We Use Incoterms® 2010 Rules, Common Shipping Terms. We supports the international import and export guidelines and universal shipping terms laid out in the International Chamber of Commerce’s (ICC) Incoterms rules. To get acquainted with Incoterms, you can visit the main site in here.
Free Carrier (F.C.A)
The FCA Incoterm or “Free Carrier” states that the seller must deliver the goods, ready for export, to the buyer’s chosen carrier at a specific agreed-upon location listed in the sales contract. This location can be a particular port or a carriers’ hub.
The seller is also responsible for all customs costs and risks. The risk is only transferred from the buyer to the seller once the cargo has been delivered to the buyer’s chosen location. Given the clear risk transfer point, FCA is the recommended Incoterm for containerized cargo.
The FCA Incoterm is versatile and can be used regardless of the mode of transport.
Obligations in F.C.A incoterms
Under FCA, neither buyer nor seller is contractually obliged to purchase cargo insurance.
However, buyers and sellers often obtain their own insurance policies to cover the ocean freight portions they’re responsible for. Alternatively, one party can also purchase coverage that covers the entire transportation process.
When negotiating insurance terms, make sure to specify their conditions in the sales contract.
FCA as an alternative to EXW
Under certain circumstances, the FCA Incoterm may be a good alternative to the Ex Works Incoterm.
With EXW, the shipper is responsible for getting the goods ready for pick up at origin, but not for loading. It may be common practice for certain shippers to take the initiative to load the cargo but it is by no means guaranteed.
As a buyer, without this guarantee, you will have to arrange for your own loading services, which can be rather cumbersome to do from another country. A good alternative to this would be to have your goods shipped under FCA and specify a pickup address, which is also commonly known as FCA (named place).
This is a good workaround as shipping under FCA puts shippers in charge of loading the cargo.
Carriage Paid To (C.P.T)
Carriage Paid To (CPT) rules require the seller to clear the goods and arrange carriage (by one or more transport modes) to the named place of destination. The seller does not need to obtain or pay for insurance.
A carrier is any person or company who undertakes the carriage of the goods, such as a shipping line, airline, trucking company, railway or freight forwarder.
In multimodal shipments, the place of shipment is the first carrier used.
Under CPT rules, the seller’s risk ends, and the buyer’s risk begins, when the first carrier receives the goods from the seller. However, the buyer is only responsible for additional costs after the goods arrive at the final destination.
CPT is often used in air freight, containerized ocean freight, small parcel shipments and “ro-ro” shipments of motor vehicles.
Obligations in C.P.T incoterms
Under Incoterms rules, it is not mandatory for the buyer or seller to provide insurance under the CPT Incoterm. Buyers and sellers are free to arrange their own cargo insurance coverage. When doing so, define your insurance terms clearly in your sales contract.
When negotiating insurance for your CPT shipment, you may want to also consider the CIP Incoterm. CPT and CIP are nearly identical, with the only difference in the provision of insurance.
Under CIP, the seller is contractually obliged to provide cargo insurance. That said, if the buyer is able to obtain better cargo insurance coverage than the seller, CPT would be the better option.