Created by the International Chamber of Commerce, Incoterms are a series of three-letter designations that define responsibilities between buyers and sellers around the sale of goods, specifically related to transportation costs and liability. If you’re looking for more information on Incoterms, check out our other articles on this topic:
The Complete Guide to All 11 of the 2010 Incoterms Rules
Incoterms 2020 Rules: Everything You Need to Know
Protect Your Bottom Line by Understanding These 5 Common Incoterms
Incoterms, or International Commercial Terms, were created by the International Chamber of Commerce (ICC). Let’s talk specifically about the FCA Incoterm and what it might mean for you.
What Does FCA Mean?
FCA stands for “Free Carrier.” Under this Incoterm, the seller delivers goods to a named location, such as a terminal or port. From that point forward, the buyer is responsible for arranging all other transportation.
Although this may seem like a very small difference between the previous Incoterm, EXW, it may offer buyers a slight advantage. For example, rather than having to arrange transportation to the port in a region they might not be familiar with, buyers can choose to let the seller make those arrangements under the FCA Incoterm.
Additionally, if the seller makes frequent deliveries to a nearby port, they may be willing to offer the buyer a low price for this service. However, if the buyer arranged for a dedicated delivery under the EXW Incoterm, it might cost significantly more.
What Is the Seller Responsible for Under the FCA Incoterm?
Under the FCA Incoterm, the seller is responsible for delivering goods to the named location in the contract. Although the seller doesn’t need to pay for the unloading of the goods under the FCA Incoterm, the seller must pay any export duties or fees.
What Is the Buyer Responsible for Under the FCA Incoterm?
Once the goods arrive at the named place, the buyer is responsible for the unloading of the goods and all transportation going forward, including freight costs, import duties and fees, and insurance.
Incoterms Insights: FCA
FCA is one of the Incoterms affected by the Incoterms 2020 update. The change only affects contracts in which a letter of credit is used as the payment method.
If you’re negotiating a contract with the FCA Incoterm, make sure you check whether your contract specifies the 2010 or the 2020 rules. If it’s the latter, review the change to the FCA Incoterm before signing your contract.
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