FAS Incoterm (Free Alongside Ship) – Use and Meaning

October 9, 2024

What is the FAS Incoterm (Free Alongside Ship)?

FAS Incoterm (Free Alongside Ship) is, in essence, an essential term in international shipping contracts. In this regard, it means the place where the seller is supposed to deliver the goods alongside the ship at the port of departure. After the goods have been so placed alongside the vessel, the buyer has to assume responsibility. Under the FAS definition in business, it means the seller pays for everything and bears all the risks until such time as the goods arrive at that spot.

The seller performs all the work up to delivering the goods near the ship, and the buyer then takes over responsibility from that point, including loading on the ship, paying for FAS shipping, and undertaking the risks in transport.

FAS is the general term applied to bulk cargo, such as grains or metals, where loading can be somewhat complicated. Once both buyer and seller understand Free Alongside Ship Incoterms, both parties will be able to make their roles and responsibilities clear, and the trade will proceed much more smoothly. It is for this reason that the FAS terms need to be explicitly stated in a contract so misunderstandings about shipment do not arise.

What Is FAS Incoterm Meaning?

FAS is the abbreviation for Free Alongside Ship, which is one of the most important Incoterms international trade terms that defines the role of buyers and sellers. According to the conditions of FAS terms Incoterms, the seller bears full costs and risks of delivering the goods alongside the ship at the port of departure, thus including transportation and export duties. The seller places the goods next to the ship, after which the buyer takes over in managing the loading, shipping costs, and any transit risks.

It is often used when speaking of bulk cargo, like grains or metals, which may be more tricky to load. Understanding FAS shipping would also make sense of both parties’ roles and responsibilities, thus smoothing transactions more internationally. Free Alongside Ship should be articulated in the contract for lots of potential misunderstandings.

What Does Fas Mean in Shipping Terms?

FAS shipment, or Free Alongside Ship shipping, is the method of shipment upon the FAS terms in international trade. It provides that the seller is obliged to bring the goods to a place located alongside the buyer’s ship at the port of departure. The seller enjoys all the costs and risks up to the above-mentioned point, which also includes the costs of shipping the merchandise to the port and export duties.

With the goods placed alongside the ship, the buyer then assumes the responsibility to load the goods on board the vessel, pays for shipping costs, and assumes the risk of loss or damage during shipment. Normally, this term is used when the bulk cargo is carried, such as grain or metal.

When should you choose FAS?

The FAS Incoterm is a good option in certain conditions. You may want to use FAS if you are bulk shipping cargo that might be hard to load, such as grains or metals. This could be a great option for you if you already have a trustworthy shipping partner that will take care of the loading on your behalf.

FAS is also advantageous when the purchasing party is in the same country where the shipping port is because it would be easier for them to handle matters of logistics. If you want to minimize risks and costs before the goods reach the ship, it allows the seller to take care of the expenses up to that point.

Also, in cases where one has the experience and resources to transport the goods after they are loaded, FAS puts control of shipping goods into your hands. Always consider your capabilities and the nature of the goods in making a decision on whether FAS is for your shipment or not.

Buyer Control Over Shipping:

The Free Alongside Ship Incoterm leaves room if the buyer wants to leave the shipping arrangements to their discretion. The buyers can select carriers, modes of transport, and routes according to preference.

Minimizing Transportation Costs:

Due to the fact that loading responsibility lies with the buyer, they are in a position to negotiate better shipping rates or opt for less expensive service and, therefore, minimize all transportation expenses.

Seller Facility Limitations:

The Free Alongside Ship terms allow the buyer to handle this aspect if the seller does not have facilities for loading onto vessels, such as docks or crane equipment, thereby maintaining smooth shipment.

Buyer Expertise in International Shipping:

In an international trade that involves buyers who are experienced, they would prefer to use Free Alongside Ship, being confident of handling the procedures for loading and associated risks.

Control Over Shipment Timing:

With Free Alongside Ship terms, the buyer can directly coordinate the timings of loading to ensure that loading falls within their shipping schedule and preferred timeline.

Before settling for either Free Alongside Ship or any other Incoterm, both parties are supposed to assess their responsibilities, capabilities, and roles. Their consultation with logistics or trade experts will be of immense help in making them understand which Incoterm will be best for the underlying transaction.

What are the Seller’s Responsibilities?

Depending on the type of Incoterm the transaction involves, there are a set of responsibilities by the seller. However, generally, the responsibilities of the seller may include:

Making sure the goods are in conformance with the contract specifications and applicable regulations Adequate packaging of the goods for transportation in light of the nature of the goods involved and the transport mode.

Making the arrangement to transport the goods to a location or point of delivery as defined by the Incoterm used. Export license or permits required to export the goods. Export customs formalities include preparation and submission of the export documentation. Providing any pre-shipment inspection certificates or other documents, as required, to the buyer.

Taking responsibility for goods and whatever risks involved in respect of the goods up to the point clearly stated in the Incoterm selected Notifying the buyer of any information that may be required to import the goods in good time, regarding details about shipment or whatever documents are presented
Cooperate with buyers and representative of buyers for smooth movement and delivery of items.

These may vary according to selected Incoterms, according to the terms of the contract, and particular agreements between buyer and seller. It is important that there be clarity and agreement on the responsibilities of a seller in a transaction to operate trade smoothly and efficiently.

What are the Buyers Responsibilities?

Once again, the buyer’s responsibilities in the international trade transaction depend upon what Incoterm is selected and under what terms of the contract. Therefore, general responsibilities of the buyer may include: To provide the seller with necessary information about the goods ordered or sold, including quantity, specifications, and other special requirements.

