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All you need to know about Free Alongside Ship (FAS) incoterm 2020

Free Alongside Ship (FAS) is an incoterm that states delivery of goods immediately next to the importer’s ship, where they can be reloaded. Learn more about its benefits and process in this blog.

Incoterms are guidelines that define the responsibilities of sellers and buyers in international trade and transactions. Each incoterm – EX Works, CIP, DAT, DAP, CFR, etc. – are used to clearly state the duties of exporters and importers during a contract.

What does FAS mean in customs?

One of the incoterms used in international trade – Free Alongside Ship (FAS) states that the exporter clears goods for export and places them alongside the vessel at a specified port of departure¹.

Free Alongside Ship (FAS) conditions

FAS incoterm means that the exporter needs to load goods alongside the vessel that the importer specifies. In each of the 11 regulations, the exporter is expected to deliver goods, their commercial invoices, and any further proof of conformity that are stated in the contract such as an analysis certificate or weighbridge document. The document can be in paper or electronic form, as specified in the contract.

On the specified day and at an agreed-upon time, the exporter must deposit goods alongside the vessel designated or provided by the importer. The type of products and the port’s customs will determine how they are delivered. The exporter is not required to arrange for carriage².

What are the benefits of FAS incoterm?

· One of the main benefits of Free Alongside Ship incoterm for the exporter is that when delivery terms are on FAS basis, the exporter is responsible for the least amount of risk and expenses associated with the movement of goods. Once goods are unloaded close to the vessel that is expected to arrive, the exporter passes risks and costs to the importer to deliver them to the final destination.
· Another benefit of using FAS delivery terms for the seller is that the importer will not have to spend money transporting products to their location. Therefore, an exporter engaged in international trade can minimize their business investment to that extent, resulting in an increase in the total invoice value of their goods.
· Exporters are not responsible for protecting products after they are positioned close to the vessel and are at the importer’s disposal for continued transportation under FAS delivery standards.

Use of Free Alongside Ship (FAS) in contracts

The exporter is required to deliver goods with full export customs clearance documents and place them adjacent to the vessel. Out of Gauge (OOG) freight or cargo, that does not qualify within the internal dimensions of a container, is handled by Free Alongside Ship (i.e boats, tractors). Only maritime goods may be processed through FAS, and exporters must cover the expense of loading cargo into the vessel. Time and location are crucial while negotiating under FAS due to the limited hours available.

Exporter’s obligations under FAS incoterm

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

Importer’s obligations under FAS incoterm

· 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

Understanding incoterms and other compliance requirements helps sellers prepare and plan their export business better. With the growing use of online shopping websites and the opportunities e-commerce provides to businesses, many Indian sellers are opting for e-commerce exports. Over one lakh exporters are successfully selling on international marketplaces like Amazon USA, UK, UAE and more with Amazon Global Selling.

Amazon Global Selling: Your passport to easy exports

Amazon Global Selling enables manufacturers, sellers, and exporters to sell globally across 200+ countries and territories. With easy registration and live webinar support, Indian sellers get assistance to understand end-to-end processes and also make use of Amazon’s international tools to obtain documents and ship across the world.

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://guidedimports.com/blog/what-does-fas-mean-incoterms/
2. https://www.aitworldwide.com/incoterms-fas#:~:text=In%20the%20Incoterms%20rules%20for,the%20named%20port%20of%20departure
3. https://www.tradefinanceglobal.com/freight-forwarding/incoterms/fas-free-alongside-ship/
4. https://www.eworldtrade.com/blog/advantages-and-disadvantages-of-free-alongside-ship/
5. https://internationalcommercialterms.guru/incoterms-fas/
6. https://howtoexportimport.com/Difference-between-FAS-and-FOB-under-Inco-terms-20-22111.aspx

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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