FCA Incoterms 2020: Free Carrier
Under FCA the seller clears the goods for export and hands them to the buyer's carrier at a named place. The buyer pays the main transport and takes the risk from that point.
FCA Free Carrier
Any mode of transport
| Step | FCA |
|---|---|
| Export packing and marking | Seller |
| Loading at the seller's premises | Seller |
| Export customs clearance | Seller |
| Transport to the port or terminal | SellerRisk passes to the buyer here |
| Terminal charges and loading at origin | Buyer |
| Main carriage (ocean or air freight) | Buyer |
| Cargo insurance | Not required by the rule |
| Unloading at destination terminal | Buyer |
| Transport to the named place | Buyer |
| Unloading at the named place | Buyer |
| Import clearance, duties and taxes | Buyer |
- FCA
- Risk passes: When the goods are handed to the buyer's carrier: loaded on the buyer's vehicle at the seller's premises, or ready for unloading at another named place.
- Costs: At the named place, export cleared. The buyer pays the main carriage and everything after.
What does FCA mean?
FCA (Free Carrier) means the seller delivers the goods, cleared for export, to the carrier or person nominated by the buyer at a named place. Risk and cost pass to the buyer at that moment. The buyer books and pays the main transport and handles import. FCA works for any mode of transport and is the most flexible "buyer arranges freight" rule.
Two ways to deliver under FCA
Where the goods are handed over decides who loads and unloads:
- Named place is the seller's premises: delivery happens when the goods are loaded on the buyer's truck or container. The seller loads.
- Named place is anywhere else (a port terminal, airport, forwarder's warehouse): delivery happens when the goods arrive on the seller's vehicle, ready for unloading. The buyer's carrier unloads.
So write the place precisely: "FCA Seller's warehouse, 18 Industrial Road, Ludhiana, India" or "FCA CFS Nhava Sheva, India".
Seller and buyer obligations under FCA
| Seller | Buyer |
|---|---|
| Packs, marks and delivers the goods to the named place on time | Nominates the carrier and tells the seller the time and place |
| Clears the goods for export and pays export duties and fees | Pays the main carriage and any insurance it wants |
| Loads at its own premises | Unloads at any other named place |
| Provides proof of delivery and the commercial invoice | Clears import and pays duties and taxes |
Example
A Turkish textile mill sells to a buyer in Canada "FCA Mersin Port container terminal, Incoterms® 2020". The mill trucks the cartons to the terminal and clears them for export. Once the truck is at the terminal ready for unloading, the risk is the buyer's. The buyer's forwarder receives the cargo, books the ocean freight and handles Canadian import.
FCA vs FOB for containers
Many traders still say FOB for container shipments, but FOB puts the risk on the seller until the container is on board the ship, while the seller has already handed it to the terminal and can no longer protect it. The ICC recommends FCA for containers, so risk passes when the container is handed over. Since 2020, an FCA buyer can also be required to instruct its carrier to give the seller an on board bill of lading, which banks often ask for under a letter of credit.
Insurance under FCA
Neither side has to insure under FCA. The buyer carries the risk during the main voyage, so the buyer usually buys cargo insurance from the delivery point onwards.
Whatever the rule, the seller provides a commercial invoice that names the Incoterm and place, and usually a packing list. For quotes before the order, use a proforma invoice with the same rule written on it.
Features
- Who does each step under FCA
- Where risk passes, marked on the chart
- Compare FCA with FOB or any other rule
- Link to the Incoterms chooser
Frequently asked questions
What does FCA mean in Incoterms?
FCA means Free Carrier. The seller clears the goods for export and delivers them to the buyer's carrier at a named place. The buyer pays the main transport and takes the risk from delivery.
Who loads the goods under FCA?
If the named place is the seller's premises, the seller loads the buyer's vehicle. At any other place the seller only delivers the goods ready for unloading, and the buyer's carrier unloads them.
Who pays freight under FCA?
The buyer pays the main freight. The seller pays to bring the goods to the named place and to clear them for export.
Is FCA better than FOB?
For containers and air freight, yes. FCA passes the risk when the goods are handed to the carrier, which matches how containers are actually handled. FOB is meant for goods loaded directly on board a ship.
Does the seller clear export under FCA?
Yes. Under FCA the seller handles export clearance and pays export duties and fees. The buyer handles import.