The buyer must pay for the price of the goods contracted by paying to the seller against the terms of payment agreed to in the contract. Making arrangements for the carriage of the goods from the point of delivery indicated in the Incoterm used to the final destination.
Paying for the cost of and carrying the risk for the main carriage of the goods, according to the chosen Incoterm.

Import customs clearance and formalities: clearing the goods through customs and paying duties and taxes, if any. Obtaining any licence or other authorisation needed for the importation of the goods.
Comply with any regulations or other requirements for the importation of the goods to the country of destination.

Provide the seller with documentation or information concerning the importation of the goods in a form that may be required by an official in an official form. Informs the seller in due time of any facts relevant for the exportation of the goods, including instructions and documents relating to shipment.
Checking commodities upon arrival that they are within the contract specifications and in acceptable condition.

Buyer responsibilities, like seller responsibilities, vary depending on a number of variables: Incoterm of choice, terms of the contract, and/or any special agreements between buyer and seller. Communication and understanding by the parties are the keys to successful fulfillment of the international trade transaction.

FSA Delivery Terms

The FAS delivery terms can be explained as Free Alongside Ship, in which both buyer and seller are responsible within an international shipping agreement. The delivery term means that the goods must be delivered to a spot right next to the ship at the port of departure; the seller is responsible for all costs and risks until the goods are alongside the ship.

From the time that goods are placed alongside the ship, responsibility shifts to the buyer. He becomes liable for loading goods on board the ship, the cost of shipping, and every risk of transit.

FAS usually applies to bulk cargo, such as grains or metals, for which loading may be cumbersome. Similarly, being aware of the delivery terms FAS will help both parties to know what exactly is expected of each party and avoids misunderstandings. In shipping, it has to be spelled out as to who does what and at what time so that the transaction goes on smoothly and the goods are delivered with success.

FAS and Other Incoterms

Free Alongside Ship is among the Incoterms widely used in global trade.

These terms detail the responsibilities of buyers and sellers regarding goods delivery.

Here’s a brief look at FAS and some other common Incoterms:

Delivered Ex Ship (DES), Delivered Ex Quay (DEQ), and Ex Works (EXW) are unique Incoterms, each outlining specific duties for buyers and sellers:

Delivered Ex Ship (DES):

Under DES, the seller bears all risks and costs until the goods arrive at the named destination port. Sellers have fulfilled their obligations when goods are available to the buyer on the arriving vessel. DES applies appropriately when sellers are responsible for transportation to the destination port but unloading may be left to buyers.

Delivered Ex Quay (DEQ):

DEQ requires the sellers to deliver the goods onto the quay in the destination port, undertaking risks and costs until the goods are unloaded. Buyers would then arrange subsequent transport, duty, and clearance beyond unloading. DEQ is in common usage for maritime transactions where the seller has to arrange delivery to the ports.

Ex Works (EXW):

EXW gives the seller minimum responsibility, as under this agreement, the seller is to provide the good at his premises or another named location. All risks and costs involving transportation and clearance remain with the buyers from that point. EXW is favored by the sellers because it reduces their obligations.

In short, DES, DEQ, and EXW denote different terms, each carrying specific implications for buyer and seller responsibilities. Knowledge of such terms becomes very crucial during successful international trade negotiations and agreements

Delivered Ex Ship, Delivered Ex Quay, and Ex Works

The obligations of FAS Incoterm (Free Alongside Ship) terminate the moment goods are placed alongside the ship at the named port of export.

In that regard, the seller has fulfilled their duties concerning the FAS terms.

By placing the goods along the ship, the costs and risks shift to the buyer.

Therefore, FAS responsibilities go up to when the goods are ready to be loaded on board the ship, while afterwards all other responsibilities regarding loading and transportation are with the buyer himself.

What is the difference between FOB and FAS?

FOB Incoterms stands for Free On Board, and FAS stands for Free Alongside Ship. Each has its own significance in international trade; however, there exist a number of differences between them.

The FOB requires that the seller deliver the goods onto the ship. To put it another way, the seller pays for everything and also bears all the risks at the time the goods are loaded onto the vessel. The moment the good is on board, the buyer takes over all responsibilities regarding shipment and risks involved.

Under FAS, however, the seller brings goods to a place at the side of the ship but not on it. The seller is responsible for all costs and risks up to the time when goods are alongside the ship. Beyond that point, the buyer assumes responsibility, including loading the goods on board the vessel and managing further shipping costs.

Basically, the major difference between Free Alongside Ship vs Free On Board is the responsibility transfer point. The time for the shift of FAS vs FOB is different, with FOB at the time of loading onto the ship, while FAS means when the shipment merchandise is moved next to the ship. The differences highlighted above can enable you to select the appropriate term depending on your needs in shipping.

Conclusion

It describes the obligation of both the seller and the buyer. The definition of FAS in business and Shipping incoterms , therefore, helps both parties to demarcate their responsibilities with clarity for smoother and clearer transactions. All costs and risks of loss will be taken over by the seller when the goods are placed alongside the ship but the buyer shall then be responsible for them.

This would especially be important to note in contracts for complex shipments, like bulk cargo, to avoid confusion and allow the process of shipping to be smooth. TopShipping Company can assist in taking care of these terms effectively by giving you the best advice and assistance. You may also arrange for your shipping and logistics more organized with the help of Freight Forwarders who have experience in the field.

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