This article is part of our blog series on the Incoterms® Rules, helping importers and exporters understand international trade terms. C J International is a full-service Customs Broker and Freight Forwarder.
Meaning of Free Carrier
“Free Carrier” (FCA) means the seller will deliver the goods, already cleared for export, to a named place or named carrier specified by the buyer.
The named place of delivery is critical to note because it identifies exactly where the seller’s obligation ends and where the buyer’s responsibility begins.
The named place or point of departure is usually the seller’s premises, but it can also be a named cargo terminal or tendered to a carrier – all at the seller’s expense. Origin loading and terminal handling charges are the responsibility of the buyer.
“One common thing that I have seen is that shippers will not be specific enough. For example, they may use the term FCA but they don’t include the place of delivery. It should be FCA [named place of delivery] — the seller’s facility or another place. If FCA is used and no place of delivery is listed, then there could certainly be confusion between the shipper and consignee as to where (place) the transfer of responsibilities occurs.” — Brenda Cox, CHB, CCS, CES | VP of Kentucky Operations
Example of FCA
The buyer is a marble tile distributor and purchases slabs of marble that fit in a 20’ sea container from ABC Quarry Company in Bergamo, Italy. Terms of sale are FCA La Spezia, Italy.
The seller must load the marble into the container, clear its contents for export, and make it available at the named place of La Spezia.
The buyer must assume all risk and responsibility for the goods from the time they are delivered either to a warehouse or a carrier at La Spezia up to the time they are delivered to the buyer’s door. The buyer pays origin terminal charges, loading onto vessel and all costs of transportation from that point forward, as well as insurance and Customs formalities at import.
Note: If this cargo was to move as air cargo, the FCA terms could read “FCA Milan” wherein the seller would make the goods available in the same manner described for the sea container. The buyer would pay for the air carrier terminal charges, loading onto the aircraft, plus all other costs to transport and clear goods to the buyer’s door.
➤ Free Carrier puts more responsibility on the seller compared to Ex Works.
More Resources on the Incoterms® Rules
The International Chamber of Commerce (ICC) has provided a very helpful illustration of the Incoterms® Rules that you can download for free. It shows how in working down the list of terms, risk progressively changes from the buyer’s responsibility to the seller’s responsibility.
The Incoterms® Rules consist of 11 trade terms, which are divided into two groups.
Group 1
Terms that can be used for any mode of transportation:
- EXW Ex Works
- FCA Free Carrier
- CPT Carriage Paid To
- CIP Carriage and Insurance Paid To
- DPU Delivered at Place Unloaded
- DAP Delivered at Place
- DDP Delivered Duty Paid
Group 2
Terms that apply to sea and inland waterway transport only:
- FAS Free Alongside Ship
- FOB Free on Board
- CFR Cost and Freight
- CIF Cost, Insurance, and Freight
This blog series is intended to be a helpful introduction to international trade terms, not a comprehensive resource. C J International recognizes that the ICC is the onlyofficialsource of definitions and explanations surrounding the Incoterms® Rules, and encourages our clients and the shipping community to consult iccwbo.org and their educational materials for further details.
Incoterms® and the Incoterms® 2020 logo are trademarks of ICC. Use of these trademarks does not imply association with, approval of or sponsorship by ICC unless specifically stated above. The Incoterms® Rules are protected by copyright owned by ICC. Further information on the Incoterms® Rules may be obtained from the ICC websiteiccwbo.org.
