Free Alongside Ship (FAS) is a shipping term used in international trade, defined by the International Chamber of Commerce (ICC) as one of the Incoterms 2020. Under FAS, the seller’s responsibility and cost end when the goods are placed alongside the vessel at the specified port of shipment. From that point onwards, the buyer assumes all risk, cost, and responsibility for further transportation, including loading the goods onto the vessel, transporting them to the destination, and purchasing insurance if needed.
Responsibilities Under FAS
Seller’s Responsibilities
- Delivery: The seller must deliver the goods alongside the vessel at the agreed port of shipment.
- Export Clearance: The seller is responsible for export customs clearance.
- Costs Covered: This includes transportation to the port, export fees, and handling charges at the port.
Buyer’s Responsibilities
- Loading and Transport: The buyer takes charge of loading the goods onto the vessel and their transport to the destination.
- Insurance: The buyer is responsible for purchasing insurance for the shipment.
- Import Clearance: The buyer must handle customs clearance and pay any import duties at the destination.
Comparative Analysis
FAS vs. FOB (Free on Board)
- FOB: Under Free on Board (FOB), the seller’s responsibility extends until the goods are loaded onto the vessel. In FAS, the seller’s responsibility ends when the goods are delivered alongside the vessel.
- Risk Transfer: In FOB, the risk transfers to the buyer once the goods pass the ship’s rail. In FAS, the risk transfers once the goods are delivered alongside the ship.
FAS vs. CIF (Cost, Insurance, and Freight)
- CIF: Under Cost, Insurance, and Freight (CIF), the seller covers the cost of transportation to the port of destination and buys insurance for the cargo during transit. FAS, on the other hand, significantly limits the seller’s responsibility to delivery alongside the vessel.
- Seller’s Obligation: In CIF, the seller’s obligations are far greater, extending to coverage of insurance and freight costs.
Historical Context
The concept of Free Alongside Ship (FAS) has its origins in maritime trade, where delivering goods near a vessel was a practical way of transferring responsibilities from sellers to buyers. The term has evolved as part of Incoterms, a globally recognized set of trade terms first published by the International Chamber of Commerce in 1936.
Applicability
- Bulk Commodities: FAS is commonly used for shipping bulk commodities such as oil, grain, and minerals.
- Maritime Trade: It is especially prevalent in maritime transport due to specific responsibilities related to ship loading.
Related Terms
- Incoterms: International Commercial Terms that define responsibilities of sellers and buyers in international transactions.
- FOB (Free on Board): A shipping term where the seller’s responsibility ends once goods pass the ship’s rail.
- CIF (Cost, Insurance, and Freight): A term where the seller pays for the cost, insurance, and freight to the port of destination.
FAQs
What are Incoterms?
What are the seller's obligations under FAS?
When does the buyer assume responsibility in an FAS agreement?
Is insurance mandatory under FAS?
References
- International Chamber of Commerce, “Incoterms 2020.”
- International Trade Administration, “Guide to Trade Terms.”
Summary
Free Alongside Ship (FAS) is a crucial term in international trade, specifying that the seller’s responsibility ends once goods are placed alongside the ship. The buyer then takes on all risks and costs, including loading, transport, and insurance. Understanding the distinctions between FAS and other Incoterms like FOB and CIF is vital for seamless global trading.
By following this structured and detailed entry, readers will have a comprehensive understanding of Free Alongside Ship (FAS) and its application in international trade.
