FCA Incoterm (Free Carrier) – Definition
FCA (Free Carrier) is one of the Incoterms 2020 rules that can be used with any mode of transport, including multimodal shipments. The seller fulfils its obligation when the goods are handed over—loaded if the named place is the seller’s premises, or placed at the carrier’s disposal if elsewhere—to the carrier or another party nominated by the buyer at the named place of delivery. From that moment, risk transfers to the buyer.
2020 update: Article A6/B6 now lets the parties agree that the buyer instructs the carrier to issue an on‑board bill of lading to the seller once the goods are loaded, making FCA more attractive for letter‑of‑credit trades.
Seller’s Main Obligations (FCA)
- Issue the commercial invoice and packing list.
- Clear the goods for export and bear all export duties, taxes, and formalities.
- Load the goods on the buyer‑nominated vehicle if the named place is the seller’s facility; otherwise, place them ready for pickup at the agreed point.
- Provide the buyer with the transport document (B/L, AWB, CMR) showing “FCA, [Named Place], Incoterms 2020.”
- Notify the buyer that delivery has occurred.
- Bear risk and costs up to the hand‑over point.
Buyer’s Main Obligations (FCA)
- Pay for the goods as set out in the sales contract.
- Arrange and pay for the main carriage, choosing and instructing the carrier.
- Handle transit and import customs clearance, duties, VAT, and any local taxes.
- Organise on‑carriage from the named place to the final destination.
- Obtain cargo insurance for the legs under its risk (optional but strongly recommended).
Insurance Under FCA
Incoterms impose no mandatory cargo‑insurance requirement.
| Transport phase | Typical policy holder | Rationale |
|---|---|---|
| Up to the FCA hand‑over point | Seller | Risk remains with the seller until delivery |
| Main carriage + onward moves | Buyer | Risk passes to the buyer at delivery |
A clearly drafted sales contract should spell out who buys which policy to avoid gaps. (Trade Finance Global)
FCA Compared with Related Terms
| Rule | Who Loads?* | Who Pays Main Carriage? | Who Clears Export? | Typical Use‑Case |
|---|---|---|---|---|
| FCA | Seller (if at seller’s site) | Buyer | Seller | Containerized or multimodal shipments where buyer controls the freight |
| EXW | Buyer | Buyer | Buyer | Buyer has strong origin‑side logistics capability |
| FOB (sea only) | Seller (onto vessel) | Buyer | Seller | Traditional bulk or break‑bulk sea freight |
| CPT | Seller | Seller | Seller | Seller prepays freight but risk still passes at origin |
| DAP | Buyer | Seller | Seller | Seller delivers to destination, buyer unloads & clears import |
*If the named FCA place is not the seller’s premises, loading/unloading is for the party that contracts the carrier.
Worked Example: FCA at the Seller’s Premises, Fully Costed
Scenario. A US importer buys $30,000 of consumer electronics from a Chinese factory on FCA Shenzhen Pudong warehouse, 15 Pudong Road (seller's premises). Seller loads onto buyer's nominated truck at the warehouse; buyer's forwarder takes over from that point. Ocean leg to Rotterdam.
| Cost line | Pays | Range (USD) | Source |
|---|---|---|---|
| Goods (FCA invoice) | Buyer | $30,000 | Seller quote |
| Loading at seller's warehouse | Seller (FCA at seller's premises) | included in FCA price | Incoterms 2020 A4 |
| Inland trucking Shenzhen warehouse → Yantian port | Buyer | $200-350 | icontainers China drayage tariff |
| Origin THC + export docs | Buyer* | $180-260 | *FCA 2020 A6/A7 — seller arranges export clearance but buyer pays origin THC depending on carrier contract |
| Ocean freight 40ft Yantian → Rotterdam | Buyer | $2,200-2,800 | Drewry WCI Asia-Europe 40ft, H1 2026 |
| Destination THC + drayage Rotterdam | Buyer | $500-770 | Port of Rotterdam tariff + EU drayage |
| EU VAT 21% + import duty (HS 8517 ~0% MFN) | Buyer | $6,930-7,200 | Dutch Belastingdienst + EU TARIC 2026 |
| Buyer's total landed | — | $40,010-41,380 | Sum of above (cargo + logistics + VAT) |
FCA 2020 A6/B6 change: under the Incoterms 2020 revision the seller can (at the buyer's request and cost) instruct the carrier to issue an on-board bill of lading marked-as-loaded — important when the buyer has a Letter of Credit (LC) that requires an on-board BL. Pre-2020 FCA could not deliver this BL form.
