FCA is the incoterm which can be used in any mode of transportation (Sea, Air, Surface), this is applicable for multimodal transportation also. This incoterm gives flexible options to deliver the cargo at named place.
In case of FCA incoterm buyer hands over the cargo to at a place of seller's choice, the place may be at seller's premises or at agent/forwarder's warehouse or at port of loading or any other place.
FCA to be mentioned as "FCA + named place"
Example: FCA Shanghai container terminal.
FCA delivery has two options:
1st option: Delivery at seller's premises: In this case seller loads the cargo in buyer's trucks, from this point all buyer takes care of all operations.
2nd option: Delivery at named place by buyer: In this case seller loads the cargo hands it over at a place of buyer's choice, the place can be agent's or forwarder's warehouse or named container terminal or any other place. In this case seller includes the cost of primary transportation in cargo price.
Risk:
In 1st option seller has the responsibility of the cargo till it gets loaded on the truck, at this point all risks are transferred to buyer.
In 2nd option seller has the responsibility of cargo till it reaches to the named place, at this point all risks are transferred to buyer.
Insurance:
Seller doesn't have obligation of insurance in case of FCA delivery term. Buyer needs to arrange insurance of the cargo.
Export custom clearance: In case of FCA seller's agent takes care of export clearance with the help of buyer. That means all documents like export and other licenses, product test reports, commercial invoice, packing list, authorization etc. to be given by seller and the clearance process to be handled by buyer's agent.
Example:
Let us understand how shipment happens under FCA incoterm.
1st option:
Assuming an electronics goods manufacturer in Shanghai, China connects with a mobile phone manufacturer in Chennai, India who needs cruise boards for their manufacturing needs, and they starts discussion on further business.
Negotiation:
Indian buyer knows few agents/freight forwarders in China who has good logistics infrastructure. Buyer wants to go ahead with FCA delivery terms and seller at China doesn't have any objection for that. They negotiate on the price and sealed the agreement with FCA buyer's factory.
Contract:
Both party agreed and the contract gets signed with FCA (FCA, Shanghai factory) delivery term and CAD payment term.
Operations:
Once contact is finalized seller checks availability of all the raw materials and gives expected readiness date to buyer, and starts manufacturing process.
Buyer contacts it's agent at China and places booking for containers as well as vehicles for primary transportation. Once booking is done buyer shares loading date to seller along with it's agent's contact details.
Seller coordinates with buyer's agent for placement of trucks for loading and gives them loading date and time.
On the date of loading agent places trucks at seller's factory, seller loads the cargo and hands over all required documents to the agent. At this point all responsibilities are transferred from seller to buyer.
Custom clearance & Documentation:
Buyer provides all relevant documents for export, below is the list of documents required:
1. Commercial invoice
2. Packing list
3. Pre shipment inspection report
4. Export license
5. Any other documents related to the trade
Buyer's agent takes the cargo to the nearest port or ICD and initiate custom clearance process once they received all documents. Seller will help the agent if custom raises any query on the product or documents. After custom clearance buyer's agent sends the cargo to container terminal and coordinate with shipping line for loading of the containers on vessel.
Once vessel is onboarded, agent approaches the office of shipping line for issuance of Bill of lading, once B/L is issued they reach out chamber of commerce for issuance of Certificate of origin, similarly other documents will be issued from various offices if required.
Post issuance of shipping documents agent hands over those documents to seller as per buyer's instructions. Seller will lodge the documents at their bank, once documents are received at buyer's Bank they will get notification from Bank and check the documents by paying the amount.
Once vessel arrives at port of destination (Chennai, India) buyer needs to appoint it's CHA for custom clearance, and place vehicles to take the cargo or containers to their premises post clearance.
2nd option:
In 2nd option of FCA buyer may ask seller to deliver the goods at buyer's agent's warehouse or at container terminal or any other place. In this case let's assume buyer asks seller to deliver the cargo at agent's warehouse at Shanghai, after that the agent arranges unloading. Agent takes the cargo to the container terminal and completes custom clearance with the help of seller. Remaining process is same as of 1st option.
This is all about FCA incoterm.
FCA term is recommended for containerized shipments.
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