What is Free Carrier (FCA)?
Free Carrier (FCA) is an Incoterm (international commercial term) that sets out the allocation of costs, risks, and responsibilities between a seller and buyer for delivery of goods. Under FCA the seller delivers the goods, cleared for export, to a carrier or another party nominated by the buyer at a named place in the seller’s country. The seller bears the risk and cost until that delivery point; after the carrier takes possession, the buyer assumes risk and arranges the main carriage and insurance. (Sources: Investopedia; International Chamber of Commerce)
Key takeaways
– FCA applies to any mode of transport, including multimodal shipments.
– The seller must deliver goods, export-clear them, and provide proof of delivery at the named place.
– Risk transfers from seller to buyer when the goods are handed to the carrier at the agreed location.
– The buyer normally arranges and pays for the main carriage and insurance after handover.
– Parties should specify the exact named place and Incoterms version (e.g., Incoterms 2020) in the contract. (Sources: Investopedia; ICC)
How FCA works — sequence and responsibilities
1. Contract negotiation
– Parties agree the price, named place (e.g., seller’s premises, terminal, airport), Incoterms version, and who nominates the carrier.
2. Seller’s pre-carriage and export formalities
– Seller packs the goods, obtains export licenses, completes export customs clearance and any export declarations required in the seller’s country.
3. Delivery to the named place
– Seller brings goods to the agreed place and hands them to the carrier or the buyer’s nominated carrier.
– Seller must provide proof of delivery (carrier receipt, signed document).
4. Risk transfer and main carriage
– Risk transfers at the moment of delivery to the carrier at the named place.
– Buyer takes responsibility for the main carriage, freight charges from that point, import clearance and duties, and insurance (unless otherwise agreed).
5. Documentation and follow-up
– Seller supplies agreed sale documents (commercial invoice, packing list, evidence of export clearance).
– Buyer arranges onward transport and import clearance.
Important points and practical implications
– Named place matters: Specify precise location (terminal, quay, seller’s warehouse) and whether delivery there includes unloading. Ambiguity causes disputes. (Invest in precise contract language.)
– Export formalities: Under FCA the seller generally is responsible for export clearance, export duty, taxes and any export licenses required. (Source: Investopedia)
– Loading/unloading: If delivery is at the seller’s premises, the seller typically loads the goods onto the buyer’s carrier. If delivery is at another place (e.g., a terminal), unloading obligations must be agreed—seller generally is not obliged to unload unless expressly agreed.
– Insurance: No obligation exists to insure under FCA. The buyer should arrange insurance from the point of risk transfer.
– Proof of delivery: The seller should obtain a carrier receipt or similar document showing the goods were delivered to the nominated carrier; this protects the seller from later claims.
– Incoterms version: State the Incoterms version used (e.g., “FCA [named place], Incoterms 2020”) because interpretations change across editions. (Source: ICC)
FCA vs. FOB (Free on Board)
– FOB applies only to sea or inland waterway transport and transfers risk when the goods pass the ship’s rail or are loaded on board a vessel. The seller must load the goods on board.
– FCA applies to any transport mode (including multimodal) and transfers risk when goods are handed to the carrier at the agreed place. Under FCA, loading onto the main carrier can be the buyer’s responsibility depending on location. (Source: Investopedia)
FCA vs. DDP (Delivered Duty Paid)
– DDP places maximum obligations on the seller: the seller pays for carriage, import duties, and is responsible for delivery to buyer’s premises, bearing all risks until arrival.
– FCA places minimal transport obligations on the seller: seller delivers to buyer’s nominated carrier in seller’s country and is responsible only until that handover; the buyer arranges and pays the main carriage and import formalities. (Source: Investopedia)
Who pays for FCA shipping?
– The buyer typically pays for the main carriage (international freight) and insurance, because the buyer usually nominates and hires the carrier. The seller includes costs up to delivery to the carrier—pre-carriage, export clearance, packaging, and delivery to the named place are the seller’s costs. (Source: Investopedia)
Who is responsible for export clearance under FCA?
