Incoterm – Free Alongside Ship (FAS)
Free Alongside Ship (FAS) is an Incoterms 2020 term in which the seller is obligated for export-related custom clearance and the delivery of goods alongside the vessel specified by the buyer at the origin port. All costs and risks associated with the goods are still on the seller’s side until the point of delivery. It’s important to note that FAS exclusively applies to ocean or inland waterway ports.
FAS is commonly chosen for out-of-gauge (OOG) cargo, which includes items exceeding standard container dimensions, such as boats or tractors. Furthermore, FAS can only be used for ocean cargo, with loading costs into the vessel falling under the seller’s responsibility.
Given the limited time available at the pier, precise timing and location are paramount in FAS agreements. This term finds frequent use in situations involving the transfer of liquids where ships must deploy hoses, for instance, in transporting chemicals.
When using the FAS term, it is advisable to specify the exact location within the port, especially in larger ports with multiple zones. This term is commonly used to sell bulk commodities like grains or oil. In cases of containerized cargo, it’s typical to deliver the goods at the carrier’s container yard or terminal, where the FCA term aligns more appropriately.
Choosing Free Alongside Ship
- If the chosen port is convenient for both parties and ensures efficiency.
- If the buyer is experienced in shipping and seeks to negotiate better shipping rates and reduce expenses.
- If the shipment contains heavy or bulky goods that require specialized handling needs.
- If the buyer seeks control over the loading process.
Understanding the Responsibilities
Seller’s Responsibilities: Under the FAS Incoterms, the seller’s primary responsibility is to manage the export procedure and make the goods available alongside the ship at the port nominated by the buyer.
Packaging
The seller must prepare the goods according to different origin's export packaging standards.
Duties, Taxes, and Custom Clearances
The seller is responsible for the export procedure, including the documentation preparation, expenses, and other examination processes.
Delivery Charges
The seller is responsible for transporting goods to the agreed export location, including the fees involved in the process.
Terminal Charges
The seller is responsible for handling fees that occurred at the origin terminal.
Buyer’s Responsibilities: After the seller has completed the obligations mentioned above, it is incumbent upon the buyer to meet the following criteria to finalize their role in the transaction:
Duties, Taxes, and Custom Clearances
The buyer is responsible for the import procedure, including the documentation preparation, expenses, and other examination processes.
Loading and Unloading Charges
The buyer must cover charges for cargo loading at the origin collection point and unloading at the destination from the final carrier.
Terminal Charges
The buyer is responsible for expenses occurred at destination terminals.
Carriage Charges
The buyer is responsible for covering all freight costs, specifically from the port of origin to the destination.
Transportation Charges
The buyer is accountable for the transportation charges from the point of the destination port to the final stop.
Insurance
While not obligatory, the buyer may opt to secure insurance for the shipment to protect against potential damages.
Pros and Cons for Buyers
Flexibility
FAS allows for flexibility in choosing the port of shipment, giving both parties the option to select a convenient location for the transaction.
Cost Effective
The buyer is obligated to load the goods onto the vessel, therefore is a cost saving method as the buyer can negotiate better rates with the shipping company and have more control over the loading process.
Enhanced Control
FAS can be a good choice for buyers who want to have a higher level of control over the whole shipment process. With FAS, the buyer can negotiate their own shipping rates and control the loading process. This is especially relevant for buyers with experience in international shipping.
Limited Transportation Modes
FAS terms are only suitable for sea and inland waterway transports. FAS would not be a good solution if your shipment requires faster shipping speed by using air freight.
Restricted Shipment Type
FAS does not apply to containerized shipments. If the buyer prefers the containerized shipments to be delivered only to a terminal, FCA would be recommended instead.
Extra Risk and Burden
FAS burdens the buyer significantly, as the seller's responsibility ends once the goods are placed alongside the ship. This means the buyer must handle all costs and risks from that point forward, including loading, transportation, and insurance. Consequently, there is a heightened risk for the buyer, as they are responsible for the goods during the loading process, and any potential damage or loss becomes their responsibility.
Seeking assistance from a 3rd party logistics or freight forwarder when dealing with FAS terms can better ensure smooth export processes and minimize risks.
Contact Us
Do you have questions about Incoterms or need assistance with your logistics needs? Our experts are here to provide guidance and support!
