What is FCA (Free Carrier)?
FCA stands for “Free Carrier” and is a delivery term used in international trade. It is a term included in INCOTERMS (International Commercial Terms) 2020. FCA indicates a delivery method where the seller is obligated to deliver the goods to the buyer’s carrier.
Characteristics of FCA:
Delivery Place:
When the FCA term is used, it is understood that the seller is obligated to deliver the goods to the buyer’s carrier at a specified location (e.g., a warehouse, factory, terminal, etc.). It is important to clearly specify the delivery location.
Transfer of Risk:
When the seller delivers the goods to the carrier at the specified location and time, the risk transfers to the buyer. Thus, after this delivery, the seller is not responsible for any damage or loss that may arise.
Distribution of Costs:
The seller covers all costs until the goods are delivered to the carrier. However, the costs incurred after the goods are handed over to the carrier (e.g., international transportation costs, insurance costs, etc.) must be borne by the buyer.
Customs Procedures:
If customs clearance is required for the export of goods, the seller assumes these procedures and their costs.
When FCA is Used:
The FCA term can be used in both maritime transportation and other transportation methods (road, rail, air). However, FCA is typically preferred in container transportation or when multiple transportation modes are used.
Advantages of FCA:
Flexibility:
FCA is a flexible delivery term as it can be used in both maritime transportation and other transport methods.
Clear Distribution of Liability:
In FCA, when and where the risk and costs will transfer to the buyer is clearly defined. This helps the parties to prevent potential disputes.
Control:
The buyer has more control over the transportation process as they have the right to choose their own carrier.
Disadvantages of FCA:
Uncertainty of Costs:
It is challenging for the buyer to know in advance the exact transportation costs, as these can vary depending on the carrier and service chosen by the buyer.
Complexity:
If multiple transportation modes are used (e.g., road and sea), the buyer may need to make separate arrangements for each mode.
Difference Between FCA and Other Delivery Terms:
When compared to other INCOTERMS terms like FOB (Free On Board) and CIF (Cost, Insurance, and Freight), FCA stands out differently. For instance, in FOB, the seller’s obligation is at the moment the goods are loaded onto the ship, but in FCA, it’s when the goods are delivered to the buyer’s carrier. It’s vital for both parties to fully understand the contract terms and obligations to prevent potential disputes.
In international trade, it’s crucial for the parties to understand their rights and obligations in a clear and specific manner. FCA (Free Carrier) offers a flexible use in both maritime transportation and other transport methods, distinguishing the responsibilities, costs, and risks of the buyer and seller. However, for FCA to be correctly implemented, parties need to understand its nuances, advantages, and disadvantages fully. In the end, with the right knowledge and preparation, FCA emerges as an effective and transparent delivery method in international trade.
