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GLOSSARY TERM

FAS (Free Alongside Ship)

What Is the Incoterm FAS (Free Alongside Ship)?

What Is FAS (Free Alongside Ship)?

FAS is an incoterm rule for international trade set by the International Chamber of Commerce (ICC). The term “Free Alongside Ship” signifies that all costs and risks until the goods are placed alongside the vessel are borne by the seller.

Under FAS, the seller is responsible for delivering the goods to the named port of departure. This can be a loading dock or a barge, not a container terminal. After that, the buyer takes on all risks and costs associated with delivery to the final destination.

Key Features of FAS

Here are the core principles of the FAS incoterm:

Seller’s Obligations Under FAS

Under FAS, the seller is responsible for preparing the goods for export, including packaging and marking. They must bear the cost of loading the goods onto a carriage and transporting them to the buyer’s named port of departure.

The seller should also provide a commercial invoice and secure an export license. They have to handle all export customs formalities, including documentation and duties. They must also provide proof of delivery and cover all pre-shipment inspection costs. Their role ends as soon as the goods are placed alongside the vessel.

Buyer’s Responsibilities

Under FAS, the buyer’s responsibilities include paying for the goods as stipulated in the sales contract, loading the cargo onto the vessel, and delivery to the destination country. They must bear the costs of the main carriage, including insurance and handling, and undertake all import formalities and duties. 

After arrival at the destination port, the buyer also handles the discharge, onward carriage, and pre-shipment inspection charges (for import clearance).

FAS does not require the seller to cover insurance for the main carriage. So, it is the buyer’s responsibility.

Designated Place for Delivery and Risk Transfer

The FAS incoterm dictates that the designated delivery place is the named port of origin specified by the buyer. The risk of loss or damage transfers from the seller to the buyer once the goods are delivered alongside the ship at that location. After that, the buyer must bear all risks and costs.

Advantages of FAS

Here are the plus points of using FAS for buyers and sellers:

For the Seller

  • Clear delineation of responsibility once the goods are at the vessel’s side

For the Buyer

  • Flexibility in selecting a suitable carrier and negotiating transport costs

Disadvantages of FAS

Here are some potential drawbacks of using the FAS incoterm:

Challenges for the Seller

  • Limited control over shipping once the goods are alongside the vessel

Challenges for the Buyer

  • Bearing the responsibility of import customs clearance and related costs

When to Use FAS

FAS is only suitable for ocean and inland waterway transportation. Buyers should choose this arrangement when they seek flexibility in choosing a carrier. Additionally, this rule is suited for non-containerized, bulk cargo as it can be loaded directly onto vessels. Since the initial point of delivery under FAS is not a terminal but alongside the ship, it can present complications for containerized cargo. In that case, the FCA incoterm would be more appropriate.

FAQ

What is the difference between FAS and CIF?

FAS and CIF (Cost, Insurance, and Freight) are two incoterms exclusive to sea and ocean freight. Here are the primary differences between them:

  • In FAS, the seller’s responsibility ends when the goods are placed alongside the ship at the named port. In CIF, the seller must also arrange for the main carriage.

Who bears the risk of loss or damage under FAS?

Under FAS, the seller bears the risk of loss or damage to the goods until their delivery alongside the vessel. After that, all risk and liability fall on the buyer.

Can FAS be used for any mode of transportation?

FAS is among four of the 11 incoterms that apply exclusively to ocean or inland waterway transportation. It cannot be used for any other mode of transport.

How does FAS impact the cost of goods for the buyer?

Under FAS, the buyer has to cover insurance, transportation, and import-related expenses in addition to the agreed-upon price of the goods.