Key points:

  • Incoterms are internationally recognized rules that break down the responsibility of sellers and buyers during an international sale
  • Free carrier (FCA) is an Incoterm used to define the point at which the seller transfers the goods to the buyer
  • Easyship can help you find a fast and reliable international shipping service, with exclusive prenegotiated rates from top carriers

Looking at whether FCA free carrier is the right shipping method for your international orders? This article breaks down Incoterms, the meaning of FCA, the buyer and seller's obligations, plus a comparison with other Incoterms. Learn how Easyship can help you offer your international customers the best value shipping methods at checkout, helping you boost customer satisfaction and increase sales.

What are Incoterms?

Incoterms are a set of globally recognized and respected rules that detail the responsibility of sellers and buyers in international shipping. These rules help to clarify the tasks, costs and potential risks for both online store's and the end customer. Overall, there are 11 international trade rules and terms of sale specifying responsibility for:

  • Paying costs
  • Managing the shipment
  • Insurance
  • Documentation
  • Customs Clearance

While Incoterms can help buyers and sellers define responsibility for a shipment's transit, they do not cover the following broader sales contract features:

  • All the conditions of a sale
  • Detail which goods are being sold or the price
  • The preferred type or timing of payment
  • When ownership passes from the buyer to the seller
  • Identity which relevant documents must be provided by the seller for customs clearance
  • Specify liability for late delivery or goods not in conformity with the sales contract

FCA Free Carrier Meaning

Under the Incoterms 2020 rules, Free Carrier (FCA) means that the seller is responsible for export clearance and delivery of the goods to a specific place. While the buyer is responsible for all the costs, plus risks of loss or damage to the goods from that point on. Under FCA, a carrier is any person or company who undertakes transporting the goods.

Responsibility of the Seller

To further breakdown the role of the seller in this shipping method, these are the key obligations that the seller delivers before the cargo can be transferred to the buyer:

  • Commercial invoice and paperwork like bill of lading
  • Export packaging and labelling
  • Export licenses & associated transport documents
  • Pre-carriage to terminal
  • Delivery to named place
  • Cost of pre-shipment inspection
  • Delivery proof
  • Loading charges
  • Export duty and taxes
  • Customs clearance

Responsibility of the Buyer

Once the order successfully clears customs and arrives at the named place, the risks and costs transfer to the buyer. Below is a quick breakdown of the buyer's obligations under FCA to conclude the logistics process with goods from the seller:

  • Responsibility of loading the goods for onward transport
  • Destination terminal charges
  • Paperwork like letter of credit
  • Delivery to onward destination
  • Unloading the goods at onward destination
  • Import duty, taxes and custom clearance
  • Carrier to issue charge for transport to final destination
  • Insurance

When to Use FCA

Under most circumstances, a buyer would want to consider FCA over other Incoterms when the following conditions were met:

  1. The freight being shipped is containerized
  2. Knowledge of the logistics process and requirements in the seller's country or are using a shipping service
  3. Goods are transported directly to the terminal for export and not to the couriers warehouse
  4. The seller also prefers FCA to other Incoterms

Related post: DDU vs. DDP: Understanding the Differences

Comparison of FCA with EXW and FOB

FAC is not the only Incoterm available. When comparing with Ex Works (EXW), FCA can give the buyer an advantage. The buyer still retains some control as the seller is responsible for export, while with EXW as all risk falls on them. Buyers will want to use FCA when they are confident their courier can offer better value than the loading costs offered by the seller.

While for ocean shipments, Free on Board (FOB) can be preferred to FCA. Under FCA, there is liability for any mode of transportation, air courier, truck, rail vessel or multi-modal shipments. Under FOB shipping terms, the seller is responsible for loading the cargo onto the vessel, however with FCA it is the buyer's responsibility. As FOB is only used for ocean transport, the buyer assumes the risk on the vessel.

Benefits of FCA

When analyzing whether FCA is the best shipping method for you, there are some key advantages to consider:

  • Less costs for the seller
  • Clear definition of responsibilities between the seller and the buyer
  • Flexibility in choosing the delivery location
  • Suitability for various modes of transportation
  • Easier customs clearance

Risks of FCA

While the benefits of FCA can make it an appealing cost-effective shipping method for the seller, there are some potential downsides for both buyer and seller to consider:

  • Risk of damage or loss of goods during transit
  • Responsibility for obtaining and paying for insurance coverage
  • Clearly defined and carefully considered delivery location
  • Potential delivery delays
  • Through understanding the local laws and regulations

Offer More Shipping Options with Easyship

Understanding which Incoterms offer the best shipping method for your online store can be key to creating a sustainable shipping solution that drives conversions. However, if you want to effortlessly offer your customers a fast and reliable delivery experience, Easyship's shipping tools can help you save time and increase sales.

Real-Time Shipping Rates at Checkout: Seamlessly offer your customers the cheapest, fastest and best value shipping options on your online store's checkout

Looking to scale your store internationally? Sign up for an Easyship account and explore exclusive prenegotiated rates from over 250 couriers around the worldwide