2010.
The International Chamber of Commerce sells Incoterms regulations online.
FCA example
Under FCA shipping, the supplier delivers to the buyer’s specified location. The shipper is responsible for the items upon arrival. The buyer would load the products for travel.
Joe Seller sends products to Bob Buyer under FCA terms. Bob chooses his previous shipper. After agreeing, Joe must deliver the products to the shipper. Bob now assumes the entire liability.
What is the difference between FCA and FOB?
FCA and FOB are shipping words for different transits. FOB delivery only applies to marine shipments during cargo loading. Sellers are responsible for warehouse-to-water vessel deliveries. FCA allows many additional transit methods. The supplier must provide an export declaration after loading items into a buyer’s vehicle.
What is the difference between FCA and DDP?
DDP shipping requires vendors to pay for the shipment. Additionally, the vendor assumes all shipping risks until the buyer receives the products. Buyers pay for FCA shipping conditions since they designate the carrier.
Who covers FCA shipping?
Since the buyer chooses the carrier, FCA shipping terms usually cost them.
FCA Export Clearance: Who Is Responsible?
FCA shipment requires the seller to pay export duty, taxes, and customs. Imported products are the buyer’s responsibility.
Bottom Line
The seller is responsible for pre-carriage to a terminal, delivery to the specified location, and evidence of delivery per FCA shipping standards. Export packing, licensing, and customs are the seller’s responsibility. However, with FCA shipments, the buyer pays for the products, the principal mode of transportation, and loading. The buyer handles import taxes, tariffs, and procedures.
Conclusion
- Sellers must transport products to a specific airport, shipping terminal, warehouse, or other carrier site selected by the customer under the free carrier contract.
- The seller covers shipping costs and takes the loss risk until the carrier delivers the goods.
- The buyer has full responsibility once the vendor delivers the products to the carrier.
- The International Chamber of Commerce (ICC) added the free carrier provision to Incoterms in 2010 and modified the FCA shipping term definition in 2020.
- The responsibility transfer requires the seller to deliver the products to the stated location, not unload them.
