When it comes to shipping, understanding the terms you’re dealing with is super important, especially when discussing responsibilities and risks. FOB (Free on Board) and FCA (Free Carrier) are two standard shipping terms. Let’s break them down in simple terms and see how they’re used in real-world situations.
What is FOB (Free on Board)?
FOB is a shipping term that’s mostly used for sea freight. It’s all about who’s responsible for the goods and when the risk transfers from the seller to the buyer.
* Responsibility: The seller is responsible for the goods until loaded onto the shipping vessel. Once the goods are on board, the risk shifts to the buyer.
* Risk: Once the goods are on the ship, the buyer takes the risk if something happens, like damage during transport.
* Cost: The seller pays to get the goods to the port and onto the ship. The buyer pays from that point forward.
Example: Imagine you’re importing electronics from China to Malaysia. If you agree to FOB, the seller in China will get your goods to the ship. After that, you must handle the rest—shipping, insurance, and any risks during the ocean voyage.
What is FCA (Free Carrier)?
FCA can be used for any mode of transportation (road, air, sea, rail), not just sea freight. It means that the seller delivers the goods to a specific place (often a warehouse or carrier hub), and the buyer takes responsibility from there.
* Responsibility: The seller’s obligation ends when they deliver the goods to the carrier or another named location.
* Risk: The risk passes to the buyer once the seller hands over the goods to the carrier at the agreed place.
* Cost: The seller covers the costs until the goods reach the named place, and then the buyer takes over the costs from there.
Example: If you’re buying furniture from Germany and choose FCA, the seller will deliver the furniture to the warehouse or shipping company (the carrier) that you’ve selected. From that point, it’s your job to handle everything, including insurance and shipping.
Critical Differences Between FOB and FCA
- Transportation Mode:
* FOB is mostly for sea or inland waterway transport.
* FCA can be used for any transport—sea, road, rail, or air.
- Where Responsibility Passes:
* FOB: The risk transfers when the goods are loaded on the ship.
* FCA: The risk transfers when the goods are delivered to the carrier or specified location.
- Who Pays for What?:
* FOB: The seller pays to get the goods to the port and onto the ship.
* FCA: The seller pays to get the goods to the specified location (a warehouse or carrier terminal).
Quick Recap
* FOB (Free on Board) is used mainly for sea shipping. The seller gets the goods onto the ship, and the buyer takes over.
* FCA (Free Carrier) can be used for all types of transport. The seller delivers to the carrier or agreed location, and the buyer takes over from there.
@ansarcomp Replying to @myzainimyatim In international trade, understanding the terms FOB and FCA is very important. FOB places the seller’s responsibility up to the point where the goods are on the vessel at the port of shipment. In contrast, FCA transfers responsibility to the buyer once the goods are delivered to the carrier or nominated person at the agreed location. Understanding these terms helps in planning and managing logistics more effectively. #incoterms #FOB #FCA #freeonboard #freecarrier #logistics #shipment #ansarcomp