Ever wondered what “how free along ship” means when buying or selling goods overseas? If you’re venturing into international trade, understanding shipping terms can make all the difference in avoiding confusion—and unexpected costs.
This question is key for anyone involved in global commerce. Getting it right helps protect your time, money, and peace of mind.
In this article, we’ll break down “how free along ship” and walk you through its meaning, implications, and useful tips to ensure a smoother shipping experience.
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Understanding “Free Alongside Ship” (FAS): A Comprehensive Guide
What Does “Free Alongside Ship” (FAS) Mean?
“Free Alongside Ship” (FAS) is one of the key Incoterms® (International Commercial Terms) used in global trade contracts. When a sale is made under FAS terms, the seller fulfills their obligation by delivering the goods alongside the vessel nominated by the buyer at the specified port of shipment. In simple terms, once the goods are placed next to the ship—on the dock or barge—the risk and responsibility for those goods transfer from the seller to the buyer.
This shipping term is particularly common when transporting bulk cargo, heavy machinery, or other large items that are difficult or impractical to containerize.
Step-by-Step: How FAS Works in International Trade
Let’s walk through what happens under a typical Free Alongside Ship arrangement:
- Contract Agreement
- Buyer and seller agree that the shipment will be executed under FAS Incoterms®.
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The named port of shipment is specified in the contract.
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Seller’s Responsibilities
- Packing, labeling, and preparing goods for export.
- Transporting goods to the named port.
- Clearing the goods for export (completing customs formalities and providing necessary documentation).
- Delivering goods alongside the vessel—on the designated quay (dock) or barge—at the port.
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Informing the buyer that goods are ready for loading.
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Buyer’s Responsibilities
- Selecting the vessel and reserving shipping space.
- Paying for and managing loading of goods onto the vessel.
- Assuming all risks and costs from the moment goods are placed alongside the ship.
- Handling import formalities and paying relevant duties at the destination.
Key Points and Aspects of FAS
When is FAS Best Used?
- For large, non-containerized cargo such as machinery, vehicles, and bulky raw materials.
- Where the buyer has strong shipping arrangements or prefers to control freight from the port of origin.
- For shipments departing via sea or inland waterway only (FAS is not suitable for air or land-only shipments).
Seller’s and Buyer’s Obligations in Detail
Seller’s Responsibilities
- Prepare and package goods for export.
- Arrange (and pay for) inland transport to the exporting port.
- Complete export customs clearance and cover related charges.
- Deliver goods, with all documentation, alongside the buyer’s nominated vessel by the agreed date.
Buyer’s Responsibilities
- Take on risk and cost the moment the goods are placed alongside the ship.
- Arrange and pay for loading, ocean/inland waterway freight, insurance from the port, and all onward transport and duties.
- Handle all import-related documentation and costs at the destination.
What’s NOT Included in FAS?
- Seller does not pay for loading the goods onto the vessel or for the main carriage (sea freight).
- Seller does not arrange for insurance after goods are alongside the ship.
Benefits of Using FAS in International Shipping
For Sellers
- Defined Point of Responsibility: Once goods are alongside the ship, the seller’s risk and cost end.
- Limited Exposure: No need to worry about vessel delays, port congestion, or ocean freight charges.
- Focus on Domestic Logistics: Seller only needs to manage export arrangements up to the quay.
For Buyers
- Control Over Main Carriage: Buyer selects the vessel, negotiates freight rates, and manages loading.
- Flexibility: Buyer can leverage established relationships with freight carriers.
- Potential Cost Savings: If the buyer can negotiate better shipping or insurance deals, they benefit directly.
Challenges and Risks with FAS
Like any shipping arrangement, FAS comes with challenges:
For Sellers
- Port Coordination: Seller must ensure goods are delivered to the correct place, on time, near the vessel.
- Export Documentation: Seller must handle complex export clearance and paperwork.
For Buyers
- Greater Risk Responsibility: Once the goods are alongside the vessel, the buyer is responsible for loss or damage.
- Port Handling Costs: Buyer pays for loading, which can vary significantly.
- Need for Local Arrangements: Buyer needs good knowledge of export ports and their handling procedures.
Important: FAS is not suitable for containerized shipments. For those, Free on Board (FOB) is the preferred Incoterm, as containers are usually delivered to a terminal rather than alongside a ship.
Practical Tips and Best Practices for Using FAS
For Sellers
- Communicate Clearly: Always advise the buyer when the goods will be ready and confirm exact location and timing at the port.
- Document Everything: Keep thorough records of delivery, including times, places, and witnesses.