– The seller is responsible for export customs clearance, export duties (if any), export licenses, and the formalities required to allow the goods to leave the seller’s country. The buyer is responsible for import clearance and import duties. (Source: Investopedia)
Practical steps and checklists
For sellers (exporter)
– Negotiate and clearly state: named place, Incoterms version, who nominates the carrier, and responsibility for loading/unloading at the named place.
– Prepare export documentation: commercial invoice, packing list, export licenses, certificates of origin, any health/safety certificates.
– Complete export customs clearance and pay any export duties.
– Pack and label goods suitably for transport and for the carrier’s rules.
– Deliver goods to the named place and hand them to the buyer’s nominated carrier.
– Obtain and keep proof of delivery (carrier receipt, signed delivery note, or bill of lading if applicable).
– Notify buyer of delivery and provide documents required for the buyer’s carriage/import.
For buyers (importer)
– Nominate a reliable carrier and communicate exact pick-up details and any specific carrier requirements.
– Arrange and pay for the main carriage (ocean/air/rail/road freight) from the named place.
– Arrange insurance effective from the point risk transfers (or negotiate seller-provided insurance if desired).
– Ensure you have the import documentation and licenses ready for destination country (import permits, payment for duties/taxes).
– Coordinate with the carrier to confirm pickup and onward delivery timeline.
– Verify seller’s proof of delivery and match it to logistics documents to prevent disputes.
Documents commonly exchanged under FCA
– Commercial invoice and packing list (seller).
– Export clearance documents (seller).
– Carrier receipt or signed delivery note at the named place (evidence of transfer of risk).
– Bill of lading, air waybill or multimodal transport document (may be issued to buyer once carrier picks up goods).
– Certificates required by destination/import rules.
Example (practical)
– Susan (seller) and Bob (buyer) agree FCA, named place: “Seller’s warehouse, Hamburg, Incoterms 2020.”
– Susan arranges export clearance and transports the goods to her warehouse. Bob nominates a carrier to collect at the warehouse.
– Susan hands the goods to Bob’s carrier at the warehouse and obtains a carrier receipt. Risk transfers at that moment.
– Bob’s carrier takes the goods to the port, and Bob pays the main carriage and imports the goods at destination.
Fast facts
– FCA was added to Incoterms in 1980 and has been updated periodically by the ICC; always specify the Incoterms year in contracts. (Source: ICC)
– FCA is suitable for containerized and multimodal transport and is flexible for modern logistics. (Source: Investopedia)
Common pitfalls and how to avoid them
– Vague named place: Specify exact location and whether unloading is included.
– Not obtaining proof of delivery: Seller must keep carrier receipts to prove they met their obligation.
– Not clarifying who nominates the carrier: Define this in the contract to avoid disputes over timing or carrier choice.
– Export/import compliance missteps: Both parties should confirm regulatory requirements and licenses well before shipment.
– Insurance gaps: Buyer should arrange adequate insurance beginning at the point of delivery to carrier.
When to consult experts
– For high-value shipments, restricted goods, or complex customs regimes, consult a trade attorney, freight forwarder, or customs broker. Incoterms alter legal and accounting outcomes (e.g., asset recognition, risk), so legal/finance teams should confirm contract language. (Source: Investopedia)
The bottom line
FCA is a flexible Incoterm used for any mode of transport that makes the seller responsible for delivery of export-cleared goods to a buyer-nominated carrier at a named place in the seller’s country. The seller bears costs and risk up to that handover; the buyer takes on risk, main carriage, import formalities, and insurance from that point. Precise contract wording, clear nomination of carriers, and documented proof of delivery are essential to prevent disputes. (Sources: Investopedia; ICC)
Sources and further reading
– Investopedia, “Free Carrier (FCA)” (article by Crea Taylor) — https://www.investopedia.com/terms/f/fca.asp
– International Chamber of Commerce (ICC), Incoterms Rules History — https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-history/
If you’d like, I can prepare: a printable FCA contract clause template, a seller/buyer checklist you can print, or a side-by-side comparison table of FCA vs. other common Incoterms (FOB, CIF, DDP). Which would help you most?