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What is Free Carrier (FCA Incoterms)?

What are the obligations for sellers and buyers in Free Carrier?

Key changes in FCA Incoterms 2020

What are the differences between Free Carrier and Ex Works?

Other Incoterms alternatives to consider

How ShipBob helps with shipping logistics and ecommerce fulfillment 

Free Carrier (FCA) FAQs

When shipping goods, especially internationally, sometimes a seller is primarily responsible for the pre-carriage shipping and export requirements.

This shipping practice is known as “Free Carrier” and it involves a set of different rules known as Incoterms®: essential terms of trade for the sale of goods.

FCA is used more so for international shipments, and it works for different modes of transport including LCL (less than container load), FCL (full container load), and air when shipping freight.

Incoterms were most recently revised in 2020, laying the groundwork for shipping goods FCA with a Bill of Lading with on-board notation.

This article discusses the different FCA Incoterms rules, when they apply, and the benefits and disadvantages of FCA.

FCA Incoterm, or “Free Carrier (FCA),” is a trade agreement that identifies a seller of goods as responsible for their delivery to an end destination, or “Named Place,” specified by the buyer. “Free” alludes to the seller’s obligation (or the buyer’s lack of obligation) to manage the transfer of goods to the named place.

As per the FCA shipping terms, the seller can choose the location if the buyer doesn’t offer a location.

Everyone talks about the importance of getting your shipping logistics right. 

And the key to doing so is ensuring that the different obligations of both sellers and buyers are carefully outlined and enforced.

Here is a table that compares the obligations of the buyers and sellers as per the Free Carrier terms:

To understand this better, let’s look at a hypothetical scenario.

A US-based seller Trent ships orders to a UK-based buyer Bryan.

As per FCA, Bryan must commission a carrier and freight forwarder to transport the goods and Trent must arrange for pre-carriage from his warehouse to a named place, such as a terminal or transport hub, or forwarder’s warehouse. 

The moment the shipper receives the goods at the named place, the liability for the goods transfers to Bryan. 

Note: Export formalities are undertaken by the seller at the port of export, while import formalities are taken care of by the buyer at the destination port. 

It’s best to use FCA in the case of international shipping, in which the buyer takes complete responsibility for the main carriage of the goods. 

It also works out well to use FCA when shipping containerized goods. Containerized refers to the practice of carrying goods in containers of the same shape and size for shipping

Additionally, lots of sellers who would like to avoid the struggles of managing a large chunk of shipping logistics prefer this option.

Incoterms are a collection of shipping terms that appear on shipment contracts.

These rules are used to decide the time and place of delivery and when the ownership of the goods changes, plus the cost and risk of shipping transfers from the seller to the buyer. 

These terms are upgraded every 10 years with the last update in 2020.

As per the Incoterms 2020, the 11 types of commercial terms set by the International Chamber of Commerce (ICC) are:

In the Incoterms 2020, it was established that the buyer can instruct the carrier (in the sales contract) to issue a bill of lading (BOL) to the seller after the goods have been loaded onto the international carrier.

This BOL is required by the seller to prove that the cargo was loaded and satisfies the terms of a letter of credit.

Pre-2020, the buyer would hire the carrier, which meant that the carrier has no obligations to the seller. This spelled trouble for the seller that needs a BOL, from the carrier, to get paid.

For the FCA, the biggest change in Incoterms 2020 (as compared to Incoterms 2010), is that the buyer can request the carrier to give the seller an onboard BOL.

The trade term Ex Works (EXW) is a shipping rule that states the seller only needs to ensure that goods are available and sent to their warehouses or place of business.

From there, the buyer is expected to pick up shipments and manage the rest of the freight.

It is different from FCA, which is more balanced when it comes to the division of risk and cost between seller and buyer.

FCA is considered a better option than EXW since it does not put the buyer in a difficult position of arranging local transport and dealing with customs at the seller’s location.

Some of the other major differences between the two is outlined below:

Apart from FCA, there are multiple other Incoterms that can aid in avoiding miscommunication between sellers and buyers.

Here are some of the popular ones:

FOB refers to when goods are being transported only by sea or inland waterway. 

The cargo is the responsibility of the seller until it is loaded onto the vessel and cleared for export from the predetermined port. At this point, the transfer of risk happens with the title deed also switching to the buyer.

FOB is the best Incoterm for sellers who sell goods in bulk and don’t containerize their cargo.

EXW is when the seller has to take responsibility for the shipment, aside from ensuring the goods are available, packed, and delivered to a specified location. 

This means that the buyer needs to manage the loading of goods onto the carrier, manage export procedures, and any onward transport. All costs incurred after the goods are dropped off by the seller are the buyer’s responsibility.

This is an Incoterm commonly used during domestic trade for different (or multiple) types of transport.

It’s difficult to implement in international trade because it’s difficult for the buyer to manage the loading and export formalities in a different country. And in case the seller helps with the loading, as a favor, it will still be at the buyer’s risk. 

Similar to FOB, with CIF the seller is responsible for the cost and management of insurance for the goods until it reaches the named port (pre-carriage). 

And the rule expects the seller to only secure the shipment with a minimum insurance cover. Buyers who want to better safeguard their shipments from risks will need to specifically mention the required coverage amount in the commercial agreement.

