Delivery under FCA (Free Carrier)

Due to the fact that the modern world does not stand still, the consumer services market is also expanding. Any trading operations carried out at the international level are governed by the rules of Incoterms. They greatly simplify the relationship between both parties to the transaction, because they contain not only the correct interpretation of various terms, but also determine the specific conditions on the basis of which the contract should be executed. Clear regulation reduces the likelihood of conflict situations, and also simplifies their peaceful resolution. It is important to understand that each transaction has certain FCA delivery conditions. What does it mean? Let's take a closer look at this.

general information

The term FCA stands for Free Carrier, which in Russian means "free carriage." It assumes that the manufacturer or distributor is responsible for the safety of the cargo throughout all stages of delivery. Obligations are deemed fulfilled upon receipt of the goods by the buyer. Which method will be carried out by the customer decides. He calculates the cost and makes the most optimal route.

The main differences between FCA and other types of delivery

Let's dwell on this in more detail. The presence of the letter F in the abbreviation indicates the place of shipment, namely the seller’s warehouse. Thus, direct delivery without payment by the supplier of transport costs. Responsibility at all stages lies with the distributor, and it passes to the seller at the time of acceptance of the goods and signing of documents. This is precisely the main difference between FCA conditions and other types of cargo transportation. In this case, the type of vehicle is not of fundamental importance. Delivery can be carried out both by land and by sea.

Regulatory principles

This aspect should be given special attention. Many start-up entrepreneurs who are just starting to engage in international freight transportation are interested in the question of how Incoterms 2010 works. Delivery conditions will be discussed in detail below, but for now, let's look at the basic concepts. Among the general principles of regulation are the following:

1. Distribution of financial expenses between the customer and the contractor.
2. Consideration of associated risks associated with damage or loss of cargo.
3. Determination of the moment and method of transfer of goods, as well as responsible persons.
4. Setting the time period during which the buyer must receive the goods.

According to FCA's terms of delivery, the transfer of ownership is outside the scope of these rules. Simply put, the seller is completely released from liability and ceases to be the owner of the goods after signing the act of acceptance of the goods.

Fundamentals of Free Carrier

This aspect should be given special attention. Delivery terms for Incoterms 2010 are agreed in advance and are prescribed in the contract. The main provisions are:

• providing documentation necessary for the transport of goods across the border;
• Estimated delivery time;
• conditions and types of insurance;
• cargo packing;
• cost of services and payment method.

In addition, Incoterms FCA determines the rights and obligations of both parties, as well as liability for the violation and financial costs associated with the transportation. All terms are indicated in the form of an abbreviation consisting of three letters. The first determines the place of transfer of the goods to the buyer, the second stipulates the delivery rules, and the third determines which party pays for insurance services.

Minor Terms

It is very important to determine in advance under what conditions the FCA will be transported. The thing is that Incoterms, in addition to the main ones, has a number of additional terms. For example, who will be engaged in loading and unloading, in what place they will be carried out, etc. Regulation will allow to clearly distribute responsibilities and prevent disputes between the buyer and seller. The following terms are used to establish the type of transport and volume:

• FIB - sea transportation with a barge;
• PHOT - transportation of goods.

If desired, the buyer can also establish a preferred delivery location. The following Incoterms FCA parameters allow this:

• FFB - mooring device for the ferry.
• FT - terminal.
• FOR - station of dispatch.

It is important to understand that for each type of vehicle there are certain basic FCA delivery conditions. They allow in modern market realities not only to increase efficiency and simplify the work process, but also to reduce financial costs, since there is no need to contact intermediaries.

Seller Responsibilities

So what do you need to know about this? The supplier of the products can be either the manufacturer himself or the wholesale warehouse or official distributor.

In cooperation on FCA terms, the seller agrees:

• Deliver the goods safe and sound to the place and time indicated by the buyer;
• prepare a bill of lading, invoice, as well as quality certificates and licenses, if required by law;
• upon agreement, insure the cargo;
• to load and unload goods.

All associated costs, namely, payment of tax fees, customs clearance, duties and other expenses are borne by the seller. At the same time, he is obliged to notify the buyer about the progress of the cargo transportation at all its stages. Obligations are considered fulfilled after the buyer is convinced of the integrity of the goods and signs on the accompanying documentation on its acceptance. If delivery cannot be completed on time due to unforeseen circumstances, for example, road accidents, natural disasters or changes in the political situation in a country or a specific region, an electronic notice must be submitted within 2 days.

