FAS (Free Alongside Ship) Shipping Terms: Key Responsibilities and Differences

Incoterms are a cornerstone of international trade, helping sellers and buyers define their responsibilities during the transportation of goods. Among these, FAS (Free Alongside Ship) holds a unique place for maritime shipping transactions. Published by the International Chamber of Commerce (ICC) in the Incoterms 2020 edition, FAS is specifically tailored for sea and inland waterway transport. This article explains the FAS term in detail, covering responsibilities, risks, costs, and how it differs from other Incoterms.

What is FAS?

FAS stands for Free Alongside Ship, a shipping term used primarily for non-containerized goods like bulk or break bulk cargoes. Under FAS, the seller is responsible for transporting the goods up to the point where they are placed alongside the buyer’s nominated vessel at the designated port of departure. Once the goods are at this location, the buyer assumes responsibility for loading them onto the ship and for the costs and risks of the journey from that point onward.

FAS is not recommended for containerized shipments, as the logistics for such goods are better handled under the FCA (Free Carrier) Incoterm.

Key Responsibilities under FAS

Seller’s Responsibilities

• Delivery to the Port: The seller ensures the goods are transported from the warehouse or factory to the designated port. They bear all costs and risks until the goods are placed alongside the vessel.
• Packaging and Labeling: The seller must package and label the goods per international shipping standards, ensuring they are ready for inspection and handling during transport. Proper marking is crucial to prevent delays and disputes.
• Inland Transportation: The cost and risk of moving the goods from the seller’s premises to the port fall under the seller’s obligations. This includes:

Truck or rail transport fees

Loading charges for placing goods onto the vehicle

• Freight Forwarding and Customs Clearance: The seller handles export customs clearance, including:

Preparing documents like the commercial invoice, packing list, and export declaration

Paying customs duties and fees in the exporting country

Ensuring goods comply with export regulations

• Depot and Port Fees: The seller must pay port handling fees, storage charges, and other associated costs until the goods are placed alongside the vessel.
• Risk Transfer: Once the goods are alongside the ship, the risk of loss or damage passes to the buyer.

Buyer’s Responsibilities

• Loading the Goods: The buyer is responsible for loading the goods onto the ship at the designated port. This step includes coordinating with the port authorities and ensuring that the loading process adheres to safety regulations.
• Freight Charges: The buyer takes on all shipping-related costs from the port of departure to the final destination. This includes:

Ocean freight charges

Terminal handling fees at the destination port

• Insurance: The buyer must arrange insurance for the goods during their transit. Ocean freight insurance protects the buyer against potential losses or damages while the goods are in transit.
• Customs Clearance at Destination: The buyer manages import customs clearance, including:

Paying import duties and taxes

Submitting required documentation for customs processing

• Inland Transportation: After clearing customs at the destination port, the buyer is responsible for transporting the goods to the final delivery point, such as a warehouse or retail location.

Costs and Risk Division in FAS

Seller’s Costs:

• Packaging and Labeling Charges: Ensuring compliance with export standards.
• Inland Transportation Fees: From the factory to the port of departure.
• Customs Duties and Export Fees: For processing export documentation.
• Port Handling Fees: Covering storage and handling until the goods are placed alongside the vessel.

Buyer’s Costs:

• Loading Charges: Cost of placing goods onto the vessel.
• Freight Costs: Ocean shipping charges from the departure port to the destination.
• Insurance Premiums: Protecting goods during transit.
• Import Duties and Taxes: Costs incurred during customs clearance at the destination country.
• Inland Delivery Charges: Transporting goods from the port to the final destination.

Comparison: FAS vs. FOB

FAS (Free Alongside Ship) and FOB (Free On Board) are two popular Incoterms used in maritime trade, yet they differ in critical aspects.

FAS (Free Alongside Ship) requires the seller to deliver goods alongside the buyer’s designated vessel at the agreed-upon port. The seller’s obligations end when the goods are placed next to the ship, at which point the risk of damage or loss transfers to the buyer. All costs from this stage, including loading the goods onto the vessel, ocean freight, insurance, and destination port duties, fall under the buyer’s responsibility. FAS is commonly used for non-containerized goods like bulk cargo, where logistics demand this clear division of tasks.

FOB (Free On Board), on the other hand, shifts more responsibility to the seller. Under Free On Board, the seller is responsible for loading the goods onto the vessel. Risk and costs transfer to the buyer only once the goods are securely loaded on the ship. This term is ideal for containerized cargo or shipments where the seller has access to efficient loading facilities.

In summary, FAS ends the seller’s role earlier in the shipping process, while FOB extends it to the loading stage, making it crucial to choose the right term based on the type of goods and logistical needs.

FAQs on FAS Incoterms

What is FAS shipping?

FAS shipping refers to the seller delivering goods alongside the buyer’s nominated vessel at the port of departure. The buyer assumes responsibility for loading and further transport from this point.

Who pays freight under FAS?

Freight charges are paid by the buyer since the seller’s obligations end when the goods are placed alongside the ship.

What is FAS value?

FAS value represents the cost of goods delivered to the port of departure, including packaging, inland transportation, and export fees. It excludes loading and freight costs.

Who handles customs in FAS?

Export customs are managed by the seller, while the buyer handles import customs clearance.

Importance of FAS in Global Trade

The FAS (Free Alongside Ship) Incoterm plays a vital role in international trade, especially for bulk and non-containerized goods transported by sea or inland waterways. It provides clear guidelines for responsibility transfer between buyers and sellers. The seller ensures goods are delivered to the port alongside the buyer’s vessel, streamlining export processes like customs clearance. Meanwhile, the buyer gains control over loading, freight, insurance, and subsequent logistics. FAS minimizes seller liabilities while granting buyers flexibility in transportation planning. Its precise allocation of costs and risks fosters smoother trade operations, making it crucial in global shipping practices.

Conclusion: Leveraging FAS with Credlix

For businesses operating in global trade, FAS is a valuable shipping term for maritime transactions. By clearly outlining responsibilities, it reduces ambiguity and facilitates smoother operations. However, successful implementation of FAS relies on precise coordination and adherence to the terms.

Companies like Credlix, a leading global supply chain solution provider, can simplify this process. With expertise in supply chain financing and logistics, Credlix ensures seamless trade execution, helping businesses optimize their operations and mitigate risks. Whether you’re navigating export customs or managing freight costs, partnering with Credlix can give you the edge in international trade.

By understanding FAS and collaborating with supply chain experts, businesses can unlock new opportunities in global markets.