When it comes to international trade, businesses must understand the international trade terms (Incoterms) agreed upon by the exporting and importing parties. One of the Incoterms is Free Alongside Ship (FAS). This Incoterm is used primarily for water transport, such as shipping by sea or river. The term indicates that the seller must place the goods alongside the ship at the port of departure specified in the sales contract.
What are Incoterms?
Incoterms is the short form for International Commercial Terms. These are terms used by the business community and cargo transport operators in the sale and the subsequent transport of goods by land, sea, or air.
The Incoterms are updated and published by the International Chamber of Commerce (ICC) once every 10 years. They help make communication between the different parties to trade and transport easy and unambiguous. Incoterms are accepted universally by trading communities, transporters, government bodies, etc.
The current version that is used is the Incoterms 2020. It has 7 rules that cover all the modes of transport and 4 that are specific to the transport of cargo over water. These Incoterms rules are as follows:
- EXW – Ex Works (showing the place of delivery)
- FCA – Free Carrier (showing the place of delivery)
- CPT – Carriage Paid to (showing destination)
- CIP – Carriage and Insurance Paid To (showing destination)
- DAP – Delivered at Place (showing destination); replaces Delivered Duty Unpaid or DDU.
- DPU – Delivered at Place Unloaded (showing destination); replaces Delivery at Terminal or DAT.
- DDP – Delivered Duty Paid (showing destination)
The Incoterms that are specific to water transport are the following:
- FAS – Free Alongside Ship (port of loading has to be mentioned)
- FOB – Free on Board (port of loading to be mentioned)
- CFR – Cost and Freight (show port of discharge)
- CIF – Cost Insurance and Freight (port of discharge to be shown)
What is the FAS (Free Alongside Ship) Incoterm?
The FAS term is used when the buyer has contracted with a separate carrier to transport the goods to its destination. It requires the seller to deliver the goods to a port of departure, but the seller is not responsible for the transportation costs or any additional risk of loss or damage during shipment. The seller bears the costs associated with loading the goods onto the vessel, and the buyer is responsible for all other costs and risks associated with the shipment.
The FAS term is usually used when the buyer has the necessary infrastructure to move the goods from the port of departure to its destination, as the seller is not responsible for any additional costs or risks associated with the shipment. This term also implies that the seller is responsible for all export customs formalities, including the payment of export duties and taxes.
The FAS Incoterm is not suitable for the transportation of goods that require special handling or require special packing. This is because the seller is not responsible for loading the goods onto the vessel and it is the buyer’s responsibility to ensure that the goods are properly and safely loaded.
The FAS term is also not suitable for goods that require special handling or require special packing. This is because the seller is not responsible for loading the goods onto the vessel and it is the buyer’s responsibility to ensure that the goods are properly and safely loaded. Additionally, if the buyer requires the seller to bear the cost of packing and marking the goods, then the CIF, or Cost, Insurance and Freight, Incoterm should be used instead.
The FAS term is also not suitable if the goods need to be shipped to a specified destination. If the buyer requires that the goods be shipped to a specific port, then the FOB, or Free On Board, Incoterm should be used instead.
The FAS Incoterm is suitable for goods that require minimal handling and for goods that can be easily loaded onto the vessel. This term is also suitable for goods that do not require special packing and for goods that can be shipped to the port of departure without requiring special handling.
Botton Line
The FAS Incoterm is a suitable choice for buyers who have the necessary infrastructure to move the goods from the port of departure to its destination, as the seller is not responsible for any additional costs or risks associated with the shipment. This term also implies that the seller is responsible for all export customs formalities, including the payment of export duties and taxes. However, the FAS term is not suitable for goods that require special handling or require special packing, or if the buyer requires the goods to be shipped to a specific destination. In such cases, the CIF or FOB Incoterms should be used instead.
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Tags: Incoterms, International
