What are FAS conditions?

I. WHAT ARE FAS CONDITIONS?

 

FAS (an abbreviation for "Free Alongside Ship") is a term in international trade that specifies the obligations, costs, and corresponding risks related to the delivery of goods from the seller to the buyer according to the Incoterms standards published by the International Chamber of Commerce (ICC).

 

Under the FAS terms, delivery alongside a ship means that the goods are delivered to the buyer when they are placed alongside the designated ship specified by the buyer (for example, on the quay or a barge) at the named port of shipment. The risk of loss or damage to the goods transfers to the buyer when the goods are alongside the ship, and the buyer bears all costs and risks from this moment onwards.

 

FAS is to be used only for sea or inland waterway transport where the delivery of goods is made by placing the goods alongside a vessel. Thus, the FAS rule is not appropriate where goods are handed over to the carrier before they are placed alongside the vessel, for example where goods are handed over to a carrier at a container terminal. Where this is the case, the parties should consider using FCA rather than FAS.

The expression of FAS conditions on foreign trade contracts:

 

FAS [designated port of shipment] Incoterm^® 2020

 

For instance, the delivery location designated by the Buyer is at the port of Tiên Sa, Đà Nẵng, with an address at 01 Yet Kieu, Tho Quang, Son Tra, Da Nang. The FCA clause of this international trade contract would be expressed as follows: FAS 01 Yet Kieu, Tho Quang, Son Tra, Da Nang, Vietnam Incoterms 2020.

 

II. INSTRUCTIONS FOR USE

 

Mode of transport

 

This condition will be used for sea and inland waterway transport when the goods are delivered by placing them alongside the designated vessel. FAS will not be suitable when the goods are delivered to the carrier before being placed alongside the vessel, for example, when the goods are containerized and usually delivered at the port terminal. In such cases, the FCA condition should be used.

 

2. Transfer of goods and risks

 

Delivery alongside a ship means that the goods are delivered to the buyer when they are placed alongside the designated ship specified by the buyer (for example, on the quay or a barge) at the named port of shipment. The risk of loss or damage to the goods transfers to the buyer when the goods are alongside the ship, and the buyer bears all costs and risks from this moment onwards.

 

The seller shall either deliver the goods alongside the vessel or buy back the goods that have been delivered in this way. The term "buy back" here applies to the practice of selling goods multiple times during the transportation process (selling goods in a chain), which is common in the trade of raw materials.

 

No matter where the delivery takes place, the place of delivery will always be the point at which the risk is transferred to the buyer, and from that moment on, all costs will be borne by the buyer.

 

3. Determine the specific delivery location

 

The parties should specify the loading location at the designated delivery port where the goods will be transferred by a loading bridge or crane onto the carrier vessel, and all costs and risks associated with delivering the goods there will be borne by the seller. These costs and types of expenses may vary depending on the customs of each port.

 

4. Export/Import customs clearance obligations

 

The FAS condition requires the seller to carry out export customs clearance for the goods if necessary. However, the seller is not obliged to carry out import customs clearance or transit customs clearance in third countries through which the goods must pass, nor to pay import taxes or import customs clearance costs.

 

5. Delivery location under FAS

 

The FAS condition is only suitable when the delivery to the carrier is performed directly alongside the vessel at the loading port. The goods are considered "alongside the vessel" when they are placed:

 

- on the quay or on any other transport vehicle at the quay, if the vessel can dock at the quay, or

 

- on a barge or another vessel that can be brought alongside the vessel (board and board) as instructed by the buyer, whether the vessel is anchored at the quay or not.

 

In any case, the goods must be delivered at the point alongside the vessel where the port crane, ship crane, or any other stevedore can load the goods onto the vessel.

 

If the goods are transported by road or rail to the quayside at the loading port, they will be delivered on a truck or a railcar and ready to be unloaded onto the vessel. Some argue that using FCA delivery at the quay is also suitable. However, FAS is more appropriate than FCA because the mode of transport for the goods is actually by sea or inland waterway transport.

