FCA delivery terms

FCA (Free Carrier) — is an international trade term that falls under the category of Incoterms 2020. It is a widely used, recognized set of rules defining the responsibilities of buyers and sellers when buying and selling in international trade transactions.

Free Carrier is specifically associated with the delivery of products, often translated as “free carrier”, indicating that the company selling the batch of raw materials/goods voluntarily assumes full responsibility for delivery to the place previously specified in the contract .

In this article we will take a closer look at the terms of such delivery, their consequences for both buyers and sellers, and their role in facilitating trade between different countries.

Arrangement of concepts — FCA Incoterms 2020

Translated from English “Free Carrier” — “free carrier” means that the company selling the goods undertakes to deliver it at a certain place, be it:

• production area;
• port;
• airport or terminal.

With amazing flexibility, FCA Incoterms 2020 allows for multiple modes of transport, including multimodal options, making it the preferred choice for international trade. Their adaptability and breadth of use make these requirements a critical component of modern global commerce.

Incoterms – is a set of international trade terms that define the responsibilities, obligations of buyers and sellers in global trade. The International Chamber of Commerce (ICC) reviews and updates its rules every ten years to ensure they remain current and appropriate for both domestic and international trade. The previous version was published in 2010, and the latest version came into force on January 1, 2020.

The latest changes concern increased security requirements, greater clarity in the distribution of costs, and solutions to insurance problems. The 2020 Rules are designed to meet the needs of modern trade, ensuring that the terms are relevant and suitable for both domestic and global trade.

The differences between FCA Incoterms 2010 and Incoterms 2020 are minor. However, there are some key points that buyers/sellers should be aware of. For example, the name of the term DAT (Delivered at Terminal) was changed to DPU (Delivered at Place Unloaded) due to a misinterpretation of the word “terminal”. The new edition also specifies safety requirements as part of responsibilities and travel costs.

Another significant change for 2020 — emphasis on seller responsibility. For example, in CIP terms the seller is now responsible for providing the maximum insurance coverage, while in CIF terms the seller is only responsible for providing the minimum insurance coverage.

FCA delivery terms: features

FCA is when the seller takes responsibility for delivering the goods to the carrier at a pre-agreed location. To do this, you need to load the goods onto the carrier’s vehicle. Then the baton of FSA responsibility passes to the buyer, who assumes all costs and risks associated with transporting the goods from the specified place to the final destination.

The buyer's responsibilities under FSA Incoterms include:

• obtaining the necessary export licenses or permits;
• completing all necessary customs formalities for the export of goods.

This distribution of responsibilities ensures a harmonious transaction process, in which both parties clearly understand their roles and responsibilities under the FSA terms of delivery.

Deciphering the term: what is a free carrier

Sometimes the term “free carrier” used interchangeably with FCA Incoterms. However, it is important to note that the term free carrier — it is a concept that is not officially recognized by the International Chamber of Commerce (ICC). Essentially, it describes a situation where the seller hands over the goods to the carrier at a specified location.

In this case, the seller bears the burden of transportation costs and risks associated with delivering the goods to the final destination. Although this concept is not an officially recognized Incoterm term, it is consistent with the fundamental principles of the body of accepted rules.

FCA price: transportation costs

The proposed rules, the abbreviation of which stands for “free carrier,” are based on the FCA price principle — This is payment for goods at the specified place.

This term is key to understanding the financial aspects of international transport. However, it is important to realize that this price does not include costs associated with transportation or insurance to get the item to its final destination. This feature emphasizes the responsibility and obligations of the parties in the process of international trade.

In accordance with the terms, the seller undertakes to deliver the goods to the carrier at the specified place. From this moment, all costs and risks associated with transporting the goods from this point to its final destination are transferred to the buyer.

This important distinction helps avoid misunderstandings and conflicts by ensuring clarity and reliability in financial obligations between parties to a transaction. By considering FCA Incoterms, companies can be confident in the transparency of the agreement, achieve successful results in international trade, building long-term, mutually beneficial partnerships.

In the confusing reality of international trade, FCA Incoterms act as beacons of clarity, guiding businesses through the maze of global trade. Their flexibility, adaptability, and comprehensive system make them indispensable tools for both buyers and sellers.

To successfully implement an international trade transaction, a deep understanding of these rules and the nuances of delivery conditions is necessary. By adhering to the proposed principles, enterprises embark on the path of hassle-free transactions, helping to strengthen global connections, moving the wheel of international trade forward.