FAS (Free Alongside Ship)

From Supply Chain Management Encyclopedia

Jump to: navigation, search

Russian: FAS Франко вдоль борта судна (...названный порт отгрузки)


Contents

General Provisions

In accordance with rules of Incoterms® 2010,[1] the FAS (Free Alongside Ship) rule is to be used only for sea or inland waterway transport. The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards. The parties are well advised to specify as clearly as possible the loading point at the named port of shipment, as the costs and risks to that point are for the account of the seller and these costs and associated handling charges may vary according to the practice of the port. The seller is required either to deliver the goods alongside the ship or to procure goods already so delivered for shipment. The reference to "procure" here caters for multiple sales down a chain ('String Sales'), particularly common in the commodity trades. Where the goods are in containers, it is typical for the seller to hand the goods over to the carrier at a terminal and not alongside the vessel. In such situations, the FAS rule would be inappropriate, and the FCA (Free Carrier) rule should be used. The FAS requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.


Table 1. Seller's/Buyer's Responsibilities Allocation for Carriage Arrangements, Transaction Costs, and Risk Transfer as Stated by the FAS rule of Incoterms® 2010
Facilities3.png

Facilities4.png

Papers1.jpg

Customs.jpg

Truck.png

Train.png

Delivery.png Craneto.jpg Onboard.png Ship.png

Plane.png

Truck.png

Train.png

Onboard.png Cranefrom2.png De.png

Conterm.png

Truck.png

Train.png

Customs.jpg

Papers1.jpg

Importer1.png

Importer.png

Seller (Exporter), Named Place, Seller's Facilities Export Documents, Formalities, and Duties (if any) Pre-carriage to Named Place, Not Unloaded Delivery at Named Place / Port, Unloaded [1] Ready for Loading at Named Place / Port of Shipment Loaded on Bord of Ship or Vehicle Transport by Air, Rail, Road, Water, or Multimodal On Board Ship or Vessel, Not Unloaded Discharging (Unloading) at Named Place / Port of Destination Delivery at Named Place / Terminal Onward Carriage to Named Place, Not Unloaded Import Documents, Formalities, and Duties Buyer (Importer) - Named Place, Unloaded
Seller's/Buyer's Responsibilities Allocation for a Contract for the Carriage of Goods as Stated by the FAS rule of Incoterms® 2010
Seller►►► Seller►►► Seller►►► Seller►►► Seller►►► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer►
Seller's/Buyer's Responsibilities Allocation for Transaction Costs as Stated by the FAS rule of Incoterms® 2010
Seller►►► Seller►►► Seller►►► Seller►►► Seller►►► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer►
Seller's/Buyer's Transaction (Loss/Damage of Goods) Risk Transfer as Stated by the FAS rule of Incoterms® 2010
Seller►►► Seller►►► Seller►►► Seller►►► Seller►►► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer► ●●Buyer►

Summary on Buyer's and Seller's Resposibilities under FAS

Seller's Responsibilities (in brief)Buyer's Responsibilities (in brief)
Goods - Payment
  • Provide the goods, commercial invoice, and other documentation as required by the sales contract.
  • Pay for the goods as provided in the sales contract.
Licenses, Security, and Customs Formalities
Carriage
  • The seller has no obligation [1] to provide for main carriage of goods.
  • At the request of the buyer, the seller may contract for carriage on standard industry terms [2] at the buyer’s risk and cost.
  • Provide for loading and carriage of the goods from the named port of shipment.
Insurance
  • The seller has no obligation [1] to provide for insurance.
  • Provide information to enable the buyer to obtain insurance.
  • Buyer has no obligation [1] to seller for insurance.
Delivery - Taking Delivery
  • Deliver the goods alongside the ship at the named port of shipment,
    • or procure [3] the goods so delivered, within the agreed-upon time stipulated in the sales contract.
  • If the buyer has not stipulated a specific loading point at the named port of shipment, the seller may pick one that suits seller’s purposes.
  • Take delivery of the goods as provided in the sales contract.
Risk Transfer
  • Assume all risks of loss or damage to the goods until they have been delivered alongside the ship at the named port of shipment within the agreed-upon time stipulated in the sales contract.
  • Assume all risk of loss or damage from the time the goods have been delivered alongside the ship at the named port of shipment as provided in the sales contract.
  • If the buyer nominates the ship, assume all risk of loss or damage and costs if the named ship does not arrive on time,
    • or if the ship fails to take the goods,
    • or if sufficient notice is not given to seller regarding ship name, loading point, and time.
Costs
  • Pay all costs until the goods have been delivered alongside the ship at the named port of shipment.
  • Pay all costs relating to export, including customs formalities, duties, and taxes.
  • Pay all costs for carriage and insurance from the time the goods have been delivered alongside the ship at the named port of shipment.
  • Pay all costs resulting from failure to take delivery at the named place and time.
  • Pay all costs relating to import formalities, duties, fees, and taxes, and other charges including transshipment.
Notice to the Buyer - Notice to Seller
  • Provide, at buyer’s risk and cost, notice to the buyer that the goods have been delivered alongside the ship at the named port of shipment,
    • or that the ship did not take possession of the goods at the agreed-upon time.
  • If the buyer nominates the ship, give sufficient notice to the seller of the name of the ship, the loading point, and the time or period for delivery.
Delivery and Transport Documents - Proof of Delivery
  • Provide the buyer with a proof of delivery that the goods have been delivered alongside the ship at the named port of shipment.
  • At the buyer’s request, if the proof of delivery is not a transport document, help the buyer obtain a transport document.
  • Accept the seller’s delivery document [5] if it is in conformity with the sales contract.
Checking, Packing, Marking - Inspection(s) * Pay all costs associated with checking the quality and quantity of the goods to be in conformity with the sales contract.
  • Provide pre-shipment inspections as required for export formalities.
  • Package the goods, unless the goods are conventionally sold unpackaged.
  • Package the goods as the seller deems appropriate for transport, unless the buyer has given specific requirements prior to the finalization of the sales contract. * Provide marking appropriate to the packaging.
Other
  • Timely provide the buyer, at the buyer’s request and cost, assistance in securing information and documents, including security information, required by the buyer for transport and import of the goods to the final destination.
  • Reimburse the buyer for buyer’s costs related to securing information and documents, including security information, the seller requires for export formalities and security clearance of the goods to the named port of shipment.
  • Timely advise the seller of any security-related data requirements.
  • Reimburse the seller for seller’s costs related to securing information or documentation, including security information, that the buyer requires for import formalities, security clearance, and transport of the goods to the final destination.
  • Timely provide the seller, at the seller’s request and cost, with any documents and information required for export, transport, and security clearance of the goods to the named port of shipment.


