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Why Use FCA Incoterms for Shipments


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The Optimal Choice for International Shipments: **FCA (Free Carrier)**

For containerized cargo, FCA provides the optimal cost and risk allocation, but it requires the seller to export the goods for clearance.

Why is FCA the Best Incoterm for Importers?

If you are a buyer acquiring items from a foreign producer and shipping them abroad, FCA (Free Carrier) is likely the best incoterm for your shipment.

  • FCA, FOB, and EXW are commonly used by Incoterms (per Incoterms 2010) for international shipments.
  • FCA stands out as the preferred choice for importers.

Why FCA Over FOB?

FOB is inappropriate for container shipments due to specific challenges:

  • FOB agreements require the seller to deliver items on board the ocean vessel.
  • The majority of cargo is delivered in containers, complicating FOB agreements.
  • Under FOB, the issue of buyer or seller accountability can lead to disputes and costs for the buyer if cargo is damaged in transit to a CY or CFS.

The incoterm FCA, introduced by the ICC (International Chamber of Commerce) after the 2010 modification, addresses the challenges of contemporary shipping.

Additional Provision in Incoterms 2020 for FCA

Incoterms® 2020 introduced a provision to address certain issues with FCA:

  • Parties can agree that the buyer must instruct the carrier to issue a transport document at the buyer's cost and risk.
  • The seller is then required to provide the buyer with a copy of the transaction document.

FCA vs. EXW: Why FCA is Favored

What makes FCA more favored than EXW?

  • Under FCA, the seller is responsible for export clearance and loading of goods (if the buyer picks them up at the seller's location).
  • EXW terms require the buyer to export-clear their goods, which can be expensive and time-consuming.
  • EXW places the responsibility on the customer for loading items onto their transportation, even if the seller is in a superior position to do so.

The final decision on cost and risk lies with the buyer and the seller, and it must be determined before the shipment process begins.

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