What does FCA mean? Incoterms explained

Free Carrier (FCA) is one of the 11 Incoterms the International Chamber of Commerce (ICC) uses to clarify the responsibilities of buyers and sellers in international trade.

FCA is highly versatile, suitable for all modes of transport and is especially popular for containerized shipments. In this article, we’ll explain what FCA means, how it works, the obligations for buyers and sellers, and why FCA might be the right choice for your next shipment.

What does Free Carrier (FCA) mean?

Under the FCA Incoterm, the seller is responsible for delivering goods to the carrier or another nominated party at a named place (like a terminal, warehouse or port).

The seller covers all of the costs and assumes all risks up to the point of delivery. Once they hand the goods over, the risk and responsibility transfers to the buyer, who manages the rest of the journey and pays for the main carriage and insurance and handles import clearance and final delivery.

What makes FCA unique is its flexibility. You can use it for any mode of transport — rail, road, air, sea or multimodal — and is particularly suited for containerized cargo, where the buyer often arranges the main carriage.

What is the buyer responsible for under FCA?

The buyer assumes all costs, risks and responsibilities once the seller delivers goods to the nominated carrier or location. Those responsibilities include:

● Arranging and paying for the main carriage from the named place to the final destination

● Obtaining insurance during the main carriage and onward journey

● Clearing import customs, including obtaining licenses and permits, and completing documentation

● Paying import duties, taxes and fees

● Arranging onward transportation from the port

One of the biggest benefits of FCA for the buyer is that they have the freedom to choose their carrier and negotiate rates — hence the name, Free Carrier. This can be a huge advantage to companies with established logistics networks.

What is the seller responsible for under FCA?

The seller is responsible for everything until they deliver goods to the buyer’s nominated location. Those responsibilities include:

● Packing and preparing goods for export and making sure they are safe

● Clearing export customs, including obtaining the necessary licenses and permits

● Transporting goods to the place of delivery

● Notifying the buyer that the goods have been delivered.

Note, the seller is only responsible for unloading goods if delivery occurs at their premise. Otherwise, the buyer must arrange for goods to be loaded onto the carrier.

What’s an example of shipping under FCA?

Consider a UK retailer purchasing electronics from China and shipping them under FCA. Here’s what the process would look like:

● The Chinese supplier prepares the goods for transport and completes export formalities, including customs clearance

● The supplier arranges transport to the port in Shanghai, which is the buyer’s named destination

● At the terminal, the goods are handed over to the buyer’s representative, Pro Carrier, in this case, Our team is responsible for loading goods onto the carrier.

● At this point, the risk and responsibility transfers to the buyer. They will have already arranged insurance for the goods and paid to have the goods shipped to Tilbury.

● Upon arrival in the UK, the buyer’s representative, Pro Carrier, is responsible for clearing import customers and arranging onward delivery to the buyer’s warehouse.

As you can see, the buyer retains a significant amount of control under FCA. They are free to select their carrier, have their representative handle most of the work and choose which shipping route the goods travel on.

What are the benefits of FCA?

Shipping under FCA offers several advantages for both buyers and sellers:

● Flexibility. You can use FCA for all modes of transport, including road, rail, air, sea, and multimodal shipments. This makes it a go-to choice for containerised and cross-border logistics.

● Clear roles and responsibilities. The point at which risk transfers from seller to buyer is clearly defined. This clarity helps both parties manage their responsibilities and insurance needs.

● The buyer has control over the main carriage. Buyers can choose their own carrier and negotiate freight rates, which is especially beneficial for large importers or those with strong logistics partnerships.

● Reduced seller liability. Sellers are only responsible up to the delivery point, minimising their exposure to international shipping risks and costs.

● Transparent costs. Both parties know exactly which costs they are responsible for, reducing the risk of unexpected charges or disputes.

What are the potential issues of FCA?

Despite its many advantages, FCA is not without challenges. These include:

● Unloading confusion. If the delivery point is the seller’s premises, the seller must load the goods onto the buyer’s carrier. If the delivery is elsewhere, the buyer may be responsible for unloading, which can lead to confusion if not clearly specified.

● Insurance gaps. The seller’s responsibility ends as soon as they handover the goods. At that point, the buyer must ensure they have adequate insurance coverage for the onward journey.

● Import clearance. The buyer must manage the importation process, which includes clearing customs. This can be complex and confusing if they lack experience or operate without a trusted partner like Pro Carrier.

If you’d rather the seller handles the entire process, then an Incoterm like Delivered Duty Paid (DDP) that places most of the obligations may be better.

When should you use FCA?

So we know what FCA is, how it works and what buyers and sellers are responsible for. But when should you use it?

Well, FCA is a great choice when:

● The buyer wants control over the main carriage and insurance

● The shipment includes containerised goods or multimodal transport

● The buyer has strong working relationships with carriers or freight forwarders like Pro Carrier.

FCA is less suitable if the buyer is inexperienced with international logistics or if the seller is better positioned to manage the entire transport chain.

What other Incoterms are there?

The International Chamber of Commerce (ICC) defines 11 Incoterms that allocate risks and responsibilities between buyers and sellers. Here are some of the most common ones:

● EXW (Ex Works): The seller makes the goods available at their premises or another agreed location, such as a warehouse. From that moment, the buyer assumes all costs and risks, including transportation, insurance and customs clearance.

● CIF (Cost, Insurance, and Freight): The seller covers transportation and insurance costs to the destination port. However, the risk passes to the buyer once the goods are loaded onto the vessel at the origin port.

● FOB (Free On Board): The seller is responsible for all costs and risks until the goods are loaded onto the vessel at the port of origin. Risk transfers to the buyer at that moment.

● DAP (Delivered At Place): The seller bears all transportation costs and risks until the goods arrive at the buyer’s location, excluding import duties and taxes.

● DPU (Delivered At Place Unloaded): The seller delivers and unloads the goods at the agreed location. The buyer then assumes responsibility, including import duties and any further transportation.

● DDP (Delivered Duty Paid): The seller takes on the maximum responsibility, covering all costs such as transportation, insurance, import clearance, duties and taxes until the goods reach the buyer’s premises.

● CIP (Carriage and Insurance Paid To): The seller pays for carriage and insurance to the named destination. Risk transfers to the buyer once the goods are handed over to the first carrier, but the seller must provide insurance coverage during transit.

Get an FCA Quote from Pro Carrier

Free Carrier (FCA) is a flexible, transparent and widely used Incoterm that empowers buyers to manage their logistics while minimising seller risk. Its ability to be used for any mode of transport makes it particularly popular.

Navigating Incoterms like FVA can be tricky, but not if you have Pro Carrier as a trusted partner to guide you through the process. Our reliable international freight forwarding solutions are supported by innovative technology and customer service excellence.

Take Horizon, our all-in-one supply chain platform, for instance. It offers complete visibility across your shipments. When you work with Pro Carrier, you’ll also benefit from a proactive approach to customs clearance that sees us work two weeks ahead of schedule to overcome issues.

Speak to one of our experts today to learn how to ship from the Far East to the UK using FCA or another Incoterm.