Maybe you are one of the importers who go to China or any other trading country to import different products from more than one supplier. Then you will ask yourself this question: how will I collect goods from different suppliers and ship them together to my country?
In this article, we will answer your question by explaining the shipping agreement or the term “FCA” by explaining the mysteries and secrets of this term, reviewing its obligations for you as an importer and for suppliers, and explaining its advantages and disadvantages, so that you can benefit from the shipping agreement “FCA” in your future business operations.
First: What is meant by the term “FCA” in shipping?
THE TERM “FCA” BELONGS TO THE LIST OF INTERNATIONAL TERMS OF TRADE “INCOTERMS”, AN ABBREVIATION OF THE ENGLISH WORD “FREE CARRIER ACCEPTANCE” (“DELIVERY TO THE CARRIER OR SHIPPING COMPANY” OR “FREE CARRIER”.
Meaning of FCA Incoterms
It is a condition of shipping and international contracts that stipulates the supplier’s obligation to deliver the goods ready for shipment at an agreed specific location listed in the sales contract (in the country of origin), and this location can be a specific port or warehouses of shipping companies.
Under the FCA shipping condition, the supplier must pay the freight to the shipping desk specified by the importer, while you as an importer must pay all expenses related to shipping the goods to your country.
For example: Moncef is seeking to import a shipment of laptops and ship them from China to Saudi Arabia, and he agreed with more than one Chinese supplier because he needs different types of laptops. He relied on the FCA shipping agreement in his contracts with them. Moncef thus chooses the shipping company he will deal with. The suppliers have also agreed to deal with it, and the responsibility of the suppliers is to deliver the goods to the agreed shipping company. Upon receipt of the goods by the shipping company at this stage, all responsibility passes to Monsef.
Second: Obligations of the supplier and importer under the shipping agreement “FCA”
This axis is divided into two parts, in the first section we will tell you about the obligations of the supplier when relying on the shipping agreement “FCA Free Carrier”, while in the second section we will explain to you your obligations as an importer.
1. Obligations and fees borne by the supplier
Supplier’s Obligations: Under the “Free Carrier” shipping agreement, the supplier undertakes the following:
- The supplier is obliged to deliver the goods at the place agreed upon in the contract between him and the importer.
- The supplier adheres to the packaging procedures and shipping labeling.
Documents and paperwork: With regard to the papers required to complete the shipping process, the supplier is committed to the following:
- The supplier is obliged to prepare commercial invoices and documents for the shipment.
- The supplier is obliged to obtain export licenses and customs procedures from the country of supply.
Fees: The supplier bears some costs related to the shipping process via the FCA shipping agreement, including:
- The supplier shall pay the costs of internal transportation until the goods arrive at the place agreed upon in the contract between him and the importer.
- The supplier is committed to the costs of handling and customs clearance in the country of supply (e.g. China).
- The supplier is committed to the costs of pre-shipment inspection procedures.
2. Obligations and fees borne by the importer
Importer’s obligations: As an importer, there are obligations under the FCA that you should know, namely:
- Bear all risks and costs after the goods are delivered at the specified place.
- Agreement with the shipping company that will transport the imported goods to your country.
- Procedures for unloading goods and transporting them to warehouses and warehouses at the port of arrival.
- Customs procedures at the port of arrival.
- Internal transport in the country of destination.
Documents and paperwork: With regard to the papers required to complete the shipping process by the basket to you as an importer:
- Commitment to obtain licenses to receive the shipment at the port of arrival and customs clearance for it.
Fees: As an importer, the bulk of the costs related to the shipping process through the “free carrier” shipping agreement shall be borne by the importer, including:
- Shipping fees to the country of arrival.
- Pay for the goods as stipulated in the contract between you and the supplier.
- Customs clearance costs at the port of arrival.
- The cost of inspection for the clearance of imported goods at the port of destination.
At the end of this axis, we must note an important matter, which is that neither the importer nor the seller is contractually obliged to purchase insurance on the goods. However, we recommend that you insure the goods and obtain insurance policies to cover the parts of the sea freight for which you will be responsible.
Third: Advantages and disadvantages of the “free carrier” shipping agreement
In order to determine whether or not to use a FCA shipping agreement, you need to know what advantages and disadvantages it has. In this axis we will introduce you to the advantages and disadvantages of the shipping agreement “free carrier”.
1. Features of the use of the shipping agreement “FCA Free Carrier”
- The “Free Carrier” shipping agreement can be used with all types of shipping operations whether sea, air, land or multiple.
- The importer can group more than one type of goods from different suppliers in one place, thus saving shipping costs when shipping goods with each other.
- The importer can choose the shipping company that suits him without the intervention of the supplier.
2. Disadvantages of using the shipping agreement “FCA Free Carrier”
- The “free carrier” shipping agreement increases responsibilities for the importer and thus takes risks when compared to the “CIF” shipping agreement.
- The importer bears most of the expenses in the shipping process from freight charges, cargo transportation fees, and customs clearance fees in the destination country.
- The importer bears the risks and responsibility in the event that the goods arrive damaged due to shipping or if the goods do not arrive.
Fourth: What is the difference between the shipping agreement “FCA” and the shipping agreement “FOB”?
It is no secret that the “FCA” and “FOB” shipping agreements confuse both the importer and the supplier due to their similarities.
In this axis, we will try to remove this confusion by identifying 3 main differences between the two agreements through the attached table.
|Type of shipping process
|Shipping agreement “sale on board delivery” applies only in sea freight operations
|The “Free Carrier” shipping agreement applies to shipments by road, rail, air and sea.
|The supplier shall be responsible for the goods until they are loaded on board the ship, and the responsibilities shall be transferred to the importer until they arrive at the port of destination.
|The supplier shall be responsible for the goods until they are delivered to the shipping company or the place specified by the importer in the country of export, then the responsibility passes to the importer in full, until the goods arrive at the port of arrival.
|Risks during shipping
|The supplier bears the risks in the event of damage to the goods due to the fall of the goods outside the ship during the cargo voyage, while the damage caused to the goods on board the ship is the responsibility of the importer.
|Damage to goods, whether transported by rail, road, air or sea, lies solely with the importer.
Fifth: Is it preferable to rely on the shipping agreement “FCA”?
The FCA shipping agreement is ideal for shipping operations that are by land or air freight, or multiple shipping, but it needs experience from you in dealing, and it needs importers with a long history in the field of international trade.
If you are an international importer and have branches of your stores in more than one country, the “free carrier” shipping agreement is the most appropriate, as it allows you to group the different types of goods you intend to import in one place in the country of supply, and then ship them to different countries through your shipping company.
Through it, you can control the choice of the most suitable shipping company for you, and you can choose the shipping time that suits you, and the shipping destination also without control by the supplier.
However, you will bear all responsibility for the goods until they arrive at the port of arrival.
So we can say that the shipping agreement “FCA free” needs an experienced importer in the field of international trade to be strongly dominant during the shipping process.
In conclusion, I can only summarize the answer to our opening question: How do I collect goods from different suppliers and ship them together to my country?
You can simply do this by relying on a “FCA” shipping agreement that allows you to group the goods in one place and then ship them to your country together without having to ship each batch separately.