What Is the Free Alongside Ship Meaning?
FAS stands for Free Alongside Ship. FAS is a term within the realm of international trade. It's one of the Incoterm standards that define the responsibility of the buyers and also that of the sellers.
Under FAS, the seller is responsible for delivering goods. The items are placed next to the vessel at the port of shipment. This means the seller handles all risks up to this point.
After the goods are alongside the ship, the buyer takes over. The buyer is responsible for loading the items onto the ship and handling all other shipping responsibilities.
When Should You Use Free Alongside Ship?
The Free Alongside Ship (FAS) term is particularly beneficial when the buyer is positioned to handle the primary shipping arrangements and works well for agreements involving sea or inland canal transit. This could be due to their strong relationships with carriers, access to efficient logistics networks, or even better freight rates. With this control, buyers can often save on costs and coordinate shipments more smoothly.
FAS is not appropriate for air or land shipments and is solely suited for water-based transportation. FAS can be a functional solution for a clear distribution of risks and duties if the buyer is comfortable with these responsibilities.
What Are the Seller's Responsibilities?
Under FAS Free Alongside Ship, the seller has several key responsibilities, which include:
- Ensuring the goods are prepared and packaged for shipment.
- Delivering the goods alongside the designated vessel at the port.
- Handling all customs and export clearance processes required for international shipments.
The seller is relieved from any further responsibility or risk after completing these procedures and placing the items near the ship.
What Are the Buyer’s Responsibilities?
The customer is responsible for any additional responsibilities after the items are alongside the ship, including:
- Managing the loading of the goods onto the ship.
- Covering the main carriage, as well as any necessary insurance costs.
- Handling import duties and customs clearance upon arrival.
When the goods are delivered, the buyer assumes all costs and risks, marking a significant transition point in responsibility.
The Pros and Cons of Free Alongside Shipping
There are several benefits for both the buyer and the seller when using FAS. FAS is suitable for the seller since it restricts his responsibilities to the port of shipping. The seller's job will be completed once the products are delivered with the ship. This can reduce logistics' intricacy and accountability.
Meanwhile, for buyers, FAS is advantageous when they have strong logistics capabilities or established relationships with carriers. Since they are responsible for the loading and shipping from the port, they can potentially save on shipping costs or have greater control over the transit process. However, the main disadvantage for buyers is that they must take on the risk and cost of loading the goods and ensuring proper delivery to the destination port.
For both parties, it's important to assess whether FAS aligns with their supply chain needs and capabilities before agreeing to this Incoterm.