The FCA (Free Carrier) rule is arguably the most versatile and essential Incoterm for modern logistics. It’s suitable for all modes of transport (road, rail, air, and sea) and is the International Chamber of Commerce (ICC)’s preferred term for containerized cargo.
At Topshipping, we utilize the clarity of FCA to ensure a seamless handoff between the seller’s local transport and your global freight needs, preventing costly delays and confusion.
What is FCA Incoterms? A Core Definition
The FCA Incoterm (Free Carrier) requires the seller to deliver the goods to a carrier or another party nominated by the buyer at a named place of delivery (which must be precisely specified in the sales contract).
Once the goods are delivered to the nominated party at that location, the seller has fulfilled their obligation.
The Critical Moment: Risk and Cost Transfer
Under FCA, the transfer of risk and cost from the seller to the buyer occurs at the named place of delivery.
- Before Delivery: The seller bears all risks and costs to get the goods to the named place.
- After Delivery: The buyer assumes all risks and costs associated with the main carriage, insurance, and the import process.
This rule is part of the broader Incoterms framework, which clarifies tasks, costs, and risks in global sales contracts.
How FCA Shipping Works in Practice
The execution of FCA is highly dependent on the location chosen as the Named Place of Delivery. This choice dictates who is responsible for loading the goods.
| Scenario | Named Place of Delivery | Seller’s Loading Obligation | Delivery Completion |
| Option 1 (Seller’s Site) | Seller’s Premises (Factory, Warehouse) | The Seller is responsible for loading the goods onto the buyer’s collecting vehicle. | Delivery is completed when the goods are loaded. |
| Option 2 (Other Location) | Another Named Location (Freight Terminal, Carrier’s Warehouse) | The Seller is NOT responsible for unloading from their own truck, nor loading onto the main carrier’s vehicle. | Delivery is completed when the goods are placed at the disposal of the carrier, ready for unloading. |
FCA Responsibilities: Clear Obligations for Seller and Buyer
FCA is categorized as a “Group F” Incoterm, meaning the seller only handles the initial carriage and export formalities, while the buyer takes charge of the main carriage.
Seller’s Obligations
- Export Packing & Marking: Securely packaging and marking the goods for international transit.
- Delivery: Transporting the goods to the exact named place of delivery.
- Loading: Loading the goods if delivery is made at the seller’s premises.
- Export Customs Clearance: Obtaining all export licenses, security clearance, and handling all formalities and duties required to export the goods from the country of origin.
- Proof of Delivery: Providing the necessary transport document to the buyer (e.g., electronic receipt or truck manifest).
Buyer’s Obligations
- Contracting Carriage: Arranging and paying for the main international transport from the named place.
- Risk Assumption: Assuming all risk of loss or damage from the moment of delivery.
- Main Carriage Costs: Paying all freight charges from the named place to the final destination.
- Insurance: The buyer is strongly advised to arrange cargo insurance from the moment of risk transfer, although FCA does not mandate it.
- Import Formalities: Handling all customs clearance, duties, taxes, and fees required to import the goods in the destination country.
- Carrier Notification: Notifying the seller of the carrier’s name, the delivery time, and the mode of transport.
Key Considerations for FCA & Trade Finance
Effective documentation is vital under FCA, particularly when trade involves a Letter of Credit (LC).
The Bill of Lading Dilemma
One challenge for the seller when using an LC is the need for an “On-Board” Bill of Lading to receive payment. Since the FCA seller does not contract the main carrier, they often cannot obtain this document.
The Incoterms 2020 rule introduced a solution:
- Buyer’s Obligation (If Agreed): If stipulated in the sales contract, the buyer must instruct their carrier to issue an ’On-Board’ Bill of Lading to the seller, confirming the goods have been loaded onto the vessel for main carriage.
- Note: This obligation is conditional and can only be requested by the buyer; the seller cannot force the carrier to comply.
FCA Compared: Why FCA is Often Superior
Choosing the correct Incoterm is a strategic decision that affects cost control and liability. Understanding the subtle yet critical differences between FCA and similar Incoterms is vital for contract precision.
FCA vs. FOB (Free On Board)
Both FCA and FOB are extremely popular terms, but their application is fundamentally different. The ICC strongly advises against using FOB for modern containerized cargo, as it is strictly a maritime-only term. FCA offers flexibility and a more realistic point of risk transfer for multimodal and container transport.
| Aspect | FCA (Free Carrier) | FOB (Free On Board) |
| Mode of Transport | All modes (Multimodal, Air, Road, Sea). | Sea and Inland Waterway only. |
| Risk Transfer Point | At the Named Place of Delivery (factory, terminal, airport). | When goods are loaded over the ship’s rail at the Named Port of Shipment. |
| Seller’s Loading | Seller loads only if delivery is at their premises. | Seller is always responsible for loading the goods onto the vessel. |
| Best For | Containerized cargo and LCL shipments (the recommendation). | Bulk cargo, non-containerized goods. |
FCA vs. EXW (Ex Works)
EXW (Ex Works) represents the absolute minimum obligation for the seller, transferring almost all risk and responsibility to the buyer at the seller’s doorstep. In contrast, FCA places the crucial task of Export Customs Clearance and necessary loading onto the seller, making it a much safer and more practical choice for the foreign buyer in international trade.
| Aspect | FCA (Free Carrier) | EXW (Ex Works) |
| Seller’s Responsibility | Medium. Seller handles local carriage, loading (at premises), and Export Clearance. | Minimum. Seller only makes goods available at their premises. |
| Export Clearance | Seller is responsible. This is safer and more efficient for the seller’s compliance. | Buyer is responsible. This is highly discouraged by the for international trade as foreign buyers struggle with local export formalities. |
| Buyer’s Benefits | Gets control of main transport after the seller handles complex export paperwork. | Minimal initial product cost, but must manage everything from the factory floor. |
The Topshipping Advantage with FCA Agreements
FCA is a term built for partnership. It requires precise coordination between the seller (export) and the buyer’s nominated carrier (main carriage).
When you choose Topshipping as your nominated carrier under an FCA agreement, you benefit from:
- Seamless Handoff Management: We coordinate directly with your seller’s team, managing collection schedules and ensuring a smooth transition of risk at the Named Place of Delivery.
- Global Freight Expertise: Once the goods are in our custody, we execute the main carriage using optimized routes, managing all subsequent logistics and documentation.
- End-to-End Visibility: We provide transparent tracking and immediate alerts from the moment the risk is transferred to us (on your behalf) until the final delivery at your warehouse.
Ready to leverage the flexibility and control of FCA? Contact our logistics experts today to refine your shipping strategy.
Frequently Asked Questions
Who is responsible for insurance under FCA terms?
Neither the buyer nor the seller is obligated by the FCA Incoterm to procure insurance. However, since the risk transfers to the buyer at the named place of delivery, the buyer is strongly advised to purchase cargo insurance that covers the goods from that point onward through the main carriage.
Can FCA be used for LCL (Less than Container Load) shipments?
Yes. FCA is the ICC-recommended term for containerized cargo, including both FCL (Full Container Load) and LCL shipments, as it is designed for delivery to a terminal or a carrier’s facility before the main carriage begins.
Who is responsible for loading the truck at the named place of delivery?
This depends entirely on the named place:
- If the named place is the seller’s premises: The seller is responsible for loading.
- If the named place is a terminal/port: The seller only makes the goods available, and the buyer (via their carrier) is responsible for any necessary unloading/re-loading fees.