Buyer Responsibilities

According to the FCA delivery terms, the customer must pay for the goods on time in compliance with the rules prescribed in the contract. In addition, he is responsible for the following items of expenditure:

1. Cargo delivery from the place of unloading to your warehouse and loading and unloading.
2. Transit duties when transporting goods through other countries.
3. Associated costs associated with the conclusion of the contract with the help of the seller.

It is important to understand that the buyer does not have to accept the goods in the smaller amount specified in the contract. He is also obliged 10 days before shipment to provide the seller with the following information:

• name and quantity of goods needed;
• data about the carrier;
• exact date and time of loading;
• all encodings necessary for transportation.

Without this information, FCA shipping cannot be completed. Therefore, in order to avoid disruptions in the delivery time, it is necessary to discuss all the details in advance.

Conclusion of a contract

This aspect is worth exploring in the first place. Today, one of the most important operations in logistics is the signing of an agreement.The whole operation depends on him.

The document must necessarily contain the following information:

1. Delivery conditions. Clear deadlines for the execution of the contract should be indicated. If the cargo is delivered in separate batches, then for each of them the type of vehicle and the general schedule of cargo transportation, which is compiled by the seller and agreed with the buyer, are determined.
2. The name and volume of the goods, as well as the address and code of the place of receipt. If delivery is to a railway point, then all access roads and other information should be indicated.
3. Shipment Terms. They are determined by standard TTN in the form of TORG-12. The document is signed by both parties whose representatives are present at the time of the transfer of the goods and transfer of ownership.

These are the basic conditions of the FCA contract, which are necessary for the successful delivery of the goods. If they were not complied with or one of the parties did not provide the necessary information, then delivery may be suspended for an indefinite time.

The emergence of conflict situations and the grounds for termination of the contract

Let's dwell on this aspect in more detail. Regardless of who is responsible for the delivery of goods - the buyer or seller, both parties must control the entire process from start to finish. This is especially true for inspection of the goods upon receipt. This will avoid many problems and conflicts.

If you need to supply a large volume of products that will take a long period of time, then reconciliation is necessary every month. At the same time, an act must be drawn up within 5 days upon the completion of the work. If you find any inconsistencies in the FCA, you can suspend the delivery. If it is not possible to eliminate them, then this is a good reason for the unilateral termination of the contract.

The seller has the right to refuse his obligations if the payment was received late or not in full. In this case, he submits an electronic notice to the buyer. After receiving it, the contract is automatically considered canceled. This also applies to cases where the goods are used for other purposes. If one of the parties does not agree with the validity of the reasons for termination, then any disputes shall be resolved through the Arbitration Court.

Supporting documentation

FCA freight assumes that goods will be imported from one country to another. For customs clearance to pass quickly and without unnecessary problems, certain documents are required.

Standard package includes:

• import license;
• documents certifying the legality of delivery;
• receipt of state fees.

One of the parties, as well as a customs broker can deal with the design. But in this case, logistics costs increase, therefore, at the conclusion of the contract, this nuance is negotiated immediately.

Does Incoterms work in Russia?

In our country, this set of rules is for guidance only. They are contacted only in case of ordering goods from a foreign seller, and when transporting goods within Russia they are guided by the usual delivery contract, the terms of which are negotiated individually. Nevertheless, cooperation on Incoterms has a number of advantages, therefore it is possible that in the future companies will work on it.

A few words about the cost

The conclusion of a contract for the carriage of goods and its subsequent implementation is fraught with certain material costs. The general list of expenses includes the following components:

• the full value of the goods declared by the manufacturer or seller;
• payment of export duties;
• the cost of shipping to the unloading point;
• product insurance if necessary;
• loading and unloading operations.

In addition to the basic, additional costs may be necessary. On which of the parties they lie down, makes a reservation in advance and is indicated in the contract.

Conclusion

Cargo delivery in accordance with the Incoterms Rules opens up new opportunities and greatly simplifies the work in the field of international cargo transportation. The main thing when working on them is to correctly draw up a contract and agree on all conditions in advance. In this case, you can avoid conflicts in the process of implementation of delivery and achieve maximum productivity. And if any problems arise, one of the parties should immediately send another electronic notification. It not only removes liability, but also is the basis for termination of the contract without payment of the penalty. Working in compliance with the law, everything will be fine with you.