Created by the International Chamber of Commerce, Incoterms are a series of three-letter designations that define responsibilities between buyers and sellers around the sale of goods, specifically related to transportation costs and liability. If you’re looking for more information on Incoterms, check out our other articles on this topic:
The Complete Guide to All 11 of the 2010 Incoterms Rules
Incoterms 2020 Rules: Everything You Need to Know
Protect Your Bottom Line by Understanding These 5 Common Incoterms
Incoterms® offer buyers and sellers of goods a quick and easy way to communicate who will be responsible for what transportation costs. By understanding your Incoterms, you’ll be able to negotiate any contract like a seasoned pro.
In this article, we’ll walk you through the FAS Incoterm.
What Does FAS Mean?
FAS stands for Free Alongside Ship. It’s one of four Incoterms that applies only to transportation via sea and inland waterway. (FOB, CFR, and CIF are the other three.)
Under the FAS Incoterm, the seller is responsible for all the costs associated with getting goods to port and ready to load aboard a sailing vessel. In other words, to the buyer, the goods are “free” alongside the ship, hence the name of this Incoterm.
In addition to the seller’s costs ending alongside the ship, the same is true for the risk. The seller assumes responsibility for the goods until they’re accepted at the named port and ready to load.
After that point, the buyer is responsible for the goods and their transport costs. The buyer must pay for the goods to get loaded on the vessel and to be transported to the final destination. If the buyer wants to insure the goods, that cost will be on them.
What Is the Seller Responsible for Under the FAS Incoterm?
When selling goods under a contract that specifies the FAS Incoterm, a seller is responsible for all of the costs up until (and not including!) the loading of the goods on the ship. In other words, packing and loading the goods for transport to the named port, carriage to the port, any export clearance or customs fees, and the unloading at the port—everything up until the goods are alongside the ship, ready to be loaded—are all arranged by and paid for by the seller.
What Is the Buyer Responsible for Under the FAS Incoterm?
The buyer is responsible for the actual loading of the goods on the vessel, as well as any other charges needed to move the goods to their final destination. This includes costs related to ocean freight, unloading at the destination port, and transporting the goods to their final destination.
Incoterms Insights: FAS
As we mentioned, FAS is one of four Incoterms that only applies to shipments that involve sea and inland waterway transport. Make sure it applies to your shipment before suggesting its use in your contract.
FAS doesn’t define which party will pay for insurance. The buyer takes responsibility for the shipment from the time it’s loaded onto the ship. For this reason, buyers may want to consider marine cargo insurance to protect against losses as the shipment travels to its final destination. A freight forwarder can help with the decision around what kind of coverage to secure.
A forwarder can also be a key resource in simplifying shipments purchased under the FAS Incoterms rule. With one phone call, a forwarder can arrange for ocean freight and final delivery, as well as connect you with resources if your shipment gets held up in customs.
If you’re considering a contract that specifies the FAS Incoterm, talk to one of our experts. If you’re the buyer in this scenario, our team can help you estimate your costs and arrange for delivery to your final destination.
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