Confused about how the Incoterm FAS actually works? You’re not alone. Whether you’re new to shipping or looking to avoid costly mistakes, understanding Free Alongside Ship (FAS) is crucial for smooth international trade.
This article will break down exactly what FAS means, why it matters for buyers and sellers, and the steps you need to take to use it correctly. Get clear answers, practical tips, and key insights—all in one quick read.
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Understanding Incoterms FAS: Free Alongside Ship Explained
When shipping goods internationally, understanding Incoterms is crucial. One of these terms, FAS (Free Alongside Ship), plays a key role in trade—especially for bulk cargo or non-containerized freight that leaves from seaports. But how does FAS work, and what are your responsibilities under this agreement? Here’s a comprehensive and easy-to-follow guide to Incoterms FAS.
What Is Incoterms FAS (Free Alongside Ship)?
FAS stands for “Free Alongside Ship.” Under this term, the seller delivers the goods by placing them alongside a vessel nominated by the buyer at a designated shipping port. The moment the goods are alongside the ship, risk and responsibility shift from seller to buyer.
In simple terms:
The seller gets your goods to the port and places them right next to the ship. After that, you—the buyer—handle everything else, including loading, shipping, insurance, and import responsibilities.
Who Should Use FAS?
- Best for bulk or break-bulk cargo: FAS is commonly used for commodities like grain, timber, or heavy machinery that are directly loaded onto ships.
- Sea or inland waterway transport only: FAS is not suitable for air, rail, or containerized maritime transport.
- Suitable when buyers control main carriage: If you want to choose your shipping line and handle export and import formalities after the port, FAS can work well.
Key Responsibilities Under FAS
Here’s a breakdown of who handles what:
Seller’s Responsibilities
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Packaging and preparation:
The seller prepares and packages goods according to contract terms. -
Customs clearance for export:
The seller handles all export customs formalities.
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Delivering goods alongside the ship:
The seller arranges and pays for transport to the port and delivers the goods alongside the vessel at the agreed time and place. -
Notifying the buyer:
The seller informs the buyer the goods are delivered and ready for loading.
Important: Once the goods are placed alongside the ship, the seller’s risk and responsibility end.
Buyer’s Responsibilities
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Loading goods onto the ship:
The buyer arranges and pays for the loading of the goods onto their nominated vessel. -
Main carriage and insurance:
The buyer arranges and pays for sea transport, insurance, and any additional charges afterwards.
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Import formalities and costs:
The buyer handles customs clearance, duties, and taxes at the destination port. -
All risk after delivery alongside the ship:
Any loss, theft, or damage to goods after they’re placed alongside the ship is the buyer’s responsibility.
Step-by-Step Process: How FAS Works
Let’s walk through a typical FAS shipment:
- Negotiation and Contract:
Both parties agree to an FAS deal, specifying the port and the vessel’s name. - Seller Prepares the Goods:
Packaging is done, and export customs are cleared. - Transport to Port:
The seller arranges transportation within their country to get the goods to the port. - Delivery Alongside Ship:
The goods are placed at the dock next to the vessel. The seller notifies the buyer of readiness. - Transfer of Risk:
From this point, the buyer is responsible for loss or damage. - Loading and Shipping:
The buyer organizes and pays for loading the goods onto their nominated ship. - International Freight:
The buyer pays for and manages transportation to the destination port. - Import Procedures:
The buyer handles customs clearance and delivers the goods to the final destination.
Benefits of Using FAS
- Clear Allocation of Risk:
Both seller and buyer know exactly when ownership and risk shift hands—once goods are alongside the ship.
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Buyer’s Shipping Flexibility:
Buyers can choose the shipping line and negotiate better freight rates directly. -
Cost Control for Buyers:
Buyers are in control of main-carriage costs and insurance, potentially leading to savings.
Potential Challenges With FAS
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Limited to Sea and Inland Waterway Transport:
FAS isn’t suitable for containerized shipping or modes like air and rail. For containers, FCA (Free Carrier) is better. -
Buyer Must Be Proactive:
Buyers must have a good understanding of shipping procedures at the port. Coordination with agents is essential. -
Risk Starts Early for Buyers:
Since buyers take on risk as soon as goods sit alongside the ship, any port delays or accidents during loading are the buyer’s responsibility. -
Potential for Delays and Misunderstandings:
Miscommunication about timing or port procedures can lead to storage costs or cargo missing the ship.
