Everything You Need to Know about “Free Alongside Ship” Incoterm Agreement
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What does FAS Mean in Incoterms?
FAS or Free Alongside Ship is an Incoterm definition that dates back to the days of sail shipping. In an FAS agreement, the seller is responsible for leaving goods alongside the ship, at which time the buyer assumes all ongoing costs, risks and logistics. FAS is rarely used these days, only used for sea freight and inland waterway shipments.
On January 1st, 2020, the International Commerce Center published what is currently the most up to date International Commercial Trade Terms, Incoterms 2020. Commentary from the individuals responsible for writing these terms considered removing FAS from the list of 11 Incoterms; however, they ended up keeping it as this Incoterm is viable for very specific forms of trade.
In most instances, FAS is still used when purchasing large pieces of machinery, which would be loaded onto a barge and shipped further along a canal in order for the cargo to be placed alongside another vessel, where the buyer’s take over the shipping process.
One of the requirements in a FAS agreement is that the seller must place the cargo alongside the buyer’s ship and cannot leave the shipment at a port, waiting for the vessel to arrive. This can be considered a benefit to the buyer, especially when the cargo they are purchasing under FAS is often heavy and cumbersome; it ensures that the seller and the appointed vessel are present when transferred.
FAS requires buyers to handle all freight charges, including loading and unloading. Because of this, they are strongly advised to find a China 3rd party logistics company or China freight forwarder capable of assisting with their shipment.
What are the Seller’s Responsibilities?
The following responsibilities are placed on the seller when trading under FAS Incoterms.
- Export Packaging: The seller must package the cargo so it can be shipped.
- Loading Charges: The seller is responsible for any necessary loading costs to load the cargo onto the first carrier.
- Delivery to Port/Place: Transportation to the port or place of origin are charges that fall on the seller.
- Export Duty, Taxes & Customs Clearance: In the event, the cargo is being exported, any costs associated are the responsibility of the seller.
- Origin Terminal Handling Charges: Known as OTHC, these fees are also the responsibility of the seller.
What are the Buyers Responsibilities?
Once the seller has fulfilled their above responsibilities, the buyer must fulfill the following requirements to conclude their part of the sale:
- Loading on Carriage: Any charges associated with loading the freight onto the buyer’s elected carriage is the buyer’s responsibility.
- Freight Charges: The buyer shall cover all freight charges.
- Insurance: China Freight insurance is not a requirement for the buyer. However, it is their responsibility to determine if it is a service they would like to include.
- Destination Terminal Handling Charges: The buyer shall cover all DTHC once the cargo arrives at the destination port.
- Delivery to Destination: Once the cargo arrives are port, the buyer’s responsibilities continue; they must cover all costs associated with the final delivery.
- Unloading at Destination: Unloading fees are also the responsibility of the buyer.
- Import Duty, Taxes & Customs Clearance: In the event, this cargo shipped under the FAS Incoterm is imported into the country, the buyer is responsible for all import costs. Buyers are always recommended to elect a customs broker to assist with importing their freight.
If you are shipping products from China and considering FAS among other Incoterms, it’s usually best to contact a qualified China freight forwarder like Guided Imports. We can seamlessly help you meet your obligations under an FAS agreement. Best of all, we offer a best rate guarantee.