FCA Incoterms Guide: Who Pays, Who Risks, Who Wins

Anyone who has bought goods from another country has probably seen the term FCA on a price list. It might seem like a detail, but it who pays for what, who takes the risk, and where the seller’s work stops. This guide breaks down FCA in detail.

What Does FCA Stand For?

FCA stands for Free Carrier. It is one of the eleven Incoterms rules published by the ICC.

Under FCA, the seller delivers the goods to a carrier or the buyer at a place both sides agree on. The seller also handles export clearance. Once the handover occurs, the buyer takes over all costs and risks. An FCA contract always includes a location, such as FCA Hamburg Terminal, because that spot marks when responsibility shifts.

Where Does FCA Delivery Happen?

Two situations matter here.

• If the named place is the seller’s premises, delivery ends when the goods are loaded onto the buyer’s vehicle. The seller does the loading.
• If the named place is a warehouse or the freight forwarder’s facility, delivery ends when the seller’s transport arrives and is ready for unloading. The buyer’s carrier then handles the unloading.

This difference often causes confusion and disagreements. That’s why the contract must describe the location with care.

Who Is Responsible For What?

The Seller is Responsible for:

• Packing and making the goods
• Getting export licences and doing export clearance
• Moving the goods to the agreed place
• Loading if delivery happens at the seller’s site

The Buyer Handles:

• Choosing and booking the carrier
• Paying for transport
• Buying insurance if desired
• Handling import clearance, duties and taxes

Risk transfers at the delivery point. It does not change when the goods arrive at their destination.

What’s New in Incoterms 2020?

Incoterms 2020 allows the buyer to ask the carrier to give the seller an “on board” bill of lading after loading. This helps with letters of credit because banks often require that document. The choice is optional. The buyer must pay any costs and take on additional risk.

FCA vs FOB vs EXW

FOB applies to sea shipments. Most cargo now travels in containers that are handed off at terminals. Because of this, FCA is usually the choice. EXW puts the burden of export clearance on the buyer, which can be hard when working in another country. FCA makes that easier.

When should You Use FCA?

FCA works well when goods move by container, air, rail, road, or a mix of these. It fits buyers who want control over freight rates. It also suits cases where a letter of credit requires an on-board bill of lading. FCA may not be best if the buyer cannot arrange pickup in the seller’s country. In those cases, CPT or CIF might be options.

FAQs

Is FCA the same as FOB?

No. FOB is used for sea freight and means delivery happens on board the ship. FCA works for any type of transport. It means delivery happens at a named place.

Who pays for freight under FCA?

The buyer pays for freight.

Who handles export clearance?

The seller handles export clearance.

Conclusion

FCA draws a line between buyers and sellers. FCA means the seller brings the goods to a named place and manages export clearance. From that moment on, the buyer takes over. With a location and strong contract language, everyone knows their costs, risks, and obligations.

This article provides information. FCA is not a substitute for advice. For shipments, always check the official ICC Incoterms 2020 publication. Talk with a freight expert to make sure everything goes smoothly.