What Is Free Alongside Ship (FAS)?
Free alongside ship (FAS) is a contractual term used in the international export business that stipulates that the seller must arrange for goods to be delivered to a designated port and next to a specific vessel for easier transfer.
Free alongside ship is one of a number of internationally recognized commercial terms used by export and import businesses.
- In a contract for international trade, free alongside ship means the goods will be delivered right next to the buyer's ship, ready for reloading.
- It is one of a number of so-called incoterms, rules issued by the International Chamber of Commerce governing international transactions.
- Incoterms provide a framework for sellers and buyers, defining which parties are responsible for things like insurance, customs clearance and managing the shipment.
Understanding Free Alongside Ship
Contracts between a buyer and a seller for international transportation of goods include details like the time and place of delivery, the payment due, and which party pays the costs of freight and insurance. The contract also will indicate the date when the risk of loss shifts from the seller to the buyer.
They also typically include abbreviations for accepted commercial terms, such as FAS.
FAS and Other Incoterms
FAS is one of the trade terms called incoterms, or international commercial terms. Incoterms are published by theInternational Chamber of Commerce(ICC), an industry organization that fosters global trade and commerce. Incoterms divide into two categories: one set of rules governing any mode of transport, and a second set just for sea and inland waterway transport.
Incoterms' three-letter codesin some cases are identical to those used in other standards, such as the American Uniform Commercial Code, but the meanings are different. As a result, trade contracts expressly indicate which code that their terms reference.
When an international trade contract includes the term free alongside shipping or FAS, the word "free" means the seller must deliver the goods to a specific port, while "alongside" means that the goods must be within reach of the designated ship's lifting tackle.
Generally, the seller is responsible for ensuring that the goods are cleared for export. The buyer is responsible for costs of re-loading goods, ocean transportation, and insurance.
Terms used by the International Chamber of Commerce may have slightly different definitions from the same terms used in the American Uniform Commercial Code.
Delivered Ex Ship, Delivered Ex Quay, and Ex Works
FAS is one of several contractual terms that are used to describe how goods are required to be delivered by the seller to the buyer when they arrive on a ship, and which party is responsible for the costs. The terms include:
- Free Alongside Ship (FAS) means that the goods are considered to be delivered when the seller's ship arrives alongside the buyer's ship or destination port. The buyer bears the shipping expense. Responsible for loss or damage to the cargo shifts to the buyer when it arrives.
- Free on Board (FOB) means that the goods must be delivered onboard a designated ship. The buyer bears the shipping expense. The risk of loss or damage shifts to the buyer when it arrives at its ultimate destination.
- Cost and Freight (CFR) is nearly identical to FOB, except that the buyer accepts responsibility when the goods are on board in the port, not when they arrive at their destination.
Some other terms have become archaic in recent years.
- Delivered Ex Ship (DES) stipulates that the seller will deliver the goods to a port, but does not specify a wharf.
- Delivered Ex Quay(DEQ) requires that the seller deliver the goods to a wharf at the destination port.
Frequently Asked Questions
What does free alongside ship (FAS) mean?
FAS is a term used in overseas shipping that denotes delivery has been made when the goods have been offloaded from the seller's ship and cleared through export customs. Under FAS, the buyer is responsible for the cost of clearing export and unloading.
What is the difference between FOB and FAS?
FOB means free on board, and differs from FAS in that the seller will pay the costs of export clearing and unloading.
Why do designations like FAS and FOB apply to shipping?
These acronyms, known as incoterms, determine who is liable—and at which point they become liable—in the international shipment of goods.
FAQs
Free alongside ship (FAS) is a contractual term used in the international export business that stipulates that the seller must arrange for goods to be delivered to a designated port and next to a specific vessel for easier transfer.
What is FAS in a shipment contract? ›
What is Free Alongside Ship (FAS)? An Incoterms® rule, applicable only to ocean or waterway transport, under which the seller is responsible for clearing the goods for export and placing them alongside the vessel at the named port of delivery.
What does FAS mean in Incoterms? ›
In the Incoterms rules for FAS (short for “Free Alongside Ship”), the seller clears goods for export and places them alongside the vessel at the named port of departure. The named port of departure location can be a loading dock or a barge, but not a container terminal.
