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Free Alongside Ship (FAS) Incoterm 2020: Meaning and terms

Free Alongside Ship (FAS) Incoterm specifies that goods are delivered immediately next to the importer's ship, ready for loading. Learn more in the blog.

Delays, damage, and loss are common risks in international trade due to longer shipping times and complex processes. To address these challenges, the International Chamber of Commerce (ICC) created Incoterms or International Commercial Terms, rules that clearly define the roles of buyers and sellers. One such rule, the FAS (Free Alongside Ship) Incoterm, specifies that the seller delivers goods alongside the ship at the port, after which the buyer takes over responsibility. Learn more about FAS Incoterm, its uses, and its benefits in this blog post.

What is Free Alongside Ship (FAS) Incoterm?

Free Alongside Ship (FAS) Incoterm requires exporters to deliver goods to a specified port and position them next to the importer's vessel for convenient loading. Under FAS Incoterm, the exporter's responsibility ends once the goods are placed alongside the ship, ready for the importer to take over.¹

What are Free Alongside Ship (FAS) shipping terms?

Some key aspects of FAS Incoterms are as follows:

Exporter’s responsibilities

• Document and goods delivery.
• Presentation and wrapping.
• Land-based travel in the nation of origin.
• Handling charges for customs at source.

Importer’s responsibilities

• Payment of product origin fees.
• Destination fees for shipping internationally.
Fees for customs clearance at the destination country-specific inland transportation.
Paying taxes and duties.

Usage

• FAS is strictly for sea or inland waterway transport.
• It is ideal for bulk shipments like heavy equipment goods.

What are Free Alongside Ship Incoterm 2020 rules?

Some key updates to FAS under Incoterms 2020 are as follows:
• The exporter delivers goods alongside the vessel at the port of shipment.
• The importer takes on risk and responsibility once the goods are placed alongside the ship.
• The exporter handles export customs and costs up to the point of delivery.
• This term is mainly used for sea or inland waterway transport.

What are the benefits of FAS Incoterm?

Some key benefits of FAS Incoterm are as follows:

Lower risks and costs for exporters

FAS shifts risk and expenses to the buyer after the seller places the goods near the vessel. This reduces the seller’s liability for further transportation and handling.

More control and flexibility for buyers

With FAS, buyers gain control once the goods are positioned by the vessel. They are responsible for ensuring the vessel is ready for loading and covering all related loading costs.⁴

What are the drawbacks of FAS Incoterm?

The following are some drawbacks of the FAS Incoterm:

Limited applicability

The FAS Incoterm applies only to goods that are delivered by sea or inland waterways, restricting flexibility for other modes of transport.

Earlier risk transfer

Risk passes to the buyer sooner in the shipping process than with some other Incoterms, which may expose the buyer to additional risks and costs related to loading and main carriage.⁵

What is the use of Free Alongside Ship (FAS) in contracts?

International trade contracts between two parties typically include details regarding the transportation of goods, including date and time of delivery, method of transportation and payment, details on which party pays for freight and insurance and the point at which risk transfers from the exporter to the importer. If a contract includes FAS, it means that the exporter will be required to deliver goods with full export customs clearance documents and place them adjacent to the vessel for easy loading. Usually, only maritime goods are processed through FAS.

Exporter’s obligations under FAS Incoterm

The exporter’s obligations under FAS Incoterm are:
• Cover the cost of pre-shipment inspection.
• Deliver goods alongside the vessel at the port of shipment.
• Ensure export licenses and complete customs formalities.
• Handle export packaging and marking.
• Provide the goods, commercial invoice, and necessary documentation.
• Provide proof of delivery.
• Transport goods in pre-carriage to the terminal.

Importer’s obligations under FAS Incoterm

The importer’s obligations under FAS Incoterm are:
• Complete import formalities and pay duties.
• Cover the cost of pre-shipment inspection (for import clearance).
• Handle discharge and onward carriage.
• Handle loading charges.
• Manage main carriage.
• Pay the price of goods as specified in the sales contract.
• Transport goods in pre-carriage to the terminal.

When to use FAS Incoterm?

The following are some scenarios in which it may be appropriate to use FAS Incoterm:

Bulk shipments

FAS is suited for bulk cargo, especially when space and specialized handling are needed.

Charter or heavy-lift vessels

It works well for goods transported by charters or heavy-lift vessels.

Directly delivered to the dock

FAS is best used when goods are delivered directly to a dock, making the handoff process at the port easier.

FAS is not useful when the goods are delivered to a container yard. It is also not used for liner services at small ports.⁶

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More blogs on incoterms

1. What is Delivered at Terminal (DAT) incoterm?

2. What is a Cost and Freight (CFR) incoterm?

3. What are incoterms in exports: Here’s everything you need to know

4. Guide to FCL shipping: Everything exporters need to know

5. What is Carriage Insurance Paid (CIP) in incoterms?

6. What is Freight on Board: How does it work in shipping?

7. What is a Container Freight Station (CFS) and its role in shipping?

8. What is Cost, Insurance and Freight (CIF) in shipping?

9. What is a Free Carrier (FCA) incoterm?

10. What is EX Works (EXW) incoterm in international trade?

Frequently Asked Questions

What is the benefit of FAS Incoterm?

Free Alongside Ship (FAS) states that the exporter clears goods for export and places them alongside the vessel at a specified port of departure.

What is the difference between FAS and FOB?

In FAS, the exporter places products close to the ship. However, under the terms of FOB delivery, the seller loads the cargo onto the ship.

Who pays for freight under FAS?

If a FAS incoterm is specified in a shipping contract, the importer is responsible for all costs from the time when goods are delivered by the exporter to the transport vessel. This covers the expense of shipping, setting up export clearance, and risk of loss or damage.

Why are shipping terms like FAS and FOB used?

In the case of an international shipment, these abbreviations are called incoterms, which specify who is responsible for what at which stage of the logistics process.

Published on February 24, 2023.

Sources:
1. https://www.investopedia.com/terms/f/fas.asp
2. https://www.aitworldwide.com/resources/Incoterms/Incoterms-fas-free-alongside-ship/
3. https://nucleusmarine.com/Incoterms-2020-explained-and-what-changes-in-2020/
4. https://www.shiprocket.in/blog/fas-Incoterm/
5. https://www.tradefinanceglobal.com/Incoterms/fas-free-alongside-ship/
6. https://www.letsbloom.com/blog/Incoterm-fas/#advantages-of-fas

What are incoterms in exports: Here’s everything you need to know

What is EX Works (EXW) incoterm in international trade?

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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