FCA Incoterms 2020 – what does the Free Carrier rule mean?

In international trade, it is crucial to clearly define the obligations of the parties to ensure the security of transactions.

FCA (Free Carrier) is one of the eleven rules of Incoterms 2020, ensuring a clear division of responsibilities between the seller and the buyer.

What exactly does it mean, what are its advantages and when is it worth using?

Would you like to learn more about all 11 International Commercial Terms? Read: What are Incoterms? International sales terms in practice >>>

What does FCA mean in Incoterms 2020?

FCA (Free Carrier) means that the seller delivers the goods to the carrier or another person designated by the buyer at the designated place of delivery.

The FCA Incoterms rule is one of the 11 rules of Incoterms 2020, developed by the International Chamber of Commerce. In practice, this means that the seller is responsible for placing the goods at the disposal of the carrier at the agreed point – this may be a terminal, warehouse, airport or other location specified in the sales contract.

From that moment on, the buyer’s risk covers further transport, customs procedures, subsequent transhipments and other unforeseen events.

How do FCA delivery terms work?

FCA delivery terms are based on the transfer of goods to the carrier designated by the buyer.

The risk passes to the buyer upon delivery of the goods to the agreed place. However, the seller may also be required to load the goods onto the buyer’s means of transport (depending on the provisions of the contract).

What is most important in FCA?

The seller clears the goods for export and delivers them to the carrier.
The buyer concludes the contract of carriage and is responsible for further transport.
The moment of delivery of the goods is crucial – once it has been reached, the seller is not liable for damage to the goods or delays.

What are the seller’s obligations in FCA?

The seller is responsible for preparing, loading and handing over the goods to the carrier at the designated place, including export customs clearance.

The seller’s tasks and responsibilities include:

preparing the goods and ensuring that they are delivered on the agreed date,
loading the goods onto the seller’s means of transport (not always),
bearing the costs of export customs formalities, including export licences,
sending the commercial invoice and the transport document or equivalent electronic transfer.

Summary: In FCA, the seller delivers the goods to the carrier, fulfils the export obligations, and then the responsibility for further transport (e.g. sea transport) passes to the buyer.

What are the buyer’s obligations in FCA?

The buyer is responsible for transport from the moment the goods are handed over to the carrier, including the risk and costs of further transport.

The buyer’s obligations include:

costs from the moment of delivery of the goods,
providing a carrier and giving instructions to that carrier,
organising further transport of the goods, including insurance of the goods,
paying the costs of importing the goods and all costs of delivery to the destination,
covering additional costs resulting from delays, incorrect documents or the carrier’s lack of readiness.

Summary: The buyer’s responsibility in FCA is significant, but it gives them full control over further transport and the choice of carrier.

Where and when does the risk pass in FCA?

The risk in FCA passes to the buyer when the goods are handed over to the carrier or another person designated to take delivery.

The time and place of delivery of the goods to the carrier designated by the buyer must be clearly specified in the contract.

This may be a terminal, warehouse or even a collection point on the seller’s premises, if so agreed by the parties. After this point, the seller is not liable for damage to the goods or costs arising from further transport.

Who bears the costs in FCA?

The seller bears the costs until the goods are handed over to the carrier, and the buyer bears all further costs related to transport.

This includes:

on the seller’s side: the costs of export customs formalities and delivery to the carrier;
on the buyer’s side: transport costs, insurance of the goods, costs of delivery to the destination, import duties.

Summary – when is it worth choosing FCA?

FCA works well when the buyer wants to control the transport and the seller ensures the preparation of the goods and export clearance.

In practice, it is the most popular of the Incoterms rules in international trade.

FAQ – Frequently asked questions

What does FCA mean in Incoterms?

FCA (Free Carrier) means that the goods have been delivered to the carrier or another person designated by the buyer at the designated place, after export clearance. Further transport costs and risks remain with the buyer.

Who pays for transport under FCA?

The seller covers the costs until the goods are handed over to the carrier, and the buyer bears the remaining costs.

How does FCA differ from EXW?

FCA requires export clearance and delivery of the goods to the carrier, while EXW only requires the goods to be made available at the seller’s premises.

How does FCA differ from DAP?

In DAP, the seller is responsible for delivery to the destination, while in FCA, the seller is only responsible for delivering the goods to the carrier.

Is FCA beneficial for the buyer?

Yes, because it gives control over transport and the choice of carrier.

No, because most of the risk and costs are borne by the buyer.

It all depends on the type and nature of the transaction. The choice of Incoterms 2020 rules should always be tailored to the circumstances.

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