FCA
Also known as: Free Carrier
FCA, Free Carrier, means the seller delivers the goods, export-cleared, to a carrier nominated by the buyer. The risk passes as soon as the goods have been handed over there.
Who arranges what under FCA?
The seller delivers the goods to the carrier or at the place the buyer has named, and files the export declaration. If delivery is at the seller's premises, they also load. If it is elsewhere, unloading is for the buyer. If something goes wrong during that handover, it is the seller's risk. The buyer concludes the contract of carriage for the main transport and bears the costs and the risk from the handover point. They also handle the import formalities in the country of destination, including duties and VAT. If the buyer chooses a carrier that does not switch the reefer on, the loss is theirs, even if the seller loaded correctly. FCA also lets the seller or the buyer carry the goods on their own vehicle, instead of contracting a third party. That was spelled out in the rule for the first time in Incoterms 2020. For shippers with their own fleet, that is the difference between a term that fits and a term that requires a carrier who is not there.
Where does the risk pass under FCA?
At the moment of handover to the carrier at the named place. Naming that place as precisely as possible matters, because FCA Rotterdam and FCA Rotterdam ECT Delta put the risk at different points. Days can sit between those two points, with terminal costs and damage that then land with the wrong party. The new FCA in Incoterms 2020 has an extra arrangement: the buyer can instruct their carrier to issue an on-board bill of lading so the seller can collect under a documentary credit. That used to be a reason to choose FOB anyway, while FOB puts the risk point too late for containers. A fault in the export documents stays with the seller, even if the goods have physically long been handed over. If the shipment is held at the border because the export declaration is wrong, that is not the buyer's transport risk but a formality the seller has not yet fulfilled.
Why is FCA suitable for containers?
With container traffic the seller loses actual control when the container is handed in at the terminal or depot, not only when it is on board. FCA lets the risk pass where it actually passes. That is the depot, the terminal or the buyer's truck, depending on the named place. FOB puts that point at on-board, while the container may already have sat at the terminal for days. For that period the seller has risk but no influence. Damage in the stack, a missed cut-off or a terminal error then falls on them, without anything they can do about it. The ICC therefore recommends FCA for containers, air, road and rail. FOB, FAS, CFR and CIF are meant for cargo that really changes hands at the quay: bulk and project cargo. Anyone putting FOB on a container bill of lading because the bank asks for it can, since 2020, obtain the same documents under FCA through the on-board bill of lading arrangement.
What does FCA mean for the customs value?
As with EXW, the FCA price contains no main carriage. Freight and insurance to the EU external border must be added on import, and the intra-EU part may be deducted if it can be shown separately. The add-back is smaller than under EXW, because loading and pre-carriage to the carrier are already in the price. On export FCA is straightforward: the seller files the declaration and therefore holds the exit confirmation themselves. That message is the proof with which they support the VAT zero rate, and it is exactly what they do not automatically hold under EXW. Open export declarations therefore sit on the seller's monitor, not the buyer's. On the import declaration the named place is the place of delivery in the country of export. An FCA shipment from Shanghai therefore carries a place outside the EU, and the declarant adds freight and insurance to the EU border. If the place on the invoice and the declaration do not match, the build-up of the value cannot be followed.
Which place do you name under FCA?
FCA has two situations with different consequences. If the named place is at the seller, they load and the risk passes once the goods are on the buyer's means of transport. If the place is elsewhere, for example a terminal or a depot, they deliver loaded and ready for unloading and unloading is for the buyer. That is why FCA followed only by a city is not enough. FCA Rotterdam ECT Delta fixes the handover point, FCA Rotterdam does not. For containers that precision matters extra, because the container is often handed in days before departure and the question of who bears the risk in that period otherwise stays open. Also name the edition: FCA [place] (Incoterms 2020). The on-board bill of lading arrangement has only existed since 2020. A contract that only says FCA leaves that option out and pushes parties using a letter of credit back to FOB, with the wrong risk point for containers as a result.
How does FCA appear on the import declaration?
On the import declaration you enter FCA as the delivery term, with the named place of delivery in the country of export. Customs reads from that that the invoice price stops at the carrier in the export country, and that freight and insurance to the EU external border still have to be added. The invoice, the transport document and the declaration must carry the same place. If the invoice says FCA warehouse Gouda and the carrier books from Rotterdam, the Gouda-Rotterdam pre-carriage is a cost that belongs in the customs value, even if it sits on a separate invoice. Forget that, and the declared value is too low. On export from the EU, FCA is the term under which the seller files the declaration themselves. The MRN of the export declaration and later the exit confirmation belong in their file. Without that message they cannot support the VAT zero rate, even if the shipment physically left long ago.
Which documents and pitfalls belong with FCA?
The seller supplies the commercial invoice, the packing list, the export declaration and, if delivery is at their premises, proof of loading. The buyer has the contract of carriage, the freight invoice and later the import documents. Under a letter of credit the on-board bill of lading is added, but only if the parties have expressly agreed that. The first pitfall is a place that is too vague. FCA Rotterdam leaves open whether handover is at the seller, at a depot or at the terminal, and therefore who loads and who bears the risk in between. The second is using FOB for containers because the bank wants a bill of lading, while FCA has offered that option since 2020. The third pitfall is an export declaration that does not add up. The risk has then already passed, but the shipment sits at the border and the seller still has to repair the formality. Check the declaration before the truck leaves, not only when the terminal calls to say the container may not leave the gate.