INCOTERMS 2020 and the FCA (Free Carrier) Delivery Method Explained
As the global population grows and globalization accelerates, international trade continues to expand rapidly. At the same time, technological developments have increased transaction speed and complexity. Therefore, clearly defined international trade rules have become more important than ever.
In international trade, parties must clearly define critical issues from the very beginning. These issues include where goods will be delivered, who will bear the costs, how risks will be shared, and how transportation and insurance contracts will be arranged. Without such clarity, disputes inevitably arise.
What Are INCOTERMS?
To prevent misunderstandings and commercial disputes, the International Chamber of Commerce (ICC) introduced INCOTERMS (International Commercial Terms). These rules clearly define the obligations, costs, and risk distribution between buyers and sellers in international trade.
The ICC first published INCOTERMS in 1936 and most recently updated them on January 1, 2020. Although INCOTERMS do not constitute international law, they provide a globally accepted commercial reference. As a result, banks, insurers, and courts frequently rely on INCOTERMS in contracts and dispute resolution.
INCOTERMS 2020: Delivery Terms Overview
INCOTERMS 2020 define 11 delivery terms, which fall into two main categories.
Rules Applicable to All Modes of Transport
- EXW (Ex Works): Delivery at the seller’s premises
- FCA (Free Carrier): Delivery to the carrier at a specified location
- CPT (Carriage Paid To): Seller pays transportation costs
- CIP (Carriage and Insurance Paid To): Seller pays transport and insurance
- DAP (Delivered at Place): Delivery at an agreed destination
- DPU (Delivered at Place Unloaded): Delivery unloaded at a named place
- DDP (Delivered Duty Paid): Seller delivers goods with all duties paid
Rules for Sea and Inland Waterway Transport Only
- FAS (Free Alongside Ship): Delivery alongside the vessel
- FOB (Free on Board): Delivery on board the vessel
- CFR (Cost and Freight): Seller pays freight
- CIF (Cost, Insurance and Freight): Seller pays cost, insurance, and freight
Understanding the FCA (Free Carrier) Delivery Method
This article focuses on FCA – Free Carrier, one of the most flexible and widely used INCOTERMS.
Under FCA, the seller completes export customs clearance and delivers the goods to the first carrier at the agreed place and date. At that exact moment, all risks and responsibilities transfer to the buyer.
Seller’s Responsibilities Under FCA
Under FCA, the seller must:
- Prepare the goods in line with the sales contract
- Complete all export customs procedures
- Obtain and provide required export documentation
- Deliver the goods to the agreed location on time
- Bear all costs and risks until delivery to the carrier
Once the seller hands over the goods, their responsibility ends completely.
Buyer’s Responsibilities Under FCA
After delivery, the buyer assumes full responsibility. Specifically, the buyer must:
- Pay the full contract price
- Arrange transportation and logistics
- Cover freight, insurance, and agency costs
- Complete import customs procedures
- Take delivery of the goods at the destination
Consequently, all risks related to loss, damage, or delay belong to the buyer from that point forward.
Role of the Logistics Company in FCA Transactions
After delivery, the buyer contracts a logistics provider. Depending on the cargo type and destination, transportation may involve road, sea, air, rail, or inland waterways.
The logistics company’s responsibility begins when it receives the goods at the agreed location. However, under FCA, the buyer ultimately bears all logistics-related costs and risks, even if the seller signs the transport contract.
Conclusion
INCOTERMS 2020 provide a transparent and reliable framework for international trade. Among these rules, FCA (Free Carrier) stands out due to its flexibility and suitability for multimodal transportation.
By clearly defining responsibilities and risk transfer, FCA reduces disputes, simplifies logistics planning, and increases transaction security. For this reason, companies engaged in international trade should understand and apply FCA correctly to ensure smooth and sustainable operations.
