FAS Incoterms 2020: A Comprehensive Guide to Free Alongside Ship

Understanding FAS: Free Alongside Ship Explained

In the intricate world of international trade, clarity and precision are paramount. This is where Incoterms (International Commercial Terms) play a crucial role, defining the responsibilities of buyers and sellers for the delivery of goods under sales contracts. Among these, FAS (Free Alongside Ship) is a specific term primarily used for sea and inland waterway transport, outlining a distinct point at which risk and cost transfer from the seller to the buyer.

At its core, FAS means the seller delivers the goods, cleared for export, alongside the vessel nominated by the buyer at the named port of shipment. From this point onwards, the buyer assumes all costs and risks of loss or damage to the goods. For businesses engaging in global trade, a thorough understanding of FAS is essential to avoid misunderstandings, mitigate risks, and ensure smooth logistics operations. Ocean Cargo, with over 25 years of experience in global freight forwarding, helps clients navigate these complexities, ensuring their shipments comply with the chosen Incoterm.

Seller's Responsibilities Under FAS Incoterms 2020

Under FAS Incoterms 2020, the seller's obligations are clearly defined and extend up to the point where the goods are placed alongside the nominated vessel. These responsibilities include:

• Delivery of Goods: The seller must deliver the goods, along with the commercial invoice and any other evidence of conformity, as required by the sales contract.
• Export Clearance: It is the seller's responsibility to obtain any export licence or other official authorisation and carry out all customs formalities necessary for the export of the goods. This includes security clearance and pre-shipment inspection.
• Costs Up to Delivery: The seller bears all costs relating to the goods until they have been delivered alongside the nominated vessel at the named port of shipment. This includes costs of checking operations (quality checks, measuring, weighing, counting) and packaging.
• Risk Transfer: The seller bears all risks of loss of or damage to the goods until they have been delivered alongside the nominated vessel.
• Notice to Buyer: The seller must give the buyer sufficient notice that the goods have been delivered alongside the nominated vessel.
• Assistance with Information: The seller must assist the buyer, at the buyer's request, risk, and cost, in obtaining any documents or information needed for import clearance or transit.

Ocean Cargo's customs compliance services can assist sellers in ensuring all export documentation and procedures are correctly handled, preventing delays and penalties.

Buyer's Responsibilities Under FAS Incoterms 2020

Once the goods are placed alongside the vessel, the buyer's responsibilities commence, encompassing the majority of the shipping journey. These include:

• Payment of Price: The buyer must pay the price of the goods as provided in the sales contract.
• Import Clearance: The buyer is responsible for obtaining any import licence or other official authorisation and carrying out all customs formalities for the import of the goods and for their transit through any country.
• Costs from Delivery: The buyer bears all costs relating to the goods from the time they have been delivered alongside the nominated vessel. This includes costs of loading the goods onto the vessel, freight charges, insurance, and all costs associated with import clearance and duties.
• Risk Transfer: The buyer assumes all risks of loss of or damage to the goods from the time they have been delivered alongside the nominated vessel.
• Contract of Carriage and Insurance: The buyer must contract for the carriage of the goods from the named port of shipment and, if desired, arrange for insurance coverage.
• Notice to Seller: The buyer must give the seller sufficient notice of the vessel name, loading point, and required delivery time.

For buyers, managing the subsequent stages of the journey, including sea freight and air freight, requires a reliable partner. Ocean Cargo offers comprehensive solutions, from booking vessel space to managing destination logistics, ensuring your cargo reaches its final destination efficiently.

Key Considerations for Using FAS

While FAS offers a clear division of responsibilities, certain factors must be carefully considered before opting for this Incoterm:

Suitability for Cargo Type

FAS is best suited for bulk cargo, non-containerised goods, or heavy-lift items that are loaded directly onto the vessel from the quay. For example, shipping excavators and diggers to the UAE or wind turbine components to Australia might be handled under FAS, where the goods are positioned alongside the ship for specialist loading.

For containerised cargo, FCA (Free Carrier) is generally more appropriate, as the seller typically delivers the goods to a container yard or terminal, not directly alongside the vessel. Using FAS for containerised goods can lead to confusion regarding the point of risk transfer.

Port Operations and Loading

The efficiency of port operations at the named port of shipment is critical. The buyer is responsible for the loading costs and risks, so any delays or issues during this phase will impact the buyer. It's crucial for the buyer to have a reliable freight forwarder, like Ocean Cargo, to manage the loading process and ensure timely departure.

Communication and Coordination

Effective communication between the buyer, seller, and the nominated carrier is paramount. The buyer must inform the seller of the vessel's details and expected arrival time, and the seller must notify the buyer once the goods are alongside. Any miscommunication can lead to demurrage charges or missed vessel cut-offs.

Insurance

While not mandatory under FAS, it is highly recommended that the buyer arranges for comprehensive cargo insurance from the point of risk transfer (i.e., when the goods are alongside the vessel). This protects against unforeseen loss or damage during loading, transit, and unloading. Ocean Cargo can advise on suitable insurance options for your specific cargo.

FAS vs. Other Incoterms: When to Choose FAS

Understanding how FAS compares to other common Incoterms helps in making an informed decision:

• FAS vs. FOB (Free On Board): The key difference lies in the point of risk transfer. Under FAS, risk transfers when goods are *alongside* the vessel. Under FOB, risk transfers when goods are *on board* the vessel. This means the seller under FOB is responsible for loading costs and risks, whereas under FAS, the buyer takes on these responsibilities. FOB is generally preferred for containerised cargo where the seller has more control over the loading process.
• FAS vs. FCA (Free Carrier): FCA is more flexible and can be used for any mode of transport, including multimodal. Under FCA, the seller delivers the goods to a named place (e.g., a warehouse, terminal, or freight forwarder's premises), and the buyer is responsible from that point. FCA is often a better choice for containerised shipments as the seller delivers to the carrier's terminal, not necessarily alongside a specific vessel.
• FAS vs. EXW (Ex Works): EXW places the maximum obligation on the buyer, with the seller only making the goods available at their own premises. FAS places more responsibility on the seller, including export clearance and delivery to the port.

FAS is most suitable when the buyer has direct access to the vessel and can efficiently manage the loading process, or when dealing with specific types of bulk or project cargo that require specialist handling at the port. For example, Ocean Cargo's sea freight services to Canada can be tailored to various Incoterms, providing flexibility for both buyers and sellers.