Published by the ICC in the edition of incoterms 2020, FAS stands for ‘Free Alongside Ship’, wherein the place/port of destination plays a major role.
In FAS, the seller has well-defined instructions for the course of transportation till the port of destination and the buyer seizes responsibility for loading the goods -- and all charges -- after the goods reach the nominated port.
In practice, the FAS incoterm is restricted to sea and inland water transit, fairly suitable for bulk and non-containerized cargoes. However, for containerized goods, FCA is a more conducive term.
FAS Shipping Terms
- The seller is responsible for the delivery of goods till the location where the vessel is at, i.e., the designated port.
- Insurance proceedings are carried out by the buyer -- he may pay for the additional insurance during carriage of goods, i.e., insuring goods even during the seller's trade process.
- The risk of goods is transferred at the vessel location.
- The responsibility of loading of goods onto the vessel at the designated port is the responsibility of the buyer.
As the seller’s liability stays till the nominated port, he will be accountable for all the charges till the goods arrive there.
- Packaging charges: for labelling and marking the goods as per export standards
- Factory charges: for maintaining goods
- Loading charges: loading goods in the truck for inland transit
- Inland transportation charges: from the factory to the designated port
- Freight forwarding charges: charges to be paid to the freight forwarding agent
- Depot charges: for port duties
- Customs clearance charges: for export customs clearance and documentation procedures
Under FAS incoterm, the seller is responsible for the delivery of goods to the nominated vessel, so he will be liable for inland transit of goods from the warehouse till the vessel spot at the port.
Transfer of Risk
Risk of goods is moved from the seller to the buyer when the goods arrive next to the nominated vessel. Accordingly, the seller bears the damage responsibility of goods until the goods reach the agreed upon destination.
The seller has no obligation for getting insurance. Even if he does execute the insurance proceedings, it will be at the buyer's cost and risk, because the seller’s responsibility is only till the nominated vessel, after which all the charges are borne by the buyer.
Duty and customs clearance
Typically, the seller manages business only till the nominated vessel, but he is still liable for the export customs proceedings. All customs clearing documents will be prepared by the seller, which he will later hand over to the buyer at the nominated port. Also, he is not responsible for loading the goods on the vessel.
In FAS, the buyer is accountable for all business charges right after the goods are delivered by the seller at the nominated vessel location.
- Loading charges: loading goods on the nominated vessel
- Shipping charges: for carrying out the freight proceedings
- Insurance charges: as the damage risk of goods stays with him
- Customs charges: for carrying out import customs proceedings
- Duty charges: as the import duties and taxes will be carried out by him
- Local charges: at the port
- Inland transportation charges: from the importer's port to his ultimate destination
The buyer is responsible for the delivery of goods till the ultimate destination. He’ll load the goods at the designated port, after which the freight proceedings, import customs and inland transit till the final destination will be carried out by him.
Transfer of Risk
As the risk is transferred at the nominated vessel, the buyer will be chargeable for the risk factors till the place of destination. Also, if he fails to instruct the seller in accordance with the location/place of the vessel, he’ll be responsible for all the loss. The risk and damage factor of goods stays till the ultimate destination, as the buyer carries out the whole freight and transportation process after the designated port.
The buyer is responsible for the whole freight proceedings, so the insurance responsibility rests with him. The risk and damage of goods factor stays with him so he’ll be responsible if anything goes wrong in the process. He’ll have to carry ocean freight insurance/marine insurance, as the goods will be moved through sea and inland waterways.
Duty and customs clearance
The buyer has a duty to fulfil import customs proceedings. He’ll be liable for all the preceding documents, and he’ll have to acknowledge the proof of documents provided by the seller. All the import business and taxes will be delivered by the buyer. He remains accountable for all the local and terminal charges at the port.
Difference Between FAS and FOB
Also read: FOB (Free on Board) Incoterms | Meaning, Shipping Terms & More
FAQs on FAS Incoterms
What is FAS shipping?
FAS shipping is a part of the FAS trade transaction, which in the process is carried out by the buyer.
Who pays freight on FAS?
In FAS, since the responsibility transfers from seller to buyer at the port where the vessel is located, the freight is to be paid by the buyer.
What is FAS value?
FAS value is the price charged by the seller to the buyer in a trade transaction conducted as per FAS. All charges and payment terms involved in the trade proceeding are considered for calculating FAS price.
Who is responsible for customs under FAS?
In FAS both the parties have to contribute for customs clearance, taking care of clearance procedure in their respective countries. The exporter settles for export customs and arrangements for all essential documents and the buyer has to look after the import customs and has to approve the proof of documents provided by the seller.