If you’ve ever handled international shipping, you’ve probably wondered what “FAS” in Incoterms really means—and why it matters. Getting this right can save your business time, money, and headaches.
Understanding the details of FAS (Free Alongside Ship) is crucial for smooth and successful global trade. In this article, you’ll discover what FAS covers, when to use it, and practical tips to avoid common mistakes. Stay tuned for clear explanations that make shipping decisions easier.
Related Video
Understanding FAS Incoterms: Free Alongside Ship Made Simple
FAS or “Free Alongside Ship” is one of the 11 Incoterms rules that define the responsibilities of buyers and sellers in international trade. Under the FAS Incoterm, the seller fulfills their delivery obligation when the goods are placed alongside the vessel at the agreed port of shipment. From that moment, the buyer takes over responsibility for costs and risks.
Let’s break down exactly how FAS works, who it benefits, how it differs from other terms, and what you should consider if you’re shipping under FAS.
What Does FAS Mean in Incoterms?
FAS stands for “Free Alongside Ship,” and it’s an Incoterm designed for sea and inland waterway transport. Here’s what it means in practice:
- The seller delivers the goods by placing them alongside the vessel at the named port of shipment.
- The seller handles export formalities, documentation, and costs up to that point.
- Once the goods are alongside the ship, the risk and cost transfer to the buyer.
- The buyer is then responsible for loading, freight, insurance, and all subsequent formalities.
This rule is best when goods are bulky, heavy, or otherwise challenging to move, such as break-bulk cargoes.
How Does FAS Work? Step-by-Step Breakdown
1. Seller’s Responsibilities
The seller must:
- Package the goods suitably for export.
- Transport the goods to the agreed port.
- Complete all necessary export customs formalities.
- Place the goods alongside the vessel (not on board) at the named port and on the specified date.
- Provide the buyer with any proof of delivery required.
- Bear all costs and risks up to this point.
2. Transfer Point
Risk and cost move from seller to buyer the moment the goods are physically placed alongside the vessel. If anything happens to the goods after this point, it is the buyer’s responsibility.
3. Buyer’s Responsibilities
After the goods are delivered alongside the vessel:
- Take charge of loading the goods onto the ship.
- Handle freight costs and shipping insurance.
- Arrange and pay for import customs procedures at the destination.
- Cover costs for the remainder of the journey, including potential port fees, unloading, and inland transportation at the destination.
Key Benefits of FAS
FAS has specific advantages that make it the preferred choice in some shipping scenarios:
- Clarity on Responsibility: Clearly defines the handover point of risk and cost.
- Useful for Special Cargo: Ideal for non-containerized, heavy, or large items that require special handling.
- Cost Control: Buyers have control over the main carriage, allowing negotiation of better shipping rates.
Potential Challenges and Considerations
Shipping under the FAS Incoterm isn’t suitable for all situations. Here are some challenges and why you should be mindful:
- Not for Containerized Cargo: FAS is not recommended for container shipments, as containers are usually dropped off at a terminal, not directly alongside a vessel.
- Risk at Loading: If damage occurs during loading onto the ship, it’s the buyer’s loss—even though the seller did most of the early work.
- Requires Coordination: Both parties must coordinate drop-off and vessel timings closely to avoid delays or extra charges.
Practical Tips for Using FAS in International Shipping
For Sellers
- Confirm Port Access: Make sure you (or your freight provider) can physically deliver goods right up to the vessel.
- Clear Documentation: Provide all required export documents promptly, including customs clearance.
- Communicate Timelines: Work closely with your buyer to ensure alignment on vessel cut-off times.
For Buyers
- Arrange Loading: Don’t forget to book stevedoring (the process of physically loading the cargo onto the vessel) services.
- Coordinate Insurance Early: Your insurance should start from the point the goods are placed alongside the ship.
- Check Terminal Procedures: Different ports have various rules for accepting cargo; understand these in advance.
For Both Parties
- Agree on Cut-off Date and Place: Specify the exact berth and time for handover.
- Inspect Goods: Conduct a joint inspection at the handover point whenever possible.
Cost Considerations and Tips
When using FAS, understanding where costs lie is crucial. Here are some cost-related tips:
- Seller’s Costs End at Ship’s Side: Remember, any cost after goods are placed alongside the vessel—including terminal handling or delays in loading—is the buyer’s responsibility.
- Negotiate Port Charges: Confirm who pays for specific port charges, as rules and costs can vary by country and terminal.
- Insurance: Only the buyer arranges insurance. Sellers should clearly communicate to avoid misunderstandings.
- Currency Fluctuation Risks: If paying for port services in foreign currency, lock in rates where feasible.
Pro Tip: When comparing FAS to similar terms such as FOB (Free On Board), know that FAS ends the seller’s obligation earlier—FOB transfers risk once the goods are on the ship.
When Should You Use FAS?
FAS is particularly useful if:
- The buyer is familiar with the shipping port and has established relationships with local agents.
- The cargo is too large or awkward for containerization.
- The buyer wants to manage main carriage costs and logistics personally.
Don’t use FAS for containerized freight or when the buyer lacks experience in managing port-side logistics.
FAS vs. Related Incoterms
Knowing when to choose FAS versus other Incoterms can save you money and prevent confusion.
FAS vs. FOB (Free On Board)
- FAS: Seller is done when goods are placed alongside the ship.
- FOB: Seller’s responsibility continues until goods are loaded aboard the ship.
FAS vs. FCA (Free Carrier)
- FAS: For non-containerized sea shipments, ends at ship’s side.
- FCA: Broader—applies to all modes (road, rail, sea, air), and can end at a terminal, warehouse, or another agreed place.
Best Practices for Smooth FAS Transactions
- Detailed Contracts: Always spell out responsibilities in writing—especially cost splits and expected timings.
- Keep Records: Maintain records of delivery times and proof of handover.
- Build Relationships: The process works best with reliable counterparts both at the shipment origin and at the port.
Conclusion
FAS, or Free Alongside Ship, is a useful Incoterm for shipments where the buyer wants control over high-sea transportation logistics. It’s especially handy for export of bulk, outsized, or uniquely handled cargo from the seller’s country. Both the buyer and seller must clearly understand where the transfer of costs and risk occurs, coordinate carefully, and include every important detail in their agreement.
When used correctly, FAS helps streamline international deals, clarifies who’s responsible for what, and can save costs. But make sure you choose it for the right cargo and scenario—always considering the buyer’s ability to manage post-handover logistics.
Frequently Asked Questions (FAQs)
What is the main difference between FAS and FOB?
FAS requires the seller to place goods alongside (next to) the ship at the agreed port; the buyer becomes responsible for loading them onto the ship and all costs/risks from there. In FOB, the seller must load the goods onto the ship, after which the risk transfers.
Is FAS suitable for containerized shipments?
No, FAS is not designed for container shipments. In container shipping, goods are typically delivered to a terminal, not directly alongside a vessel, making terms like FCA more appropriate.
Who pays for export customs clearance under FAS?
The seller is responsible for export customs clearance and related formalities. The buyer is responsible for import customs duties and procedures in the destination country.
At what point does risk pass from seller to buyer?
Risk passes as soon as the seller has delivered the goods alongside the vessel at the named port, before they’re loaded onto the ship.
Can FAS be used for air or land shipments?
No, FAS is strictly for sea and inland waterway transport. For other methods (air, road, rail), Incoterms like FCA are more suitable.
By understanding and carefully applying FAS, you can make your international shipping smoother and more predictable. If FAS aligns with your cargo type and partnership logistics, it’s a powerful Incoterm to have in your shipping toolkit.
