FAS (Free Alongside Ship)

From Supply Chain Management Encyclopedia

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.

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

  1. Payment—Pay for the goods as provided in the sales contract.
  2. Licenses, Security, and Customs Formalities— Obtain any import licenses or authorizations and handle all import customs formalities.
  3. Carriage and Insurance—Provide for loading and carriage of the goods from the named port of shipment. Buyer has no obligation to the seller for insurance.
  4. Taking Delivery—Take delivery of the goods as provided in the sales contract.
  5. Risk Transfer—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.
  6. Costs—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.
  7. Notice to Seller—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.
  8. Proof of Delivery—Accept the seller’s delivery document if it is in conformity with the sales contract.
  9. Inspection(s)—Pay for pre-shipment inspections unless such is required by the country of export.
 10. Other—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.

References

1. ↑ Incoterms® 2010: ICC rules for the use of domestic and international trade terms – ICC Publication No 715E