 

For oversized and overweight cargo (sometimes referred to as "project cargo"), such as large structures in the oil and gas industry, mining equipment, and power plants, special requirements are needed in transportation and delivery. If the seller does not want to take responsibility for the risks during the loading process onto the vessel, they should choose FAS instead of FOB. Regardless of whether FAS or FOB is used, the buyer and seller need to use the services of logistics companies specializing in these "project cargo" types. If delivery is made at a location other than the port, FCA is more appropriate. In this case, the carrier represents the buyer to receive the cargo and is responsible for it. The carrier may not necessarily be a sea carrier but can be a road, rail, air, multi-modal, or simply a local forwarder in the seller's country.

 

III. OBLIGATIONS OF BUYER AND SELLER UNDER FAS CONDITIONS

 

1. The Seller's obligations

 

A1. Seller's general obligations

 

The seller must provide goods and a commercial invoice conforming to the contract of sale and any other evidence of conformity that may be required by the contract.

 

Any documents to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement as is customary.

 

A2. Delivery

 

The seller must deliver the goods by placing them at alongside the vessel designated by the buyer at the loading point (if any), at the named port of shipment or by procuring the goods so delivered. In both cases, the seller must deliver the goods on the date or within the agreed-upon period in the manner customary at the port.

 

If no specific loading point has been indicated by the buyer, the seller may select the point within the named port of shipment that best suits its purpose. If the parties agree to deliver the goods within a specific period, the buyer may select the day of delivery within that period and must give notice to the seller according to B10.

 

A3. Transfer of Risk

 

The seller bears all risks of loss or damage to the goods until they have been delivered in accordance with A2, with the exception for loss or damage in the circumstances described in B3.

 

A4. Carriage

 

The seller has no obligation to the buyer regarding the entering of a contract of carriage.

 

However, the seller must provide the buyer at the buyer’s requests, with risks and costs borne by the buyer, or support the buyer to obtain any required information and documents, including security information for export or carriage to destination.

 

The seller may or may not agree to help the buyer, in case the seller agrees, it must contract for carriage on the usual term at the buyer's risk and cost. With that type of goods, all risks and costs will be borne by the buyer.

 

A5. Insurance

 

The seller had no obligation to the buyer regarding the entering of a contract of insurance. However the seller must provide the buyer at the buyer’s request, risk and cost, with information the buyer needs for obtaining insurance.

 

A6. Delivery/transport documents

 

The seller must provide the buyer, at the seller’s cost with the usual proof that the goods have been delivered in accordance with A2.

 

Unless such proof is a transport document, the seller must provide assistance to the buyer at the buyer’s requests, risk and cost, in obtaining the transport document.

 

A7. Export/Import Clearance

 

a) Export Clearance

Where applicable, the seller must carry out and pay all export clearances formalities required by the country of export, such as:

 

Export licenses;

 

Security clearance for export;

 

Pre shipment inspection; and

 

and any other official authorization.

 

b) Assistance with import clearance

Where applicable, the seller shall assist the buyer, at the buyer's request, risk and cost, in obtaining any documents and/or information relating to all transit/import clearances, including security requirements and pre-shipment inspection, needed by any transit or country of import.

 

A8. Checking/packaging/marking

 

The seller must pay the costs of those checking operations (such as checking the quality, measuring, weighing and counting) that are necessary for the purpose of delivering the goods in accordance with A2.

 

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged.

 

The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

 

A9. Allocation of costs

 

The seller must pay:

 

 a) All costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;

 

b) The costs of providing the usual proof to the buyer under A6 that the goods have been delivered;

 

c) Where applicable, duties, taxes and any other costs related to export clearance under A7 and

 

d) The buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).

 

A10. Notice to Buyer

 

The Seller must give a buyer sufficient notice either that the good has been believed in accordance with A2 or that the vessel has failed to take delivery of the goods within time agreed.