- Understand Export Rules: Be proactive about local export customs requirements to avoid last-minute surprises.
For Buyers
- Be Ready: Arrange the vessel and be prepared for unexpected delays or changes in port handling schedules.
- Understand Port Fees: Clarify with the port authority or shipping agents who is responsible for what fees and services.
- Purchase Insurance Promptly: Cover goods as soon as the risk passes from the seller to ensure smooth claims if something goes wrong.
Cost Tips for FAS Shipping
- Inland Transport Optimization: Sellers can save costs by using efficient domestic carriers to the port.
- Compare Stevedoring Charges: Buyers should check handling fees at different ports, as some ports are far more expensive than others.
- Negotiate with Carriers: Both parties can benefit from understanding local terminal conditions and negotiating charges.
- Clear Exports Efficiently: Delays in customs clearance can result in costly storage charges at the port. Plan export procedures carefully.
- Monitor Exchange Rates: If costs are quoted in foreign currency, lock in rates early to avoid fluctuations impacting your bottom line.
FAS in Context: Comparing FAS with Other Incoterms
FAS vs. FOB (Free On Board)
- Main Difference: Under FOB, the seller is responsible for delivering goods onboard the vessel, not just alongside it. This means the seller pays for loading.
- When to Use: Use FAS when shipping bulk cargo not suited for containers; use FOB for containerized shipments.
FAS vs. EXW (Ex Works)
- EXW: Seller’s responsibility ends when goods are made available at their premises.
- FAS: Seller must transport the goods to the port and clear them for export.
- Risk Transfer: FAS offers buyers less risk than EXW, as the seller deals with some domestic logistics and export processes.
FAS vs. CIF (Cost, Insurance, Freight)
- CIF: The seller pays for ocean freight and insurance up to the port of destination.
- FAS: The seller’s responsibility ends before loading; buyer takes over most costs.
Common Scenarios: When Should You Choose FAS?
- When you are exporting loose cargo that needs to be delivered directly beside the vessel, such as timber, steel, or vehicles.
- When the buyer has a preferred shipping line or wants to handle loading and freight negotiations.
- If the buyer operates their own shipping schedule or consolidates cargo from multiple suppliers at port.
Potential Pitfalls and How to Avoid Them
- Misunderstanding ‘Alongside’: Be precise about where ‘alongside’ means at the specific port. Is it a quay, a barge, or a storage area?
- Delays at Port: Factor in possible congestion, especially in busy ports, and communicate regularly between buyer and seller.
- Incomplete Documentation: Both parties should clarify documentation obligations in the contract itself to avoid later disputes.
- Split Responsibility: Since risk shifts before loading, buyers should ensure freight forwarders and insurers are aware of the exact timing and location of risk transfer.
Summary: Should You Use FAS in Your Next Shipment?
FAS provides a clear and practical method of dividing responsibilities and risks in certain types of maritime trade. It’s ideal when the buyer is ready and able to take over from the port, for cargoes that are not containerized, and when both parties have experienced logistics teams. For containerized or more complex shipments, however, consider other Incoterms that may offer greater coverage and clarity.
Frequently Asked Questions (FAQs)
What kind of goods are best shipped under FAS?
FAS is best suited for bulk cargoes, heavy equipment, vehicles, or goods that are loaded directly onto ships or barges—essentially, non-containerized goods that need to be delivered right alongside the vessel at the port.
Who is responsible for insurance under FAS?
Under FAS, the buyer bears the risk once the goods are placed alongside the ship, so it’s the buyer’s responsibility to arrange insurance from that point onward. The seller is not required to insure the goods once they are delivered to the quay.
When does risk transfer from seller to buyer in FAS contracts?
Risk transfers as soon as the goods are placed alongside the ship at the named port of shipment. From that moment, the buyer assumes all responsibility and risk, including handling, loading, and transport.
Can FAS be used for containerized cargo?
No. FAS is not appropriate for containerized shipments. Containers are typically delivered to a terminal, not directly alongside a ship. Use the FOB (Free On Board) Incoterm for containerized goods.
Do FAS terms include any responsibilities for import clearance or destination port charges?
No. Once the goods are delivered alongside the vessel at the port of shipment, all further responsibilities—for shipping, import clearance, and destination charges—belong to the buyer.
By understanding how FAS works, you can make smarter choices in your international contracts, ensuring clarity and fairness in dividing costs and risks between exporter and importer. Always communicate clearly and detail every step and role in your contracts to prevent confusion and disputes.
