To understand what is FCA shipping, we have tried our best to explain the term and the process in a simple way by giving an example. In the event of FCA the incoterm buyer hand over the cargo at the location of the seller’s preference where it could be on the premises of the seller, at the agent’s warehouse, at the port of loading, or another location.
FCA to be referred to in the context of “FCA + named”place”
Example: FCA Taiwan container terminal.
FCA delivery comes with two choices:
First option: Delivery at the location of the seller’s property in this scenario, the buyer loads cargo on the buyer’s truck, and from that moment on the buyer takes care of the entire operation.
- Delivery at a specified location by the buyer: If the seller loads the cargo and hands it over to a location at the buyer’s discretion the location could be the forwarder’s warehouse or agent’s warehouse as well as named terminals for containers or any other location. In this instance, the seller is able to include the cost of transportation in the cost of the cargo.
What is FCA shipping risk:
In the first option, the seller takes the burden of the cargo until it is loaded on the truck. After which all risks are passed to the buyer.
In the 2nd option, the seller takes the responsibility for the cargo until it arrives at the specified destination, at which point all risk passes to the buyer.
Insurance:
The seller isn’t required to pay for insurance in the event of FCA delivery terms. The buyer must arrange for insurance for the shipment. You can read more about insurance and how to claim.
Custom clearance for exports: in the case of FCA the seller’s agent is in charge of the export clearance process with the assistance of the buyer. This means that all documents such as export licenses and other permits such as product test reports commercial invoice packing list authorization etc. to be provided by the seller, and the clearance procedure will be managed by the buyer’s freight forwarding agent.
Example to understand what is FCA shipping:
Let’s understand how the shipment occurs in the context of FCA incoterm.
1st option:
Assuming that an electronics manufacturer located in Taiwan, Taiwan connects with the mobile phone maker in Mumbai, India who needs circuit boards to meet their manufacturing requirements. They then begin discussions about future business.
Negotiation:
Indian buyer is aware of a handful of agents and forwarders in Taiwan with a solid logistical infrastructure. The buyer is keen to proceed in accordance with FCA delivery conditions and the seller in Taiwan is not opposed to this. They agree on pricing and signed the deal with FCA the buyer’s factory.
Contract:
Both parties agree and the contract is signed FCA (FCA, Taiwan factory) delivery term and CAD pay term.
Operations:
Once the agreement is concluded, the seller confirms the availability of all the raw materials and provides the date for readiness to the buyer. Then, they begin manufacturing.
The buyer contacts the freight forwarding company of his choice in Taiwan and makes booking containers and vehicles for transport. After a booking is made, the buyer provides the loading date to the seller and also his freight forwarding agent’s contact information.
The seller works with the buyer’s agent regarding the placement of trucks for loading, and also gives the date and time for loading.
When the loading agents place trucks at the factory of the seller, and seller is able to load the cargo and then hands the required documentation to the agents. The responsibility for the cargo pass from the seller to the buyer.
Custom clearance and Documentation:
The buyer must provide all the necessary documents to be exported. Below is the list of documents needed:
- Commercial invoice
- Checklist for packing
- Pre-shipment inspection report
- Export license
- Any other documents that relate to trade
The agent of the buyer takes the shipment to the closest port or ICD to begin the custom clearance once they have received all the documents. The seller will assist the agent if customs raise any concerns regarding the item or the documents. Once completing procedures of customs clearance the freight forwarder of the buyer will be moving the container for loading the vessel.
Once the container is onboard Agent should go to the shipping line’s office to obtain a bill of Lading. Once B/L is issued buyer’s agent will reach out to the chamber of commerce for the issuance of a Certificate of origin, similarly, other documents will be issued from various offices if required.
The post-issuance of shipping documents agent will hand these documents over to the seller according to the buyer’s instructions. The seller will deposit the documents with their bank. Once they have received the documents at the buyer’s Bank they will receive an email from Bank and verify the documents after paying the amount.
When the vessel is at the location of origin (Mumbai, India) buyer must appoint his CHA to clear the cargo and then place the vehicles in place to transport containers or cargo to their location for clearance.
2nd option:
The second option under FCA buyers can ask sellers to deliver the product to the buyer’s agent’s warehouse, at a container terminal, or at any other location. In this scenario, let’s suppose that the buyer requests the seller to drop off the cargo at the agent’s warehouse in Taiwan, then the agent organizes the loading. Agent transports their cargo and transports it to the port terminal, and does custom clearance, with help of the seller. The rest of the process is similar to that of the 1st option.
All this is about FCA incoterm and we hope the above article would have helped you to understand what is FCA shipping and the operation mode. If you have any consultations required for air freight, ocean freight, customs clearance, and Logistics transportation then we have a very committed team of professionals to help you out. You can get in touch with us at Consolidation Shipping Line any time of the day or drop an email at inquiry@cslindia.net
FCA term is recommended for containers for shipment.