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FAS Incoterms | Free Alongside Ship | Comprehensive Guide

What is FAS incoterms (Free Alongside Ship)?This guide will help you understand the definition of FAS and the responsibilities of each party.
What is FAS incoterms (Free Alongside Ship)?

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What is FAS incoterms (Free Alongside Ship)

Free Alongside Ship or FAS for short is a regulation that applies specifically to water transportation (sea, river, and lake).

The regulation requires sellers to take care of all matters regarding the export of goods and their placement at the shipping port, right next to the ship.

The seller’s responsibility ends right alongside the ship, so after that, responsibility for the goods shifts to the buyer including how the goods are loaded onto the ship, costs incurred, and shipping costs to the final destination (not just to the port of destination).

Incoterms General Table,DDP, FOB, DAP, EXW, CIF, FCA, FAS,CFR, CTP, CIP, DAT

Seller’s obligations under the FAS Incoterm

  • Repeating what has been written above, the seller is responsible for delivering the goods to the port and not just delivering them. He must also place it next to the ship (which is used to deliver goods).
  • The seller must also take care of all necessary export documents.
  • And the seller must make sure to cover all costs necessary for it (until the goods are placed right next to the ship). Once these three tasks have been carried out and verified by the buyer, responsibility (for the goods) immediately shifts to the buyer.

Buyer’s obligations under the FAS Incoterm

  • The buyer is responsible for loading the goods onto the ship.
  • The buyer must bear all costs of shipping the goods including loading, sea transportation, and transporting the goods to the ship. This includes loading, sea transportation, and accompanying insurance.
  • And finally, the buyer must take care of all import documents and all the accompanying fees. Basically, with the implementation of FAS, sellers and buyers have a relatively equal proportion of responsibility.

When to Use FAS Incoterm

  • When the seller has direct access to the shipping vessel.
  • If the goods are large they must be loaded directly onto the ship.
  • If the buyer prefers to take responsibility when the goods are ready on the ship, in other words, he is unwilling or unable to handle the transportation of the goods to the port (shipping port) and all the risks that accompany it. In addition to these three scenarios, FAS rules are also recommended for:
  • Transactions where the seller can ensure one hundred percent that the goods are delivered “safely” alongside the ship. This way, buyers can avoid the hassle that may arise when sending goods to the port.
  • Obtain clarity on the allocation of costs that must be incurred by buyers. Any type of flow of goods delivered to the port can result in unexpected costs that have the potential to “swell” beyond initial predictions.
  • If the goods have a high enough value they can pose a big enough risk to be handed over to the side of the ship. 

When is FAS incoterms not suitable?

In general, FAS is limited to shipping goods via inland waterways.

Why?

Since FAS itself is concerned with “next to the ship” and in the case of certain inland barges, preparing goods right next to the ship before loading is not possible.

There are also situations where goods cannot be placed right next to the ship but are handed over to the authorities at the port, for example.

In situations like this, the FCA (Free Carrier) regulations are more suitable because the handover point should not be next to the ship but somewhere else.

The risks?

There is always a risk to everything, and FAS is no different. Usually, the risk that occurs is related to confusion in the distribution of responsibilities between the two parties. In this case, the seller and buyer. Here are the points to explain it:

The seller’s responsibility is more limited because he only guarantees that the goods are still in prime condition when they arrive at the ship’s side. No one can guarantee the “safety of goods” during sea travel, and whatever happens after the goods are loaded on the ship is no longer their responsibility. But of course, this is an advantage for the seller.

The seller is not responsible for potential damage when loading goods onto the ship. Loading goods onto ships is often not a simple job and is prone to damage (to the goods). For buyers, the potential for damage during loading is something that must be considered because, at that stage, the seller no longer has any responsibility.

There may be cost uncertainties regarding loading charges or ocean shipping insurance premiums. In some cases, it can give rise to serious disputes between sellers and buyers.

Legal risks related to exports. The seller is only responsible until the goods are on the side of the ship. However, there is always a risk that the goods cannot be loaded due to incomplete documentation. It is the buyer who has to bear that risk.

In general, FAS risks are risks that affect the buyer, not the seller, but if the buyer can ensure he can load and ship the goods by ship, it is not a problem.

What are the advantages of FAS incoterms?

It can be concluded that the advantage of FAS is that there is a clear division of responsibilities between sellers and buyers.

Each party has limited responsibility according to their respective portions. Above, we might get the idea that there are more benefits for the seller, but for the buyer, there are advantages related to the freedom to choose transportation services because loading and shipping by ship are no longer the seller’s responsibility.

For both parties, limiting risks on each side can minimize ambiguity and facilitate risk management.

Conclusion

Each trade transaction regulation has its own pluses and minuses, but it can be concluded that the advantage of FAS lies in its ability to divide responsibilities between sellers and buyers, thereby making it easier for them to manage risks and prevent ambiguity.

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