FCA

What it means

FCA, Free Carrier, is the Incoterms rule under which the seller hands goods cleared for export to the carrier nominated by the buyer at an agreed place. Risk passes to the buyer there, and from that point the buyer bears transport, insurance and import costs.

The rule suits all modes of transport, including container, air and multimodal shipments. Unlike FOB, which is meant only for sea transport, it also covers handover at a terminal or warehouse rather than directly onto a ship.

Compared with EXW, it is more practical for both parties because export clearance is handled by the seller, who is established in the country of export. The buyer avoids formalities abroad, and the seller has the proof of export it needs for the VAT exemption.

How it works in practice

If the goods are handed over at the seller's premises, the seller also loads them onto the buyer's vehicle. If they are handed over elsewhere, such as the carrier's terminal, the seller delivers them there ready for unloading, and the buyer or its carrier unloads.

Naming the place precisely is key to the passing of risk. Stating FCA with the address of the seller's warehouse makes clear when responsibility for the goods passes and avoids disputes over damage during loading or while waiting for the carrier.

Incoterms 2020 allows the parties to agree that the buyer will instruct the carrier to issue the seller an on-board bill of lading. This helps with letters of credit, where the bank requires such a document even though the goods were handed over before loading onto the ship.

What to watch out for

FCA covers the seller's obligations up to handover to the carrier, not later costs. The buyer should be clear about transport, insurance and import costs, such as customs clearance and taxes at destination, to compare offers with DAP or other rules.

If the buyer's carrier does not arrive on time, the seller may face storage problems. The contract should set a collection deadline and the consequences of the buyer's delay, including passing of risk and payment of storage costs.