Lesson 2 / 11 · any mode of transport
FCA Free Carrier
The seller clears the goods for export and hands them to the carrier or forwarder chosen by the buyer at an agreed place. From there, the buyer pays and carries the risk.
Reviewed by: pending — expert review by TermVisa's editor (retired VP, international transport) in progress · Last updated
Scenario
Cotton T-shirts from Tiruppur for a US retailer
FCA Chennai Incoterms® 2020
- Seller
- Apparel manufacturer, Tiruppur, India
- Buyer
- Clothing retailer, Atlanta, United States
- Transport
- Sea — less-than-container load, consolidated in Chennai → Savannah
The seller, an apparel manufacturer in Tiruppur, India, sells 9,000 cotton T-shirts to the buyer, a clothing retailer in Atlanta, United States, under FCA Chennai Incoterms® 2020. The contract names the exact address of the buyer's forwarder's container freight station (CFS) in Chennai. The seller trucks the cartons there itself; the buyer's forwarder consolidates them into a container to Savannah and trucks them on to Atlanta. Payment is by documentary credit.
Illustrative scenario: companies are generic, and real contracts, carriers and countries add their own conditions.
The journey, stage by stage
Top bar: who pays for each stage. Bottom bar: who bears the risk of loss or damage. The red line marks where risk passes.
- Seller
- Buyer
- Depends on contract / carrier or port practice
- Point where risk passes
⚠ Risk passes when the cartons arrive at the named Chennai CFS on the seller's truck, ready for unloading.
- Loading at the seller's premises — Seller: Seller loads its own truck
- Export clearance — Seller: Seller files the export declaration in India
- Pre-carriage to the departure terminal — Seller: Seller's truck to the named CFS in Chennai
- Departure terminal handling and loading — Buyer: Unloading, consolidation, port charges: buyer's side
- Main carriage — Buyer: Ocean freight Chennai → Savannah
- Arrival terminal: unloading and handling — Buyer: Arrival charges at Savannah
- Import clearance, duties and taxes — Buyer: US import clearance and duties
- On-carriage to the named place — Buyer: Truck Savannah → Atlanta
Who does what in this scenario
| Party | What they arrange / do | Who pays (them / what they pay) | Risk they carry | Key documents |
|---|---|---|---|---|
| Seller / exporter | Packs and marks the cartons, loads its own truck, gets the export declared in India and delivers to the named CFS. | Packing, its own trucking, export formalities and everything up to the hand-over. | Until the cartons are at the CFS, still on its truck, ready for unloading. | Commercial invoice, packing list, proof of export, origin documents the buyer asks for, CFS receipt. |
| Buyer / importer | Chooses the forwarder, books ocean freight and the truck to Atlanta, tells the seller where and when to deliver, clears the goods into the US. | Everything after hand-over: unloading, consolidation, port charges, ocean freight, arrival charges, duties, final delivery. | From the moment the cartons are ready for unloading at the CFS. | Booking, bill of lading or sea waybill, US import documents, duty receipts. |
| Origin freight forwarder | The buyer's forwarder in Chennai gives the seller the receiving address and cut-off, unloads and consolidates the cartons and books the vessel. | Hired and paid by the buyer. | Answers to the buyer for its own errors, usually within limits set by its trading conditions. | Cargo receipt to the seller; house bill of lading. |
| Destination freight forwarder | Partner in Savannah: tracks the container, coordinates the US broker and the truck to Atlanta. | Buyer. | Its own handling. | Arrival notice, delivery order. |
| Ocean carrier (shipping line) | Carries the consolidated container Chennai → Savannah (often with transshipment). | Contracted by the buyer's forwarder; the buyer pays. | Liable for loss or damage in its care, within convention and bill-of-lading limits. | Master bill of lading to the forwarder. |
| Cargo insurer | No party is obliged to insure under FCA. The buyer should insure from hand-over in Chennai; the seller should cover the truck leg to the CFS. | Each party for its own cover. | Pays only what the policy wording and insured value allow. | Each party's policy or certificate. |
| Customs broker (export) | Files the export declaration in India for the seller. Most countries require one; value thresholds, exceptions and export-control checks vary — ask the broker. | Seller. | Answers to its client for filing errors; the exporter stays responsible to customs. | Export declaration and release (proof of export). |
| Customs broker (import) | Classifies the goods, files the import declaration in the United States for the buyer as importer, pays duties and import taxes on its account and obtains release. | Buyer. | The buyer remains responsible to customs as importer; the broker answers to it for its own errors. | Import declaration, duty and tax receipts, release. |
| Banks (letters of credit) | Pays the seller under the documentary credit only against matching documents. If the credit asks for an on-board bill of lading, the seller needs the buyer's carrier to issue one — the 2020 edition lets the parties agree that the buyer will instruct its carrier to do so. | Bank charges split as negotiated. | Banks look at documents only; a single discrepancy can delay payment. | Documentary credit; the seller's document set. |
| Terminals and ports | The CFS receives the cartons; the Chennai container terminal loads the container. | Buyer's side after hand-over (through the forwarder's invoice). | Its own handling. | CFS or dock receipt. |
✗ Common mistakes
- Writing only “FCA Chennai”. Name the exact address (CFS, terminal or the seller's own dock): that is where delivery and risk transfer happen.
- Mixing up the two variants: at the seller's premises the seller loads the buyer's vehicle; at another place the seller delivers ready for unloading.
- Accepting a documentary credit that demands an on-board bill of lading without agreeing how the seller will get one.
- Leaving the truck leg uninsured: the seller carries the risk until hand-over.
- Missing the CFS cut-off because the buyer's forwarder never shared the booking details.
? What to ask before you sign
- Your freight forwarder (Seller) What is the exact receiving address and cut-off — and who unloads my truck, at whose cost?
- Your freight forwarder (Buyer) If our credit requires an on-board bill of lading, will your carrier issue one naming the seller as shipper?
- Your customs broker (Seller) What does the export declaration require in our country, and what will the buyer's broker need from us for import?
- Your cargo insurer (Buyer) Does my cover start at the hand-over point named in the contract?
- Your bank (Both) Which transport document does the credit require, and can it be produced under FCA?
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