Practical Tips and Best Practices
Follow these tips to ensure a successful FAS shipment:
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Specify the Dock Location:
Clearly state in the contract the specific wharf, pier, or section where goods will be delivered. -
Arrange for Timely Vessel Arrival:
Synchronize schedules so goods do not sit unprotected. Delays could result in storage fees or increased risk. -
Hire Local Port Agents:
Use experienced local agents to manage loading and help prevent misunderstandings at the terminal. -
Obtain Proper Documentation Early:
Ensure both sides have all clearance documents and proof of delivery alongside ship before the handover.
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Insurance Advice:
As the buyer, consider obtaining insurance that covers the entire period from when goods are delivered alongside the ship. -
Regular Communication:
Keep open lines of communication between seller, buyer, and port staff to handle potential issues quickly.
Cost Considerations and Tips
Because responsibilities and costs shift at the port, controlling expenses is a big part of using FAS wisely:
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Seller’s Costs End Early:
The seller pays up until delivery at the port alongside the ship, including internal transport and export customs fees. -
Buyer’s Costs Begin at the Port:
The buyer handles costs for loading, ocean freight, insurance, handling, and all import formalities. -
Negotiate Port Charges:
Clarify which party pays which port fees—some may be billed for port entry, handling, safety, or storage. -
Understanding Risk of Damage:
Damage or loss during the loading process is the buyer’s responsibility. Consider this when budgeting for insurance. -
Get Accurate Quotes:
If you’re the buyer, request quotes from your shipping and insurance providers for loading and sea transport costs to avoid surprises.
When to Choose FAS Over Other Incoterms?
You might pick FAS if:
- The goods are break-bulk and not containerized.
- The buyer wants control of main carriage and insurance.
- The port of shipment allows for easy delivery alongside the ship.
- You’re shipping large equipment, heavy machinery, or commodities.
FAS is not advisable if you are new to international trade or unfamiliar with port procedures at the country of export.
Comparison: FAS vs. Similar Incoterms
It’s easy to confuse FAS with other terms like FOB (Free On Board) or FCA (Free Carrier). Here’s how they differ:
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FAS:
Seller delivers goods alongside the vessel. Buyer loads and ships. -
FOB (Free On Board):
Seller’s risk continues until goods are actually loaded onto the ship. -
FCA (Free Carrier):
Seller delivers goods to a carrier or another party nominated by the buyer, at a specified location—often used for multimodal transport or containers.
Remember:
– Use FAS only for traditional sea or inland waterway bulk shipping.
– Use FCA for containers or if you need multimodal flexibility.
Summary
FAS (Free Alongside Ship) is a straightforward Incoterm used primarily for sea and inland waterway transport of non-containerized cargo. Under FAS, the seller delivers goods alongside the buyer’s ship at the agreed port. The buyer is responsible for loading, shipping, insurance, and all subsequent risks and costs.
FAS offers control and flexibility to buyers, but it also places an early risk and responsibility shift on them. Careful planning, clear contracts, and solid communication with port agents and shipping providers are critical for a smooth transaction.
Frequently Asked Questions (FAQs)
What type of goods is FAS best suited for?
FAS is best for non-containerized cargo, such as grain, coal, timber, and heavy machinery. It is not suitable for containerized shipments or air/rail transport.
Who pays for loading the goods onto the ship under FAS?
The buyer is responsible for paying and arranging for the goods to be loaded onto the vessel, as well as all costs beyond that point.
What is the main difference between FAS and FOB?
With FAS, the seller’s responsibility ends when the goods are alongside the ship at the port. With FOB, the seller’s responsibility ends only when goods are actually loaded onto the ship.
Can FAS be used for air or rail shipments?
No. FAS is exclusively for sea or inland waterway transport. For air or rail shipping, consider terms like FCA.
Who arranges insurance under FAS Incoterms?
The buyer is responsible for insurance from the point the goods are delivered alongside the ship. The seller does not need to provide insurance after that handover.
With this knowledge, you are now better prepared to determine if FAS is the right Incoterm for your next international shipment. Always pay close attention to your agreement details and maintain good communication with all parties for a successful transaction.
