Free Alongside Ship (FAS)
What is the definition of the Free Alongside Ship Incoterm?
The FAS Incoterm specifies the seller's obligation to deliver goods to a designated port and place them alongside a vessel chosen by the buyer.
Under FAS, the seller is responsible for all costs associated with transporting the goods to the port, including export customs clearance.
Once the goods are alongside the vessel, the responsibility and risk of loss or damage transfer to the buyer, who then assumes responsibility for loading the goods onto the vessel, paying for ocean freight, and handling all subsequent transportation and import duties.
What are the FAS responsibilities for a buyer?
Under FAS shipping terms, the responsibilities of the buyer are clearly defined and include:
- Arranging and paying for the main carriage
- Loading goods onto the vessel
- Import customs clearance and duties
- Destination terminal handling fees
- Insurance for transportation risks
What are the FAS responsibilities for a seller?
The FAS incoterm obligates the seller to perform several duties, such as:
- Providing the goods and documentation
- Packaging and marking the goods for identification
- Export customs clearance
- Delivery alongside the vessel
- Risk and cost until delivery
- Notification to the buyer
When is a Free Alongside Ship agreement used?
FAS delivery terms can be advantageous in a range of shipping scenarios:
- Bulk cargo shipments: FAS is used for bulk cargo, such as oil, grain, or minerals, where goods are typically delivered directly alongside the vessel.
- Heavy and oversized goods: FAS shipping terms are ideal for heavy lift or out-of-gauge cargo that requires direct placement alongside the ship for loading.
- Buyer-controlled shipping: When the buyer prefers to have more control over the main carriage, including selecting the shipping line and managing the ocean freight logistics.
What are the benefits of Free Alongside Ship terms?
Simplified seller obligations
For the seller, FAS terms simplify the scope of their responsibilities. The seller's obligation ends once the goods are delivered alongside the vessel at the named port.
FAS shipping terms reduce the complexity and risk associated with managing the main carriage, including issues related to delays, shipping costs, and insurance beyond the delivery point.
Cost management
FAS terms clearly delineate the point at which risk transfers from the seller to the buyer. The transfer occurs when the goods are placed alongside the vessel, meaning any loss or damage to the goods from that point onwards is the buyer's responsibility.
The clarity of FAS delivery terms helps both parties mitigate their respective risks more effectively.
Control over the main carriage
An obvious benefit of the FAS incoterm is that it provides the buyer with greater control over the main carriage.
Since the buyer is responsible for arranging and paying for the transportation from the port of shipment, they have the flexibility to choose their preferred shipping line, negotiate freight rates, and manage the logistics according to their needs.
What are the drawbacks of Free Alongside Ship terms?
Risk of delays and additional costs
If there are delays or issues with the vessel's arrival or the loading process, the buyer may incur additional costs.
For example, demurrage charges can be substantial if the goods cannot be loaded onto the vessel as scheduled. Such scenarios can lead to increased operational costs and logistical complications, particularly in busy UK ports where berthing schedules can be tight.
Seller's obligation to assist with documentation
Even though the seller's primary responsibility ends once the goods are placed alongside the vessel, they must still support the buyer in procuring documents such as bills of lading or export licences.
The additional administrative efforts required by the seller may be time-consuming, particularly if the buyer requires extensive documentation.
FAS FAQs
What is the difference between FOB and FAS?
The primary difference between Free On Board (FOB) and FAS shipping terms lies in the point at which the responsibility transfers from the seller to the buyer.
Under FAS, the seller's responsibility ends when the goods are placed alongside the vessel at the named port of shipment. The seller's responsibility in a FOB agreement extends until the goods are loaded onto the vessel.
In what circumstances is FAS unsuitable?
Free Alongside Ship (FAS) terms are unsuitable in a number of specific circumstances:
Containerised cargo shipments
FAS is generally unsuitable for containerised cargo shipments because containers are typically delivered to a terminal or a yard rather than directly alongside a vessel.
Industries requiring timely delivery
Industries that demand strict adherence to delivery schedules may find FAS terms unsuitable.
The reliance on the buyer to coordinate the main carriage and manage the loading process can introduce delays, especially if there are scheduling conflicts or unexpected disruptions at the port.
What is the difference between free alongside ship and CIF?
The key difference between the FAS incoterm and Cost, Insurance, and Freight (CIF) lies in the extent of the seller's responsibilities.
Under FAS, the seller's obligation ends once the goods are placed alongside the vessel at the port of shipment.
The seller in a CIF agreement not only delivers the goods onto the vessel but also pays for the cost of freight and insurance to the port of destination, transferring risk to the buyer only once the goods are on board the ship at the port of shipment.