Free Alongside Ship (FAS) – Simple Explanation and Examples

Free Alongside Ship (FAS) is one of the Incoterms (International Commercial Terms) used in international trade, specifically outlining the responsibilities and liabilities of both the buyer and the seller in transporting goods. Under the FAS term, the seller completes their obligation once the goods are placed alongside a vessel at a port designated by the buyer. From this point onward, the responsibility, risks, and costs associated with the shipping process are transferred to the buyer.

By using FAS, both parties achieve a clear understanding of who handles each cost, up to and after this critical point in the shipping process. This term is predominantly used for sea and inland waterway transport.

Detailed Understanding of FAS

Responsibilities of the Seller

1. Export Packaging: Although not required under FAS, sellers generally provide adequate packaging of goods to ensure they reach the destination port safely.
2. Clearing Export Duties: The seller is responsible for customs clearance and paying export duties and taxes in the country of origin.
3. Transport to Port: The seller must transport the goods to the port and ensure that they are placed alongside the vessel, ready for loading.
4. Documentation: Necessary shipping documents should be handed over to the buyer, including the commercial invoice and, if necessary, export licenses or authorizations.
5. Risk Transfer: The risk associated with the goods transfers to the buyer once goods are alongside the ship.

Responsibilities of the Buyer

1. Selecting the Shipping Vessel: The buyer is responsible for negotiating the shipping contract and any associated costs once the goods are alongside.
2. Import Logistics: Buyers handle import duties, clearing customs in the destination country, and ensuring all paperwork is in order.
3. Costs Beyond Loading: All costs, including loading the goods on the vessel, sea journey, unloading at the destination port, and final delivery, belong to the buyer.

Examples to Illustrate FAS

Example 1: Exporting Machinery from Germany to the USA

Seller’s Perspective: A German machinery supplier agrees to sell equipment to a US company using FAS. They transport the machinery to the Port of Hamburg and complete all German customs export requirements. Once the machinery is placed alongside the designated vessel, their responsibility ends.

Buyer’s Perspective: The US company takes on responsibility from loading the vessel at the Port of Hamburg, arranging maritime insurance, and handling customs clearance at the Port of New York, rounding out the transaction with inland transport to their warehouse.

Example 2: Shipping Wine from France to Australia

Seller’s Role: A French winery sells bottled wine to an Australian distributor FAS. The winery handles packaging, documentation, and transport to the Port of Le Havre, where the wine is positioned next to the ship named by the Australian buyer.

Buyer’s Duty: From Le Havre, the Australian distributor covers all subsequent costs, including shipping to Sydney, insurance, and the import process, ensuring compliance with Australian customs.

Important Considerations for FAS

• Risk Management: Since the buyer assumes risk once goods are placed alongside, they should ensure insurance is in effect once goods leave the seller’s possession.
• Clear Agreements: It’s crucial that both parties clearly agree on specifications such as vessel type, readiness time, and precise location where goods will be placed.
• Carrier Coordination: Coordination between the buyer’s preferred carrier and the seller’s timing is vital to ensure smooth and cost-effective transitions at port.
• Limited Liability for Seller: FAS significantly limits the seller’s responsibilities post-delivery of goods alongside the ship, potentially reducing their liability exposure.
• Regulation Comprehension: Given that customs regulations vary widely, both parties should maintain up-to-date knowledge to avoid delays or legal issues.

In conclusion, choosing FAS requires a robust understanding of logistics and strategic negotiation of responsibilities. At eezyimport, we specialize in navigating complex import/export regulations and customs clearance to ensure seamless international trade operations. Contact us for all your customs-related needs to enhance your global trade efficiency.

## Free Alongside Ship (FAS) – FAQ

What is Free Alongside Ship (FAS) in international trade?

• Free Alongside Ship (FAS) is an Incoterm used in international trade where the seller is responsible for delivering goods alongside a vessel at a specified port. Once goods are alongside, the buyer assumes all costs and risks from that point forward.

How does the risk transfer work with FAS?

• In FAS, the risk transfers from the seller to the buyer once the goods are placed alongside the vessel at the departure port. This means any damage, loss, or additional costs incurred from that point onward are the buyer’s responsibility.

Is FAS applicable to modes of transport other than sea?

• FAS is primarily designed for sea and inland waterway transport. It is not suitable for air or land transportation where the concept of placing goods alongside a vessel does not apply.