Incoterms 2010: What is Incoterm FCA Free Carrier?

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Incoterm 2010 FCA Free Carriage
Picture by Vanveen JF

Overview

The Incoterms 2010 FCA means Free Carrier.

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Ask An Expert

Discussion on Incoterms 2010 FCA with renowned global trade expert Murdo Beaton and Abdul Mann, creator of the cloud based export solution EdgeCTP.

Geoff:

Today we’ll be discussing FCA, including how and when to use it. So Murdo, what is Free Carrier – FCA?

Murdo:

The Incoterm FCA, Free Carrier. This term is interpreted as meaning the exporter has an obligation to deliver the goods to a carrier nominated by the buyer. Now the buyer will nominate the carrier on the basis that in this case the buyer has made the decision that they are going to be responsible for the actual physical logistic of the goods, i.e. the delivery. Or it could be that the exporter has determined that they want to have control over the goods up to the point where they are declared to our own customs authorities at the time of export. So here, what happens is that the exporter is responsible for declaring these goods to their own customs authorities at the time of export. This would then certainly allow the exporter to be wholly compliant with the obligations that he is obliged to meet in terms of their own regulatory requirements, such as provision of export licences. Under FCA there is absolutely no arguing, the exporter this time has to secure the export licence if it is required in terms of the goods in question and the country of destination to which they’re going. The FCA as a term certainly does allow the exporter to perform the duties that are required of him in terms of export licences and such, should they actually be relevant. The buyer would be in a position where he knows that the goods would be delivered to a carrier of their choice and again the buyer here would be controlling the physical logistics.

Abdul:

So what you’re saying if I can roll back a little bit Murdo, when we were discussing ExWorks for example, that was at the factory gates of the seller i.e. the exporter. Now we’ve moved with FCA, further on down the logistics chain and it’s actually being delivered at the exit, the country leaving point and having passed all the customs requirements for exporting goods. Is that what you’re saying?

Murdo:

The term says Free Carrier; it doesn’t say free exit point. So what the term actually means is that the exporter is obliged to deliver the goods to the carrier appointed by the buyer at the location where it is deemed that the carrier will take delivery of the goods. At that point where the carrier has nominated the delivery point where he wishes the exporter to deliver the goods to, at that stage the exporter’s vehicle will arrive at the carrier’s premises and will await the unloading of the goods from his vehicle by the carrier. The exporter is not obliged to unload the vehicle; the carrier appointed by the buyer is obliged to unload the vehicle. When we talk in terms of what constitutes unloading, as far as Incoterms are concerned, that is constituted in the activity of lifting the goods from the vehicle where upon they lose contact with the platform of the vehicle. They need not necessarily have been landed on the ground. All that is required for delivery to have been executed is for them to lose contact with the platform of the delivering vehicle.

Abdul:

So I’m an exporter and between myself and the buyer we’ve chosen FCA. The buyer says great, we’re going to go with FCA and the reasons for that we’ll come to in a moment but we choose that one and I’m going to deliver that to the logistics carriers point. That could be an airport, a sea port, or even the depot of the logistics company. When my lorry turns up there my lorry driver basically goes and takes a comfort break right, because he’s not responsible for offloading the goods to the carrier? The carrier has to bring their fork lift trucks etc, pick the stuff up off my vehicle and as soon as it leaves contact with my vehicle it’s in the air and their responsibility?

Murdo:

I wouldn’t be as adventurous to suggest that the driver of the vehicle should take a comfort break because the driver is responsible for the vehicle. At that moment in time the driver is acting through his employee as an agent on behalf of the exporter and should always be available to identify anything that might be done that is to the disadvantage of the exporter. By that I mean the driver should be present when the goods are being unloaded so as to determine that nothing untoward has taken place, because again that very same driver has to secure information from the carrier to whom they are delivering the goods, that the goods have been received in good order and condition.

Abdul:

Umm, but the obligation to get the necessary documentation as we saw in ExWorks still remains.

Murdo:

Any documentation that the exporter is obliged under the contract to obtain or secure in order to assist the physical logistic process of the goods, yes of course the exporter has to secure these. Also amongst that documentation set will undoubtedly be documents that the buyer requires for the clearance of the goods when they enter the country of destination.

Abdul:

I’ve got a curve ball for you Murdo. What if I agreed with the buyer to go with FCA but the delivery point of my goods to the logistics company happens to be outside of the UK? It happens to be outside of the EU for instance. I’m sending the goods from the EU or from the UK to Brazil and they say, well deliver it in Morocco and our logistics company will take it onward to Brazil from there. Could that be one of the stipulations within FCA?

Murdo:

Well, the interpretation of the delivery activity that you described could be considered as FCA but Incoterms have taken note of that and are aware of these situations and there are other terms within the Incoterm profile that would be more suitable for what you described rather than FCA. Terms would say this is FCA based in a foreign country and one such term that could be considered as such is DAP which we’ll be covering later. One would say this is FCA, but it’s FCA in a foreign country.

Abdul:

Yes of course, OK.

Geoff:

I hope you enjoyed this audio. If you’d like more information on international trade go to www.edgedocs.com. All material in this audio is copyrighted and all reproduction rights reserved by Morgan Goodwin Ltd, thank you.

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