What is FCA?
FCA, Free Carrier, is an Incoterm where the seller delivers goods to a carrier nominated by the buyer, at a named place. The seller clears the goods for export. Once the goods are handed to the carrier at the named place, risk transfers from the seller to the buyer. FCA works for all transport modes: sea, air, road, rail, and multimodal. The buyer arranges and pays for the main carriage, insurance, and all costs from the handover point onwards.
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If your supplier has quoted you “FCA Poznan” or “FCA Shenzhen Airport” and you are not entirely sure what that means for you, this article explains it in plain English.
FCA is one of the most versatile Incoterms in global trade and, according to the International Chamber of Commerce (ICC), the one that should be used far more often than it is. It works for every transport mode — sea, air, road, rail, multimodal — and it eliminates the risk gap that exists under FOB for containerised cargo. If you are a UK buyer importing goods from Europe by road or from Asia by sea in containers, FCA is designed for exactly your situation.
The most important thing this article will teach you is exactly when risk transfers under FCA, and how the two delivery scenarios — seller’s premises versus an external location — change who does what.
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Here is the full sequence of events under an FCA shipment, from start to finish.
1. Contract agreed. The seller and buyer agree on FCA terms and name a specific place of delivery: for example, “FCA Poznan (seller’s warehouse)” or “FCA Shanghai Pudong Airport.” That named place is critical. It determines where the seller’s obligations end and the buyer’s begin, and it affects who loads the goods.
2. Seller prepares and packs goods. The seller packs the goods and prepares them for transport. The packaging must be suitable for the mode of transport the buyer has arranged.
3. Seller handles export customs clearance. The seller is responsible for clearing the goods through customs in the country of export. The seller pays any export duties, taxes, and fees. This is a key difference from EXW, where the buyer has to handle export clearance in a country that is not their own.
4. Seller delivers goods to the named place. This is where the two FCA scenarios come into play:
5. Risk transfers. The moment the goods are handed to the carrier at the named place, risk passes from the seller to the buyer. The seller’s obligations are complete.
6. Buyer arranges and pays for main carriage. The buyer has already nominated a carrier or freight forwarder. The buyer pays for the main carriage — whether that is ocean freight, air freight, road haulage, or rail — from the named place to the UK.
7. Buyer arranges cargo insurance. FCA does not require the seller to arrange insurance. The buyer bears the risk from the handover point and must arrange their own cargo insurance. This is the buyer’s responsibility, and it is frequently overlooked.
8. Transit. The goods travel to the UK by whatever mode the buyer has arranged. If anything goes wrong in transit, it is the buyer’s risk and the buyer’s insurance claim.
9. Goods arrive in the UK. Import customs clearance is the buyer’s responsibility. The buyer, or their customs broker, files a UK import declaration through the Customs Declaration Service (CDS). The buyer pays UK import duty and UK import VAT. The buyer needs a UK EORI number to do this.
10. Goods delivered. The buyer arranges final delivery from the UK port, airport, or depot to their premises. The shipment is complete.
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| Responsibility | Seller | Buyer |
|---|---|---|
| Packing and preparation | Yes | No |
| Loading at seller’s premises (FCA-A) | Yes | No |
| Haulage to named place (if not seller’s premises) | Yes | No |
| Export customs clearance | Yes | No |
| Export duties and taxes | Yes | No |
| Delivery to carrier at named place | Yes | No |
| Unloading at named place (FCA-B) | No — goods delivered on seller’s vehicle | Carrier’s responsibility |
| Risk of loss or damage in transit | Ends when goods handed to carrier at named place | From the moment goods are handed to carrier |
| Main carriage (sea, air, road, rail) | No | Yes |
| Cargo insurance | No obligation | Buyer’s responsibility |
| Unloading at destination | No | Yes |
| Import customs clearance | No | Yes |
| Import duties and import VAT | No | Yes |
| Inland delivery to buyer’s premises | No | Yes |
The single most important thing to understand about FCA: once the goods are in the hands of the buyer’s carrier at the named place, everything from that point is the buyer’s problem. The seller has done their job.
