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Highlights
- FAS means the seller delivers goods alongside a ship in the port of origin.
- The buyer assumes responsibility for export clearance under FAS.
- FAS is applicable only for ocean shipments, as risk transfers once goods reach the ship’s tackle.
Understanding Free Alongside Ship (FAS)
Free Alongside Ship (FAS) is one of the International Commercial Terms (Incoterms) established by the International Chamber of Commerce (ICC) to govern the transportation of goods in international trade. Under the FAS Incoterm, the seller's responsibility ends when the goods are delivered alongside a ship at a port in their home country. This term sets the stage for the buyer to assume greater responsibility once the goods are placed within reach of the vessel’s crane (also known as the ship’s tackle).
The seller's obligations under FAS are clear and include the transportation of goods to the agreed-upon port and ensuring that the goods are delivered alongside the ship. However, the seller is not responsible for any loading charges or risks once the goods are positioned next to the vessel. At this point, the risk transfers to the buyer.
A major point of consideration with FAS is its limitation to ocean freight. The transfer of risk occurs when the goods are placed alongside the ship, meaning this Incoterm is ill-suited for air, land, or multimodal transport. This also implies that under the FAS term, the seller does not bear the burden of securing export clearance for the goods; instead, the buyer must handle the export procedures. This is important to note because it can make the FAS Incoterm impractical for certain markets, such as U.S. exports, where the seller’s obligation to manage export clearance is generally more comprehensive.
Since FAS involves ocean transportation, it is mainly used for bulk cargo or goods that require large-scale shipping. The key benefit of using FAS is the clear demarcation of responsibility, where the buyer assumes the risks once the goods reach the ship's side. However, the buyer must then take on the responsibility for export clearance and any additional costs related to shipping the goods to the final destination.
In practical terms, FAS is not often favored for U.S. exports, as it places too much responsibility on the buyer, particularly for export clearance, which is typically the seller's responsibility in U.S. trade. Moreover, FAS is typically used for cargo that is too large or unwieldy for standard container shipping, making it suitable for goods like machinery or large quantities of bulk items that are loaded directly onto the vessel.
Conclusion
In summary, Free Alongside Ship (FAS) is a vital Incoterm for international maritime trade, specifically for situations where goods are delivered alongside a ship. While it offers a clear division of responsibility between seller and buyer, it is limited to ocean shipments and requires the buyer to take over the responsibility for export clearance. The application of FAS is often restricted due to its impracticality in certain regions like the U.S., and is typically best used for bulk or large shipments.
