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What is the Difference Between FCA and FOB

FCA and FOB are common Incoterms used in international shipping. When referring to these Incoterms, you will notice the differences between them.

Whether you are an importer or exporter, understanding these changes can help you make the ideal choice. And can help divide responsibilities and risks when goods are damaged.

So what is the difference between FCA and FOB? Let’s compare their differences.

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What is FCA?

FCA is the abbreviation of Free Carrier and is one of the Incoterms issued by the International Chamber of Commerce.

According to the FCA Incoterms, the seller is only responsible for transporting the goods to the location designated by the buyer (its factory or other location in the country of origin) and handling customs clearance of the goods. It should be noted that if the goods are not handed over by the factory, the seller will not be responsible for unloading the goods after delivering them to the designated location. The risk passes once the buyer receives the goods.

If the contract uses this Incoterms, the buyer’s risk is greater than the seller’s risk. The buyer is responsible for delivering the goods safely from the designated location to the destination. And the buyer is responsible for paying all fees, excluding customs clearance fees.

What is FOB?

The full name of FOB is “Free On Board”. With FOB, you can ship goods from one country to another via inland waterways or sea freight.

According to this Incoterms, once the goods are loaded on the ship, the seller has completed the transportation. Seller needs to provide customs clearance documents and pay all customs fees.

The buyer is responsible for transporting the goods from the ship to the destination and bears all risks during this period.

Full container means that the quantity of goods can occupy the entire container or that one container can only hold the goods of one customer. So customers need to pay for one container.

What is the difference between FCA and FOB?

There are differences between FCA and FOB and here are some examples to help understand them.
FCA is suitable for all modes of transportation, including aircraft, ships, and road freight. But FOB rates serve goods delivered by ship or inland waters.

Risk transfer.
Accurate and clear risk classification is very important for the entire transportation process. It determines who is responsible when the goods are damaged, who pays the freight, who purchases the cargo insurance, etc.
With FCA, risk passes to the buyer when the goods are delivered to the buyer at the named loading location. Risk passes to the buyer once the goods are shipped FOB.

Delivery locations vary.
For FCA, the goods are delivered to the carrier arranged by the buyer and to the location designated by the buyer. The agreed location can be the seller’s factory or other locations.
For FOB, the seller needs to transport and place the goods on the buyer’s designed ship. The buyer is responsible for transporting the goods from the ship to his warehouse.

Payment.
For FCA, the seller is responsible for customs fees or loading fees from the factory to the designated location. Other fees will be paid by the buyer. For example, all costs related to freight and the cost of unloading the goods at the port of departure. There are also warehousing fees for the goods, fees for finding freight forwarders, etc.
For FOB, the buyer is responsible for paying for transportation from the loading ship to its warehouse. Other charges will be paid by the seller, including customs charges and local charges in the country of origin.

Insurance.
Through the FCA, the buyer is responsible for procuring cargo insurance and paying for the insurance. Under FOB terms, the buyer can choose to be responsible for cargo insurance. However, the buyer’s insurance is only valid during the period when the goods are shipped to the buyer’s warehouse. The safety of the goods cannot be guaranteed during the period from the seller’s warehouse to the loading port.
Therefore, the seller can apply for additional insurance during this period by purchasing insurance for the insured’s goods or require the buyer to apply for insurance during this period at the seller’s expense.

What is the Difference Between FCA and FOB

Similarities between FCA and FOB

The above mentioned are the differences between them, let’s take a look at the similarities between them.

Whether it is FCA or FOB, the seller must successfully clear the goods through customs and pay all costs during this period, including any customs fees and taxes related to the customs clearance procedure.

The seller is required to provide all appropriate customs documentation related to the goods. These documents include commercial invoices, certificates of origin, etc. Each country has different customs documents. Whatever documentation is required should be provided by the seller.

If the shipment is detained by customs due to lack of adequate documentation or incorrect cargo information. The seller and buyer need to determine who will pay for liability damages.

How can Basenton Logistics Supply help you?

In addition to FCA and FOB, there are also various Incoterms. Buyers and sellers may have some headaches distinguishing between different international terminologies and be unsure of where risk transfers and who is responsible. Air Supply can help you.

Our experts have over 10+ years of shipping experience. We can offer the best FCA and FOB rates. And assist with complex procedures related to goods. Please contact us below.

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