Free Carrier
Free carrier is a trade term dictating that a seller of goods is responsible for the delivery of those goods to a destination specified by the buyer. When used in trade, the word "free" means the seller has an obligation to deliver goods to a named place for transfer to a carrier. The destination is typically an airport, shipping terminal, warehouse, or other location where the carrier operates. It might even be the seller's business location.The seller includes transportation costs in its price and assumes the risk of loss until the carrier receives the goods. At this point, the buyer assumes all responsibility.
Free Carrier (FCA)
Definition
Free Carrier (FCA) is an international trade term that stipulates the seller is responsible for delivering the goods to a specified location designated by the buyer, which is typically an airport, shipping port, warehouse, or another location operated by the carrier. During this process, the seller bears all risks and costs until the goods are handed over to the carrier. Once the goods are delivered to the carrier, the buyer assumes all responsibilities.
Origin
The term Free Carrier originated from the International Chamber of Commerce (ICC) and its Incoterms, first published in 1936. Incoterms aim to provide a standardized interpretation for international trade. FCA, as part of these terms, helps to clarify the division of responsibilities between the seller and the buyer during the delivery process.
Categories and Characteristics
FCA can be divided into two main types:
- Delivery at Seller's Premises: The seller delivers the goods to the carrier at their own premises and is responsible for loading the goods.
- Delivery at Another Specified Location: The seller transports the goods to a location specified by the buyer and is responsible for transportation and unloading.
The main characteristics of FCA include:
- The seller bears all risks and costs until the goods are delivered to the carrier.
- The buyer assumes all risks and costs after the goods are delivered to the carrier.
- Applicable to various modes of transportation, including land, sea, and air.
Specific Cases
Case 1: A Chinese company sells electronic products to a US customer, and both parties agree to use FCA terms. The Chinese company is responsible for delivering the goods to the Shanghai port and handing them over to the designated shipping company. The Chinese company bears all risks and costs until the goods are delivered to the shipping company. Once delivered, the risks and costs transfer to the US customer.
Case 2: A German machinery manufacturer sells equipment to a French customer, and both parties agree to use FCA terms. The German company is responsible for delivering the equipment to its warehouse in Munich and handing it over to the carrier designated by the French customer. The German company bears all risks and costs until the equipment is delivered to the carrier. Once delivered, the risks and costs transfer to the French customer.
Common Questions
Q: What is the difference between FCA and FOB (Free On Board)?
A: The main difference between FCA and FOB lies in the delivery location and the point of risk transfer. FCA's delivery location can be any specified place, while FOB's delivery location is typically the shipping port. The risk in FCA transfers when the goods are handed over to the carrier, whereas in FOB, the risk transfers when the goods are loaded onto the ship.
Q: Does the seller need to insure the goods under FCA terms?
A: Under FCA terms, the seller is not obligated to insure the goods; the insurance responsibility usually falls on the buyer.