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When a supplier quotes you a price on FCA terms, here is what that price covers, and what it does not.
What the seller’s FCA price includes:
What the buyer must arrange and pay for separately:
A cost example in practice:
A UK cycling accessories retailer orders 2,000 units of bike lights from a manufacturer in Taichung, Taiwan, on FCA Taichung (seller’s warehouse) terms. The goods are worth £18,000. The FCA price covers everything from manufacture through packing, export clearance, and loading onto the buyer’s carrier at the factory. On top of that, the UK retailer arranges and pays: haulage from the factory to the port, ocean freight to Felixstowe (around £1,200 for an LCL shipment), marine cargo insurance (around £70), destination port handling (around £180), UK customs clearance via a broker (around £200), UK import duty at the applicable rate, and import VAT at 20% on the full customs value. None of these costs are included in the FCA price.
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Under FCA, risk passes from seller to buyer when the goods are delivered to the buyer’s nominated carrier at the named place.
This moment depends on which FCA scenario applies:
This is cleaner than FOB for containerised cargo. Under FFOB “on board the vessel,” but for containers, the seller hands the box to a terminal operator well before the vessel arrives. There is a grey zone where the container sits at the terminal and neither party is clearly bearing the risk. Under FCA, if the named place is the container terminal, risk transfers at the terminal gate when the seller hands the container over. No ambiguity.
What does “risk” mean in plain terms? If the goods are damaged or lost after the handover point — during the main carriage, at the destination, or during inland delivery — it is the buyer’s financial loss. The seller has no further obligation.
Here is a concrete example. A UK electronics distributor buys components from a supplier in Munich on FCA Munich (supplier’s warehouse) terms. The supplier loads the goods onto a road haulage truck arranged by the UK buyer. During transit through France, the truck is involved in an accident and the goods are damaged. Risk passed when the goods were loaded at the supplier’s warehouse. The UK distributor bears the loss. If they arranged cargo insurance, they make a claim. If they did not, the loss falls entirely on them.
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Under FCA, the seller has no obligation to arrange cargo insurance. The buyer bears the risk from the moment goods are handed to the carrier at the named place, and it is the buyer’s responsibility to arrange appropriate cover.
This catches people out. If you are used to buying on DAP terms where the seller manages the shipment to your door, switching to FCA means you suddenly need to arrange your own insurance. Do not skip this step.
What insurance should you arrange as a buyer under FCA?
You need a cargo insurance policy covering the goods from the named place of delivery to your final destination. The standard options are:
For most UK importers buying on FCA terms, Institute Cargo Clauses A is the right choice.
How much should you insure for? Standard practice is to insure for 110% of the CIF-equivalent value of the goods — that is, the goods value plus carriage and insurance costs, then add 10% to cover incidental costs.
Practical tip: If you import regularly on FCA terms, consider an open cover policy with a cargo insurer. An open cover policy automatically covers every shipment under agreed terms and rates, without a separate policy per consignment. It works for all transport modes, which makes it a natural fit for FCA’s flexibility.
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Clear, bounded obligations. The seller’s risk and cost obligations end when the goods are handed to the carrier at the named place. After that, the carriage, insurance, and transit risks are the buyer’s problem. The seller knows exactly where their responsibility stops.
Export clearance stays with the seller. Unlike EXW, where the buyer is technically responsible for export clearaEXWeps export clearance with the seller. This is practical — the seller knows their own country’s export regulations and has the registrations to handle it.
No freight or insurance to arrange. The seller does not have to negotiate freight rates, deal with shipping lines, or arrange cargo insurance. This reduces the seller’s administrative burden.
Works for any transport mode. Whether the buyer is collecting by road, shipping by sea, or flying goods out by air, FCA works. The seller does not need to know or care what mode of transport the buyer is using. They just deliver to the carrier at the named place.
No risk gap for containerised cargo. Unlike FOB, where there is ambiguity about who bears the risk while a container sits at a port terminal waiting to be loaded, FCA transfers risk cleanly at the handover point. This protects the seller from disputes about terminal damage.