What is the main difference between FAS and FOB? ›
FOB (Free On Board) and FAS (Free Alongside Ship) are two common Incoterms you'll come across: FOB means the seller gets the goods on the ship, and then the buyer takes over. FAS involves the seller placing the goods next to the ship, and the buyer is responsible from there.
What is the importance of terms FOB and FAS in contracts? ›
This term is typically used in sales contract, and designates a location for the delivery of goods. For example, FOB Dallas means that the seller would provide the goods at the seller's expense to Dallas. The buyer is responsible for transport of the goods beyond Dallas. FAS stands for “free along side”.
What does FAS stand for free alongside ship? ›
The terms include: Free Alongside Ship (FAS) means that the goods are considered to be delivered when the seller's ship arrives alongside the buyer's ship or destination port. The buyer bears the shipping expense. Responsible for loss or damage to the cargo shifts to the buyer when it arrives.
What does FAS stand for? ›
Fetal alcohol syndrome (FAS) is a condition that develops in a fetus (developing baby) when a pregnant person drinks alcohol during pregnancy. A syndrome is a group of symptoms that happen together as the result of a particular disease or abnormal condition.
What is the FAS rule? ›
The FAS (Free Alongside Ship) is an Incoterms rule that has its roots in the days of sailing ships. It requires the seller to place the goods alongside the vessel nominated by the buyer.
When to use FAS? ›
It is best utilized when: The seller has direct access to the ship for loading bulk cargo. The goods are oversized or difficult to handle, making direct ship loading preferable.
What are the benefits of FAS Incoterm? ›
Advantages of FAS
- Limited seller responsibility: the seller has a limited scope of responsibility, which ends once the goods are placed alongside the named vessel.
- Buyer's control over shipping: the buyer has complete control over the shipping process once the goods are delivered alongside their nominated vessel.
Free Alongside Ship (FAS) is a term used in international trade to describe a pricing agreement whereby the seller is responsible for delivering the goods to the port of shipment, at which point the buyer takes over responsibility for transportation costs.
What is the main difference between FAS free alongside ship and FOB free on board Incoterms in ocean freight transactions? ›
The main difference between FOB and FAS lies in the point at which risk transfers from the seller to the buyer. In FOB, risk transfers when the goods are loaded onto the ship. In FAS, risk transfers when the goods are placed alongside the ship.
What does the term FAS in a contract indicates that? ›
True. The term F.A.S. in a contract indicates that. -The buyer is a merchant. -The seller is a merchant. -The goods are being shipped by a merchant vessel.
What is FAS in contract terms? ›
➢ Free Alongside Ship (FAS) requires the seller to deliver grain, cleared for export, alongside the buyer's vessel at a named port, at which point risk of loss or damage to the grain transfers to the buyer.
Who is legally responsible for arranging shipment under FOB term? ›
The seller handles arranging shipping and handling until the goods reach the buyer's destination. The buyer typically arranges and pays for insurance. The seller generally arranges and pays for insurance. The buyer is responsible for customs clearance and paying import duties and taxes.
Which of the following is true when the shipping term FAS is used? ›
Which of the following is true when the shipping term “FAS” is used? The buyer, at the buyer's expense, delivers the goods alongside the ship before the risk passes to the buyer.
What is FAS logistics? ›
FAS or Free Alongside Ship is an Incoterm definition that dates back to the days of sail shipping. In an FAS agreement, the seller is responsible for leaving goods alongside the ship, at which time the buyer assumes all ongoing costs, risks and logistics.
What is FAS considered? ›
Fetal alcohol syndrome is a condition in a child that results from alcohol exposure during the mother's pregnancy. Drinking alcohol during pregnancy can cause the child to have disabilities related to behavior, learning and thinking, and physical development.
What is the difference between CIF and FAS? ›
With FAS, the seller has to deliver goods alongside the vessel at a designated port of shipment but does not have to arrange for the main carriage or cover insurance for it. With CIF, the seller must arrange for the main carriage and also cover insurance costs up until delivery to the buyer's destination.
