What is FAS (Free Alongside Ship) in Shipping?

Free Alongside Ship (FAS) is an international trade term, part of the Incoterms (International Commercial Terms), which are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC). These terms are used in international commercial transactions and procurement processes. FAS specifically outlines the responsibilities of buyers and sellers in shipping agreements.

Definition and Concept of FAS

Free Alongside Ship (FAS) means that the seller fulfills their obligation to deliver when the goods are placed alongside the vessel at the named port of shipment. This can be on a quay or a barge. At this point, the risk of loss or damage to the goods passes from the seller to the buyer. The buyer is responsible for all costs and risks of loss or damage to the goods from that point onwards.

Key Features of FAS

Seller's Responsibilities:

1. Deliver the goods alongside the vessel at the named port of shipment.
2. Bear all costs and risks until the goods are alongside the ship.
3. Provide export clearance and documentation required for the export process.

Buyer's Responsibilities:

1. Take over the risk and cost of the goods once they are alongside the ship.
2. Handle all costs related to loading the goods onto the ship.
3. Arrange for the freight and transport from the port of shipment.
4. Pay for the import duties and handle import clearance.

Advantages of FAS

For Sellers

1. Limited Responsibility: The seller's responsibility ends when the goods are delivered alongside the ship, reducing the risk and cost associated with further handling and transportation.
2. Predictable Costs: Sellers can more accurately predict their costs as they only need to consider the expenses up to the point of delivery alongside the ship.

For Buyers

1. Control Over Shipping: Buyers have control over the main carriage and can negotiate the best possible freight rates.
2. Risk Management: Buyers can manage the risk of loss or damage to the goods once they are alongside the ship.

Disadvantages of FAS

1. Complex Coordination: Requires precise coordination between the seller and the buyer to ensure that the goods are delivered at the right time and place.
2. Documentation and Clearance: The seller must ensure all export documentation is correctly handled, while the buyer must manage import documentation and duties, which can be complex.
3. Risk Transfer: The transfer of risk to the buyer when the goods are alongside the ship means any delays or issues in loading the ship can become the buyer's responsibility.

Conclusion

Free Alongside Ship (FAS) is an important term in international trade that clarifies the responsibilities of buyers and sellers in shipping transactions. It offers benefits in terms of predictable costs and limited responsibilities for sellers, while providing buyers with control over the main carriage. However, it also requires careful coordination and handling of documentation. Understanding FAS is crucial for businesses engaged in international trade to ensure smooth and efficient transactions.