Footnote: ICC officially recommends FCA over EXW for cross-border because FCA puts export clearance on the seller (cleaner regulatory placement). Named place precision matters: "FCA Shenzhen" alone is ambiguous — use full street address.
When Does FCA Make Sense?
- Container exports where the buyer wants to leverage its own freight contracts.
- Intermodal projects (rail + sea + truck) needing a clean risk cut‑off at origin.
- Situations where banks require an on‑board B/L but physical loading happens inland.
- Deliveries from large exporters whose sites can safely load trucks or containers.
Common Pitfalls & Mitigation
| Pitfall | Why It Occurs | How to Avoid It |
|---|---|---|
| Wrong or vague delivery point | “Warehouse” not clearly defined | State full address and, if needed, GPS coordinates in the contract |
| Export‑clearance delays | Missing licences or data | Use a pre‑shipment checklist; engage a customs broker early |
| Cargo damage during loading | Inadequate equipment or supervision | Implement SOPs, qualified staff, and confirm carrier arrival windows |
| Freight booking gaps | Buyer books carrier too late | Align shipment date with the buyer’s booking lead times; share forecasts |
| Documentary issues for L/C | Bank needs on‑board B/L | Invoke the FCA 2020 clause for on‑board notation before negotiating the L/C |
FCA vs EXW vs FOB - Choosing the Right "Buyer Arranges Main Carriage" Incoterm
| Attribute | EXW | FCA (highlighted current term) | FOB |
|---|---|---|---|
| Mode of transport | Any mode | Any mode | Sea / inland waterway only |
| Risk transfer point | At seller's premises | When delivered to carrier (or loaded if seller's premises) | When loaded on board the vessel |
| Export customs clearance | Buyer | Seller | Seller |
| Container-friendly? | Yes (any mode) | Yes — Incoterms guidance recommends FCA for containers | No — risk transfer at "loaded on board" creates a gray area for containers delivered to terminal days before vessel loading |
| 2020 Incoterms update | Unchanged | A6/B6 added: parties can agree the buyer instructs the carrier to issue an on-board bill of lading to the seller, useful for letter-of-credit transactions | Unchanged |
Required Documents at a Glance
- Commercial Invoice & Packing List
- Export customs declaration and licences/certificates of origin or conformity
- Bill of Lading / Air Waybill / CMR marked “FCA [Named Place] Incoterms 2020”
- Any agreed insurance certificate or carrier instructions
Key Takeaways
- Risk passes under FCA when the goods are handed over to the buyer’s carrier—loaded if at the seller’s premises.
- The seller handles export clearance and origin loading; the buyer controls freight, transit, and import.
- Clear contract wording on the exact delivery point, documentary requirements, and insurance split prevents costly disputes.
- The new on‑board B/L option makes FCA a practical alternative to FOB for containerised sea shipments financed by L/Cs.
Sources & Further Reading
- ICC – Incoterms® 2020 Rules
- ICC Academy – “Incoterms 2020: FCA or FOB?”
- International Trade Administration – “Know Your Incoterms” & “Free Carrier (FCA)”
- Shipping Solutions – “Incoterms 2020 FCA: Spotlight on Free Carrier”
- xNova International – “Incoterms 2020: EXW, FOB and FCA – Correct Use and Recommendations”
- 1. Seller’s Main Obligations (FCA)
- 2. Buyer’s Main Obligations (FCA)
- 3. Insurance Under FCA
- 4. FCA Compared with Related Terms
- 5. Worked Example: FCA at the Seller’s Premises, Fully Costed
- 6. When Does FCA Make Sense?
- 7. Common Pitfalls & Mitigation
- 8. FCA vs EXW vs FOB - Choosing the Right "Buyer Arranges Main Carriage" Incoterm
- 9. Required Documents at a Glance
- 10. Key Takeaways
- 11. Sources & Further Reading
Related Articles
