FAS incoterm is used in ocean or inland waterways shipments and mainly used for bulk cargo. FAS term is not frequently used, it's used rarely.
In FAS incoterm seller hands over the goods
alongside the ship (vessel) at nominated port.
Seller deliver goods (custom cleared) to a place
nominated by buyer which is near to the vessel/ship, till that point seller
bears all the costs. From that point buyer takes care of all activities.
Risk:
In case of FAS risk is transferred from seller to buyer when goods are handed
over at named port alongside the ship.
Insurance: Risk of carrying goods till place of
delivery near to ship lies with seller, from that point buyer needs to arrange
insurance of goods for rest of the shipment. Seller can arrange insurance if
requested by buyer on buyer's cost and risk.
Example:
Let us understand FAS incoterm with a simple
example.
Negotiation:
Let us assume an importer in China needs 10000
Metric tons of iron ore, likewise there is an exporter in Australia who has
sufficient stock of iron ores and he wants to sell it, he decides to export the
iron ore because he can earn more money through export than local trading.
The seller got contact of buyer in China through
an international trade fair and they start negotiation.
Buyer has good contacts in Adelaide port and he knows few
people over there who can handle bulk operation at Adelaide port. So buyer
thinks he will be able to handle the cargo operation at Australia and he can
save some money with this, due to this buyer ask seller go ahead with FAS
incoterm, based on scope of works under FAS they finalize the price of the
commodity.
Contract:
Once Seller and buyer decides to have a deal with
FAS incoterm for the shipment of some bulk commodity, they have one
contract/agreement with FAS and the contract gets signed.
Operations:
Seller shares timeline for delivery of iron ores
at named port (Adelaide port).
Let us assume port of discharge as Shanghai port
at China.
Buyer contacts it's agent at Adelaide and
places booking for space in a bulk vessel as per given timeline. Once booking
is done buyer share booking details with its agent's contact details and place
of delivery.
Seller start preparation of cargo and contact
buyer's agent for details like cut-off date, loading date, sailing dates etc.,
once all details are received seller contact it's transporter for trucks in
order to transport the cargo to the named place at Adelaide port.
Transporter place trucks at seller's factory at Australia
and cargo gets loaded by seller and taken to the named place at Adelaide port
near to the vessel. Custom clearance happens and cargo is handed over to the
agent with exchange of proper documents.
Post handing over the cargo near to the vessel seller's
responsibility ends and from that point buyer's responsibility starts but still
it's seller's responsibility to arrange all shipping documents and hand it over
to buyer.
Once custom clearance completed and cargo is
handed over to the agent, agent starts loading the cargo into vessel using
cranes and other equipment and simultaneously seller starts approaching
different offices for post shipment documents.
After completion of loading vessel onboarding
process starts, upon successful onboarding of vessel seller coordinates with
agent for bill of lading issuance.
Once seller receives all relevant documents he
sends those shipping documents to buyer as per agreed payment terms.
Once vessel arrives at Shanghai port, buyer appoints clearing
agent and arrange clearance and transportation of the cargo till their warehouse,
buyer pays for all these activities.
This is all about FAS incoterm. FAS is preferred
for bulk cargo only, in case of containerized cargo FCA incoterm is preferred.
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