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Control of the freight. As the buyer under FCA, you choose your carrier, negotiate your own rates, and control the transport schedule. If you import regularly, you can leverage volume to get competitive rates across any mode — sea, air, road, or rail.
All transport modes covered. FCA is the only Incoterm in the “F” group that works for every mode of transport. If you source from Europe by road and from Asia by sea, FCA works for both. You do not need to switch between FOB (sea only) and FCA depending on the transport mode.
Clean risk transfer for containers. If you are importing containerised cargo by sea, FCA to the container terminal transfers risk at the terminal gate — exactly where the seller actually hands over the goods. No grey zone, no ambiguity about “on board the vessel.”
Choose your own insurer. You arrange the cargo insurance, so you choose the insurer, the level of cover, and the terms. If you have an existing open cover policy, your FCA imports fit straight into it.
Cost transparency. The FCA price covers the seller’s costs up to the named place. Carriage and insurance are separate, visible costs you negotiate directly. You know exactly what each element costs.
Letter of credit compatibility (Incoterms 2020). Under the Incoterms 2020 rules, the buyer can instruct the carrier to issue an on-board bill of lading to the seller. This means FCA now works with letters of credit that require an on-board bill — a problem that previously pushed traders towards FOB even when FCA was the technically correct choice.
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No control after handover. Once goods are with the buyer’s carrier, the seller has no visibility or influence over the shipment. If the buyer’s carrier mishandles the goods, or if the buyer fails to clear them at destination, the seller has no practical way to intervene.
Coordination with the buyer’s carrier. The buyer nominates the carrier, but the seller must deliver the goods to the named place on time. If the buyer is late nominating a carrier, or the carrier does not show up, the seller may incur storage costs and delays. The contract should specify notification timelines.
Loading responsibility at seller’s premises (FCA-A). If the named place is the seller’s premises, the seller must load the goods onto the buyer’s vehicle. This requires equipment — a forklift, loading dock, or crane — and the seller bears the risk until loading is complete. If goods are damaged during loading at the seller’s premises, it is the seller’s loss.
Less familiar than FOB in some markets. In Asia-Pacific trade, FOB is the dominant Incoterm. Some suppliers, particularly in China and Southeast Asia, are less familiar with FCA and may resist it simply because it is not what they usually quote. This is changing, but it is still a practical friction point.
Cash flow. The seller incurs costs for packing, export clearance, and haulage to the named place before receiving payment. Under payment terms of 30 or 60 days, the seller funds these costs upfront.
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You must arrange insurance yourself, and if you forget, you are unprotected. This is the biggest risk for buyers under FCA. Risk transfers at the named place. If goods are damaged or lost in transit and you have not arranged insurance, you bear the entire loss. Arrange cover before the goods are handed over.
You bear all freight market risk. You agreed an FCA price with the supplier, but you still need to book the carriage. Freight rates — ocean, air, road — can be volatile. If rates spike between contract agreement and shipment, that extra cost falls on you.
You need to nominate a carrier and coordinate timing. Under FCA, the buyer must nominate a carrier and communicate collection or delivery instructions to the seller. If you fail to nominate a carrier on time, the seller can treat the goods as delivered and risk passes to you even though you have not actually received them.
Import costs are entirely your responsibility. UK import duty, import VAT, customs clearance, and destination handling are all the buyer’s costs under FCA. If you have not correctly calculated the duty rate before agreeing the deal, you may face an unexpected bill. Always check the commodity code and applicable rate before signing.
You need a UK EORI number. Wicommodity codemmercial goods into the UK. If you are new to importing on FCA terms, HMRC registration typically takes 3–5 working days — plan ahead.
FCA-B unloading ambiguity. When the named place is an external location (FCA-B), the seller delivers on their own vehicle but does not unload. The carrier or terminal handles unloading. If goods are damaged during unloading, neither the seller nor the buyer was directly responsible — the carrier was. Make sure your carrier’s liability is clear.
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FCA works well in the following situations.
When you are importing containerised cargo by sea. The ICC recommends FCA over FOB for containerised shipments. FCA to the container terminal transfers risk at the terminal gate, eliminating the risk gap that exists under FOB. If you are starting a new supply contract for containerised sea freight, FCA is the technically correct choice.