It is only used for shipments via sea or inland waterways.

With DDP shipping, the seller assumes a large chunk of the risk, cost, and responsibility. 

This includes arranging for the carriage, delivering goods at the named place, and ensuring that it is cleared for import. All applicable taxes and duties (e.g. VAT, GST) are paid by the seller. 

DDP the opposite of FAC in terms of the volume of the seller’s responsibilities.

The risk transfers to the buyer only when the goods reach the buyer and are ready to unload from the incoming mode of transport.

This can be used in case of shipments that are sent via any (or many) means of transport.

Navigating the complexities of Free Carrier (FCA) Incoterms can be challenging. FCA terms require a nuanced understanding of logistical responsibilities, especially when it comes to ensuring compliance and maximizing efficiency in global trade operations. 

ShipBob offers a comprehensive suite of solutions tailored to meet the diverse needs of modern ecommerce brands. 

With everything from a global network of fulfillment centers to advanced technology for seamless order processing, ShipBob empowers businesses to achieve compliance with FCA terms while enhancing operational efficiency and customer satisfaction. 

Below, we explore various ShipBob offerings that can transform your fulfillment strategy, ensuring that your operations are not only FCA-compliant but also positioned for scalable growth and success.

ShipBob has a global network of over 50 fulfillment centers across the US, Canada, the UK, the EU, and Australia. Our network of dozens of facilities allows you to place inventory closest to your customers’ end destination, reducing time in transit, and shipping costs, and minimizing cross-border taxes and duties (when applicable).

“If I’m completely honest, though, the deciding factor that sold us on ShipBob was price. International fulfillment can be incredibly expensive, but ShipBob was cheaper than our old provider.

Their New Jersey-based facility in the Eastern region of the US is also more strategically located than our old provider’s warehouse, so it was cheaper to ship inventory to.”

Additionally, ShipBob offers a Delivered Duty Paid (DDP) solution to help provide a seamless international shipping experience. Without DDP, consumers in many countries face surprise fees, long delivery times and delays at customs. ShipBob’s DDP solution eliminates these post-purchase issues for a more streamlined approach to international fulfillment, while reducing customer service inquiries.

“We definitely saw advantages in the number of ShipBob’s international locations and the various features associated with being a global company. We have DDP shipping enabled for all of our international orders – that’s currently one of our favorite features.

We now have peace of mind that we can actually get things sent and delivered worldwide without having to worry about duties. People will reach out and say “Wow, that’s already done?” And we tell them, “Yep, it’s done.”

No matter which location(s) you choose to store inventory in, you get access to real-time inventory, fulfillment, and shipping data using ShipBob’s fulfillment platform.

No matter which platforms your customers are shopping on, ShipBob can help you meet them there. ShipBob’s B2B fulfillment and omnichannel fulfillment capabilities help you delight your customers and retail partners. Brands can use ShipBob EDI connection to automate B2B fulfillment to over 100 retailers.

ShipBob automates the entire process of receiving and processing orders and getting them to the fulfillment queue soon after orders are placed on any of your sales channels. 

“Logistics is something you never think about until it stops working, and we’ve never come to that point with ShipBob. Everything just works. We are super happy with ShipBob and very impressed by how well they’ve pumped out our large volume of orders.”

The only time you get a 100% open rate is at unboxing. With ShipBob’s Customization Suite, you can make a greater impression and encourage customers to make repeat purchases.

With premium gift notes, customizable marketing inserts, kitting, branded packaging, and more, you can enhance customer satisfaction and boost customer loyalty.

If you fulfill orders from your own warehouse, you need a powerful warehouse management system (WMS) to help you effectively manage inventory orders and create streamlined warehouse operations. Brands can leverage ShipBob’s proprietary WMS in their own facility to boost productivity, improve accuracy, and grow their brand.

“ShipBob WMS is so valuable to our business.  The savings we were able to realize in shipping costs alone makes using ShipBob WMS a no-brainer.  When you add in the inventory management aspect and global fulfillment center network, ShipBob WMS has allowed us to grow our sales in a way that we couldn’t before.”Tom Wall, Vice President of Global Warehousing & Logistics at Beachwaver Co.

Learn how Bunker Branding uses ShipBob WMS in their own facility.

Ready to build a long-term and profitable ecommerce business without dealing with the hassle of logistics?

Speak to the experts at ShipBob and see how you can improve profits, save time, and serve more customers across the US and abroad.

Below are answers to the most common questions about the free carrier arrangement.

Yes! Free Carrier, or FCA, can be used for all modes of transport, including LCL (less than container load), FCL (full container load), and air.

The main carriage part of the FCA freight is paid for by the buyer. Everything pre-carrier is handled by the seller.

FCA can be collect or prepaid, depending on the seller-buyer agreement. Typically, FCA is collect and the buyer pays for delivery to the final destination.

This trade term signifies an agreement between the buyer and seller. As per FCA Incoterms, the seller is responsible for delivering the order to a location specified by the buyer. Once the goods are received by the carrier, it becomes the buyer’s responsibility.

Yes, FCA can be used for any mode of transport from air to land and sea freight.