Examples[4]

  • FAS, ABC Shipping Line, Dock #1, Port Vyborg, Russian Federation
  • FAS, XYZ Shipping Line, Quay #4, Le Havre, France

Notes

  1. According to Incoterms rules, seller and buyer have reciprocal responsibilities only. The "no obligation" term often used in the rules of Incoterms means that one party has not obligation to the other party. In this case (Art. А.3.А - Incoterms® 2010) the seller has obligation neither to arrange nor to pay the contract on carriage. The same way, the "no obligation" term concerning the contract on carriage applied to the buyer (Art. В.З.А - Incoterms® 2010) describes the buyer’s position, where the latter has not responsibility to the seller for the contract on carriage. Therefore, in accordance with the EXW rule, no one from the contract parties has responsibility to the second contract party. The "no obligation" term has the same understanding for the both parties in the case of insurance. However, the "no obligation" term being applied to the second party does not mean that the task performance is out of the first party’s interests. So, for the case of the EXW rule, despite the fact that the buyer has not responsibility to the seller for the contract on carriage, it is clear, that the buyer has an interest to have such a contract on carriage that will deliver the goods to the buyer’s place of destination safely and in the time stipulated.
  2. The «on standard industry terms» term, in the Incoterms context, demands the buyer to be careful, because these multiple «standard» terms are usually defined by the buyer’s lawyers on the base of prototypes elaborated by trade associations so numerous and powerful in the United States. They say, an application of the «standard industry terms» is not so well developed and understandable in the United Kingdom in comparison with the United States, while understanding these terms is very important not only for contracts on carriage, but to define insurance coverage and other terms and conditions of insurance contracts.[2] Therefore, business consultants are well advising contract parties to clear, agree, and formalize these and other terms presented in Incoterms in generalized forms. It helps to avoid problems and disputes in the future; e.g., in an arbitration court).[3]
  3. The seller’s option to "procure goods already so delivered", existing now in a number of Incoterms® 2010 rules, is concerned to the sale, and successive resale, of a single shipment of goods while en route from place of shipment to final destination (so named string sales). This is common in the commodity trade (futures trade), where oil, grain, and ore shipments are sold and resold before the vessel arrives in port.
  4. The examples given hereto are to illustrate purposes concerning the syntax of Incoterms® 2010 rules and could conform with any real data occasionally only.
  5. Delivery document term used as the heading to article A8 (Incoterms® 2010) means a document used to prove that delivery has occurred. For many of the rules of Incoterms® 2010, the delivery document is a transport document or corresponding electronic record. Nevertheless,[4] with EXW, FCA, FAS and FOB rules, the delivery document may simply be a receipt. A delivery document may also have other functions, for example as part of the mechanism for payment declaration: refers to comply with customs regulations and have met some of the requirements, including the notes, Enron, information or physical inspection of the obligation. Such requirements are particularly common in construction contracts with large contractors, government entities, and major corporations.

References

  1. Incoterms® 2010: ICC rules for the use of domestic and international trade terms – ICC Publication No 715E
  2. Getting to Market | http://www.locations4business.com/europe/uk/business-information/commercial-law/getting-to-market/
  3. http://www.oesa.co.uk/hedge-fund-services/isda-agreements/
  4. Financial terminology | http://financialterminology.info/2011/06/incoterms-2010-international-edition-b/
Personal tools
Our Partners