When you are importing from Europe by road. FOB does not apply to road freight. If you are buying from an EU supplier and goods are moving by truck through the Channel Tunnel or via Dover, FCA is the natural Incoterm. “FCA Warsaw (seller’s warehouse)” or “FCA Milan (freight terminal)” are standard formulations for European road freight.
When you are importing by air freight. FOB does not apply to air shipments. FCA is the correct Incoterm for air freight — “FCA Shenzhen Airport” or “FCA Istanbul Cargo Terminal” — with risk passing when goods are handed to the airline or air freight agent at the named airport.
When you want to control your own freight across any mode. If you have a preferred freight forwarder, competitive rates, and the ability to manage shipments across sea, air, and road, FCA gives you that control without locking you into a sea-only Incoterm.
When you are using a letter of credit and need an on-board bill of lading. Under Incoterms 2020, FCA includes a provision allowing the buyer to instruct the carrier to issue an on-board bill of lading to the seller. This makes FCA viable for letter of credit transactions that previously required FOB.
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Avoid FCA if you do not have cargo insurance in place. Under FCA, you bear the risk from the moment goods are with the carrier at the named place. If you cannot arrange insurance before the goods are handed over, negotiate for CIP terms, where the seller arranges insurance at Institute Cargo Clauses A level.
Avoid FCA if you cannot nominate a carrier. FCA requires the buyer to nominate a carrier and provide collection instructions. If you are a first-time importer without a freight forwarder, it is safer to ask the supplier to quote on CIP or DAP terms while you get your logistics infrastructure in place.
Avoid FCA if the seller insists on controllingDAPliers prefer to manage the full shipment to the destination port or buyer’s premises. If the seller wants to control the logistics, consider CPT (Carriage Paid To), CIP, or DAP instead.
Avoid FCA if your supplier does not understand it. In some Asian markets, suppliers default to FOB and may not be familiar with FCA’s two delivery scenarios. If the supplier does not understand the difference between FCA-A and FCA-B, the risk of operational errors is real. In these cases, sticking with FOB and managing the container risk gap with insurance may be more practical.
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Mistake 1: Not specifying the named place precisely enough.
“FCA Germany” is not a valid FCA contract. The named place must be specific: “FCA Poznan (seller’s warehouse, ul. Przemyslowa 12)” or “FCA Felixstowe Container Terminal.” The named place determines where risk transfers, who loads, and who pays for what. Without a precise named place, there is room for expensive disputes.
Mistake 2: Not understanding the difference between FCA-A and FCA-B.
If the named place is the seller’s premises, the seller loads. If the named place is anywhere else, the seller delivers but does not unload. Getting this wrong means one party assumes the other is handling loading or unloading, and goods sit in limbo or get damaged with no clear responsibility. Spell it out in the contract.
Mistake 3: Not arranging cargo insurance.
Risk transfers at the named place. If goods are damaged or lost in transit and you have not arranged insurance, the loss is yours. Arrange insurance before goods are handed over. If you import regularly, set up an open cover policy.
Mistake 4: Failing to nominate a carrier on time.
Under FCA, the buyer must nominate a carrier. If you fail to do so, the seller can treat the goods as delivered at the named place. Risk passes to you even though you have not taken physical possession. Set clear deadlines in the contract for carrier nomination.
Mistake 5: Using FCA when you mean EXW.
FCA and EXW both involve the buyer collecting goods, but they are different. Under EXW, the buyer handles everything including export customs clearance in tEXWthe seller handles export clearance. If your supplier quotes EXW and you are a foreign buyer, push for FCA instead — you should not be handling export clearance in someone else’s country.
Mistake 6: Not accounting for UK import duty and VAT.
Import duty and VAT are not in the FCA price. Failure to calculate the commodity code duty rate before agreeing the deal can turn a profitable buy into a loss. HMRC publishes customs valuation guidance including how Incoterms affect customs value at
Mistake 7: Assuming FCA includes freight.
