Free Alongside Ship (FAS)

Definition

Free Alongside Ship (FAS) is a shipping term used in international trade to describe a transaction where the seller must deliver the goods to a specified port and place them alongside the vessel designated by the buyer. The seller assumes all costs and risks up to this point, including transportation to the port, loading onto trucks, and any export documentation. From this point on, the buyer takes over responsibility, covering the cost of loading the goods onto the vessel, marine freight, and subsequent expenses until the goods reach their final destination.

Examples

Automotive Parts Shipment: A car parts manufacturer in Japan agrees to ship automotive parts to a buyer in the United States using FAS terms. The manufacturer delivers the parts to the Port of Yokohama. From there, the American buyer arranges and pays for the loading onto a cargo ship, marine transport, and all other costs necessary to bring the goods to their factory in the U.S.
Electronics: A South Korean electronics company sells a batch of LCD screens to a European buyer on FAS terms. The seller organizes transport to the Port of Busan and ensures the screens are placed alongside the vessel. The buyer then handles loading them onto the ship, shipping, and any fees incurred upon arrival at a European port.

Frequently Asked Questions (FAQs)

Q1: What exact costs are covered by the seller under FAS terms? A1: The seller covers all transportation costs to the named port, export duties, and ensuring that the goods are delivered alongside the vessel. Costs such as packaging, inland freight, and handling at the port are typically included.

Q2: What are the buyer’s responsibilities under FAS? A2: The buyer must cover the cost of loading the goods onto the vessel, marine freight, insurance (if any), import duties, product unloading, and transporting the goods to the final destination.

Q3: How does FAS differ from FOB (Free on Board)? A3: Under FAS, the seller’s responsibility ends once the goods are delivered alongside the vessel. In contrast, under FOB, the seller’s responsibilities include loading the goods onto the vessel.

Q4: Can FAS be used for air shipments? A4: No, FAS is specified for sea or inland waterway transport only. Air and other forms of transport have different terms appropriate for their logistics.

Q5: What happens if the goods are damaged before reaching the port? A5: If the goods are damaged before they are delivered alongside the ship at the port, the seller is responsible since the risk does not transfer to the buyer until that point.

Free on Board (FOB)

Definition: A trade term that requires the seller to deliver goods on board a vessel designated by the buyer. The seller fulfills their obligation and risk transfers to the buyer when the goods pass the ship’s rail.

Cost, Insurance, and Freight (CIF)

Definition: Involves the seller covering the cost of goods, marine insurance, and freight to the destination port. The risk transfers to the buyer once the goods pass the ship’s rail at the shipping port.

Ex Works (EXW)

Definition: The seller makes the goods available at their premises. The buyer bears all risks and costs from that point onward, including loading, transportation, and export formalities.

Delivered at Place (DAP)

Definition: The seller delivers when the goods are made available to the buyer at the named place of destination, ready for unloading. The seller covers all risks up to that named destination.

Online References

Suggested Books for Further Studies

Incoterms 2020 by the International Chamber of Commerce (ICC) - A comprehensive guide to Incoterms 2020 rules and their application in global trade.
Global Trade and Business Strategy by Alan E. Branch - Provides insights into global logistics, transport modes, and international trade terms.
The Handbook of International Trade and Finance by Anders Grath - Covers various aspects of international trade, including documentation, terms, and financing.

Fundamentals of Free Alongside Ship (FAS): International Trade Basics Quiz

### Under FAS terms, who is responsible for paying the cost of loading the goods onto the vessel? - [ ] The seller - [x] The buyer - [ ] The shipping company - [ ] The freight forwarder > **Explanation:** Under FAS terms, the responsibility for paying the cost of loading the goods onto the vessel falls on the buyer once the goods are delivered alongside the vessel at the port. ### When does the risk transfer from the seller to the buyer in an FAS contract? - [ ] When the seller arranges for the shipment - [ ] When the goods arrive at the buyer's destination - [ ] When the goods are loaded onto the vessel - [x] When the goods are delivered alongside the vessel at the port > **Explanation:** The risk transfers from the seller to the buyer when the goods are delivered alongside the vessel at the named port in an FAS contract. ### Can FAS terms be used for air freight? - [x] No - [ ] Yes - [ ] Only for small parcels - [ ] Only if specified in the contract > **Explanation:** FAS terms are specifically designed for sea or inland waterway transport and cannot be used for air freight. ### Who organizes the export documentation under FAS? - [x] The seller - [ ] The buyer - [ ] The shipping line - [ ] Customs authorities > **Explanation:** Under FAS, the seller is responsible for organizing the export documentation necessary for the shipment of goods. ### What does the seller need to do to fulfill their obligations under an FAS term? - [ ] Deliver the goods to the buyer's premises - [ ] Load the goods onto the vessel - [x] Deliver the goods alongside the vessel at the named port - [ ] Insure the goods until they reach the buyer > **Explanation:** To fulfill their obligations under an FAS term, the seller must deliver the goods alongside the vessel at the named port and ensure they are ready for loading. ### In case of damage to goods before they reach the port, who is liable under FAS terms? - [ ] The insurance company - [ ] The buyer - [x] The seller - [ ] The shipping company > **Explanation:** If goods are damaged before they are delivered alongside the vessel at the port, the seller is liable under FAS terms, as the risk has not yet transferred to the buyer. ### Which Incoterm requires the buyer to assume responsibility once the goods are placed alongside the ship? - [ ] CFR - [ ] CIF - [ ] FOB - [x] FAS > **Explanation:** The FAS (Free Alongside Ship) term requires the buyer to assume responsibility once the goods are placed alongside the ship at the named port. ### Can the buyer select the vessel and shipping line under FAS terms? - [ ] No, only the seller can select the vessel - [ ] The shipping line makes the decision - [x] Yes, the buyer selects the vessel and shipping line - [ ] The port authority selects the vessel > **Explanation:** Under FAS terms, the buyer selects the vessel and shipping line after receiving the goods alongside the ship at the named port. ### Which expenses are typically covered by the buyer under FAS? - [ ] Export documentation - [ ] Inland transportation to the port - [ ] Unloading at the destination port - [x] Loading onto the vessel and marine freight > **Explanation:** Under FAS, the buyer typically covers the cost of loading onto the vessel, marine freight, and any subsequent expenses from the port onward. ### What is the main advantage of FAS for the seller? - [ ] The seller does not have to manage export documentation - [ ] The seller has control over the entire shipping process - [x] The seller's responsibility ends once the goods are delivered alongside the vessel - [ ] The seller handles the payment terms and insurance > **Explanation:** The main advantage of FAS for the seller is that their responsibility ends once the goods are delivered alongside the vessel, transferring risk and further costs to the buyer.

Thank you for exploring the intricacies of the Free Alongside Ship (FAS) Incoterm and testing your knowledge with our sample quiz questions. Continue to deepen your understanding of international trade logistics!