Free Carrier (FCA) is a trade term defined under the International Commercial Terms (Incoterms), which stipulates that the seller must deliver goods to a named location specified by the buyer. This location is usually an airport, shipping terminal, or warehouse. Delivery is considered complete once the goods are handed over to the carrier nominated by the buyer, at which point the risk and responsibility transfer from the seller to the buyer.
Historical Context of Free Carrier (FCA)
The concept of Free Carrier (FCA) was established as part of the Incoterms, which were first published by the International Chamber of Commerce (ICC) in 1936. These terms were created to provide a common set of rules and guidelines for international trade, ensuring clarity in the responsibilities of buyers and sellers.
Key Elements of FCA
- Seller’s Responsibilities: The seller is responsible for delivering the goods to the named place, packaging the goods appropriately, and providing the necessary export documentation.
- Buyer’s Responsibilities: The buyer is responsible for arranging and paying for the transportation from the named place to the final destination, as well as import duties and taxes.
- Risk Transfer: The risk transfers from the seller to the buyer once the goods are delivered to the named location and handed over to the carrier.
Applicability of FCA in Modern Trade
The FCA term is commonly used in modern trade for various transportation modes, including air, sea, rail, and road. It is particularly relevant for containerized shipments where the buyer has more control over the transportation process and prefers to manage the carrier directly.
Examples of FCA
- Air Freight: A seller based in New York delivers goods to JFK Airport, as specified by the buyer. Once the goods are handed over to the carrier at the airport, the buyer assumes responsibility.
- Sea Freight: A seller in Shanghai delivers goods to the Shanghai Port. The goods are then handed over to a shipper arranged by the buyer, transferring the risk and responsibility to the buyer.
Comparing FCA with Other Incoterms
- FCA vs. FOB (Free on Board): Under FOB, the seller is responsible for loading the goods onto the vessel, while under FCA, the seller delivers the goods to the carrier at a specified location.
- FCA vs. EXW (Ex Works): Under EXW, the seller’s responsibility ends when the goods are made available for pickup at their premises, whereas FCA requires delivery to a named place.
Related Terms and Definitions
- Incoterms: International Commercial Terms are a set of trade terms published by the ICC that define the responsibilities of sellers and buyers in international trade.
- Carrier: A person or company responsible for the transportation of goods from one place to another.
FAQs
1. Can FCA be used for all modes of transport? Yes, FCA is versatile and can be used for air, sea, rail, and road transport.
2. Who is responsible for customs clearance under FCA? The seller is responsible for export customs clearance, while the buyer handles import customs clearance.
3. What documentation is required under FCA? The seller must provide all necessary export documentation, including the commercial invoice, packing list, and export license if applicable.
References
- International Chamber of Commerce, Incoterms® 2020.
- Putzger, D. (2020). The Dictionary of International Trade. World Trade Press.
Summary
Free Carrier (FCA) is a critical Incoterm that facilitates international trade by clearly defining the delivery responsibilities and risk transfer between sellers and buyers. It is applicable to various modes of transport and offers significant flexibility in logistics management. Understanding FCA and its application can lead to more efficient and predictable international trade transactions.
