Free Carrier (FCA) Shipping Terms
What Exactly Is a Free Carrier (FCA)?

The term "free carrier" refers to the fact that a seller of goods is responsible for delivering those goods to a destination specified by the buyer. When used in commerce, the term "free" refers to the seller's obligation to deliver goods to a specified location for transfer to a carrier. Typically, the destination is an airport, shipping terminal, warehouse, or other location where the carrier operates. It could even be the seller's place of business.

The seller includes transportation costs in its price and bears the risk of loss until the goods are delivered to the carrier. The buyer takes full responsibility at this point.

KEY LESSONS

The term "free carrier" refers to the requirement for the seller of goods to deliver those goods to a specific airport, shipping terminal, warehouse, or other carrier location specified by the buyer.

The seller includes transportation costs in its price and bears the risk of loss until the goods are delivered to the carrier.

The buyer takes full responsibility for the goods once the seller delivers them to the carrier.

The International Chamber of Commerce (ICC) updated Incoterms in 2010 to include the free carrier provision, and the ICC updated the definition of the FCA shipping term again in 2020.

The seller is only responsible for delivery to the specified destination as part of the liability transfer, but is not required to unload the goods.


How Free Carrier (FCA) Functions

Buyers and sellers in economic trade who need goods shipped can use FCA shipping terms to describe any transportation point, regardless of the number of transportation modes involved in the shipping process. However, the point must be located within the seller's home country. It is the seller's responsibility to transport the goods safely to that facility. Any mode of transportation, such as a truck, train, boat, or airplane, can serve as the carrier.

When the seller delivers the goods to the agreed-upon port or area, liability for the merchandise passes from the seller to the carrier or buyer. As part of the liability transfer, the seller is only responsible for delivery to the specified destination. It is not required to unload the goods, but if the destination is the seller's premises, the seller may be responsible for ensuring that the goods have been cleared for export out of the United States.

The buyer does not have to deal with export details or licenses under FCA shipping terms because this is the seller's responsibility. However, the buyer must arrange for transportation. When goods are delivered to the carrier and title is transferred to the buyer, they become an asset on the buyer's balance sheet.

Incoterms FCA

International transportation contracts frequently include abbreviated trade terms, or terms of sale, that describe shipment specifics. These could include the time and location of delivery, payment, the point at which risk of loss shifts from the seller to the buyer, and the party responsible for freight and insurance costs.

International commercial terms, or Incoterms, are the most commonly used trade terms to aid in the delivery of such items. The International Chamber of Commerce publishes Incoterms, which are internationally recognized standards (ICC). These are frequently identical in form to domestic terms, such as the Uniform Commercial Code (UCC), but their official interpretations can differ slightly.

The term 'free carrier,' or FCA, is a common and widely used example of an Incoterm. It is widely accepted as a standard set of instructions for defining delivery terms. FCA shipping terms were added to Incoterms in 2010 and will be updated as needed as the ICC updates Incoterms every ten years.

What Is the Distinction Between FCA and FOB?

FCA and FOB are shipment terms that are used in various modes of transportation. Only sea shipments are subject to FOB delivery, which occurs when cargo is loaded onto a vessel. The seller is responsible for goods delivered from a warehouse to a water vessel. Many more modes of transportation are permitted under FCA. Once goods are loaded onto a buyer's vehicle, the supplier is usually required to issue an export declaration.

What Is the Distinction Between FCA and DDP?

A vendor must pay for transportation costs under DDP shipping terms. Furthermore, the vendor usually bears all risks and responsibilities for the goods' transportation until the buyer receives them. Because the buyer chooses the carrier, FCA shipping terms are usually paid for by the buyer.

Who is responsible for FCA shipping?

The buyer frequently pays for transportation under FCA shipping terms because they are the party responsible for naming the carrier to use.

Who Is in Charge of Export Clearance Under FCA?

The seller is responsible for export duty, taxes, and customs clearance under FCA shipping terms. Importing items is the buyer's responsibility.

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