 

2. The buyer’s obligations

 

B1. Buyer's General Obligations

 

The buyer must pay price of the goods as provided in the contract of sale.

 

Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as it is customary.

 

B2. Taking delivery

 

The buyer must take delivery of the goods when they have been delivered under A2

 

B3. Transfer of risks

 

The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.

 

If:

 

(a) the buyer fails to give notice in accordance with B10; or

 

b) the vessel nominated by the buyer fails to arrive on time to enable the seller to comply with A2, fails to take the goods or closes for cargo earlier than the time notified in accordance with B10;

 

Provided that the goods are identified as the contract goods, the buyer bears all risks of loss of or damage to the goods from the specified date or the last day of the specified period for delivery, provided that the goods have been clearly identified as the contract goods.

 

B4. Carriage

 

The buyer must contracts at its own cost for the carriage of the goods from the named port of shipment, except when the contract of carriage is signed by the seller as provided for in A4.

 

B5. Insurance

 

The buyer has no obligation to the seller to enter into a contract of insurance.

 

B6. Delivery/transport document

 

The buyer must accept any proof of delivery provided under A6.

 

B7. Export/import clearance

 

a) Assistance with export clearance

 

Where applicable, the buyer must assist the seller at the seller's request, risk and cost in obtaining any documents and/or information related to all export clearance formalities including security requirements and pre-shipment inspection, needed by the country of export.

 

b) Import clearance

 

Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:

 

Import licence and any licence required for transit;

 

Security clearance for import and any transit;

 

Pre-shipment inspection; and

 

Any other oficial authorisation.

 

B8. Checking/packaging/marking

 

The buyer has no obligation to the seller

 

B9. Allocation of costs:

 

Buyer must pay:

 

a) All costs relating to the goods from the time they have bear in delivered under A2, other than those payable by the seller under A9;

 

b) The seller for all costs and charge related to providing assistance in obtaining documents and information in accordance with A4, A5, A6 or A7(b);

 

c) Where applicable, duties, taxes and any other costs related to transit or import clearance under B7(b); and

 

d) Any additional costs incurred, either because:

 

(i) The buyer has failed to give notice under B10; or

 

(ii) The vessel nominated by the buyer under B10 fails to arrive on time, fails to take the goods, or closes for cargo earlier than the time notified in accordance with B10.

 

Provided that the goods are identified as the contract goods.

 

B10. Notice to the seller

 

The buyer must give the seller suficient notice of any transport – related security requirements, the vessel name, the loading point and, if any, the selected delivery date within the agreed period.

 

Advantage

Disadvantage

1. Low transportation cost: Because the seller is responsible for transporting the goods to the ship and placing them alongside the ship, it helps to reduce transportation costs for the buyer. 2. Simple and easy to use: FAS is one of the simplest terms in Incoterm 2020, making it easier to use and execute transactions. 3. The seller can control the transportation process: The seller will transport the goods to the port and place them alongside the ship, so they can control the transportation process and ensure that the goods are transported correctly and completely.

1. Delivery risk: If the goods are lost or damaged during transportation from the delivery point at the berth designated by the buyer at the specified loading port to the buyer's premises, the buyer will be responsible for the delivery and associated costs. 2. Excluding loading/unloading costs: FAS only includes the cost of transportation to the port and placing the goods alongside the vessel, so the buyer will have to pay for loading/unloading costs themselves.

 

The above is a summary of the information that helps people understand more about the FAS Incoterm 2020. In general, in commercial activities, each condition clearly demonstrates the responsibilities of the seller and the buyer. Therefore, if there are any questions or concerns that need advice on importing and exporting goods, feel free to contact FDVN for further assistance.

 

Read more: 

INCOTERMS® 2010 Q&A (EMILY O’CONNOR)

 

WHAT ARE INCOTERMS? - THE HISTORY OF THE FORMATION OF INCOTERMS® RULES

 

SOME THINGS YOU MAY NOT KNOW ABOUT FOB IN INCOTERMS 2020

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