FCA covers costs up to the named place. It does not include the main carriage. If your supplier quotes “FCA Shanghai,” that price does not include ocean freight to Felixstowe. You pay the freight separately. If you want the seller to pay the freight, you need CPT or CIP.
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FOB stands for Free on Board. It is the sea-only Incoterm that many traders use for containerised cargo, even though the ICC says they should use FCA instead.
| Key Difference | ||
|---|---|---|
| Transport modes | All modes (sea, air, road, rail, multimodal) | Sea and inland waterway only |
| Risk transfer point | When goods handed to carrier at named place | When goods loaded on board vessel at origin port |
| Suitable for containers | Yes — risk transfers at terminal handover | Technically incorrect — risk gap at terminal |
| Export customs clearance | Seller | Seller |
| Named place | Any named place — premises, terminal, port, airport, depot | Port of shipment only |
| On-board B/L provision (Incoterms 2020) | Yes — buyer can instruct carrier to issue B/L to seller | Not applicable (B/L issued as standard) |
The practical difference for containerised cargo is significant. Under FOB, risk is supposed to transfer “on board the vessel.” But for containers, the seller hands the box to a terminal operator days before loading. If the container is damaged at the terminal, FOB creates ambiguity about who bears the risk. Under FCA to the container terminal, risk transfers at the terminal gate. Clean and clear.
When to choose FCA over FOB: Choose FCA when you are shipping containerised cargo and want technically correct risk allocation. Choose FCA when goods move by air, road, rail, or multimodal. Choose FCA when you are using a letter of credit and need the on-board bill of lading provision.
When FOB is still fine: For non-containerised sea freight — breakbulk, bulk, project cargo — FOB is correct and appropriate. And in practice, FOB is still used for containerised cargo across the industry because it is familiar, banks accept it, and most traders manage the risk gap with adequate insurance.
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EXW stands for Ex Works. It is the Incoterm that places the maximum obligation on the buyer and the minimum on the seller.
| Key Difference | FCA | EXW |
|---|---|---|
| Transport modeEXWmodes | ||
| Risk transfer point | When goods handed to carrier at named place | When goods made available at seller’s premises |
| Export customs clearance | Seller | Buyer (problematic for foreign buyers) |
| Loading at seller’s premises | Seller loads (FCA-A) | Buyer loads |
| Named place | Any named place | Seller’s premises |
The critical difference is export customs clearance. Under EXW, the buyer is responsible for export clearance in the seller’s country. If you are a UK buyer importing from Poland, EXW means you have to handle Polish export customs formalities — in a country where you likely have no registration, no agent, and no expertise. Under FCA, the seller handles export clearance in their own country, which is where they have the registrations and knowledge to do it properly.
The ICC discourages EXW for international trade for exactly this reason. FCA is almost always the better choice when the buyer is in a different country from the seller. The only scenario where EXW makes sense is domestic trade, or where the buyer has a local agent in the seller’s country who can handle export formalities.
Loading is the other difference. Under EXW, the buyer loads at the seller’s premises. Under FCA-A (seller’s premises), the seller loads. Since the seller has the forklift, the loading dock, and the knowledge of how to handle their own products, FCA-A is almost always more practical.
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DAP stands for Delivered at Place. It is the Incoterm where the seller delivers goods to a named destination, ready for unloading, and bears all costs and risks up to that point.
| Key Difference | FCA | DAP | All modes | All modes |
|---|---|---|
| Risk transfer point | When goods handed to carrier at named place of origin | When goods arrive at named place of destination |
| Who arranges main carriage | Buyer | Seller |
| Who pays main carriage | Buyer | Seller |
| Who arranges insurance | Buyer (no obligation on seller) | Seller (no formal obligation, but seller bears the risk) |
| Import customs clearance | Buyer | Buyer |
The fundamental difference is who controls the freight. Under FCA, the buyer arranges and pays for the main carriage. Under DAP, the seller arranges and pays for everything up to the destination. Under both terms, the buyer handles import customs clearance and pays import duties and taxes.
When to choose FCA over DAP: Choose FCA when you want control of the freight, when you have competitive rates, or when you want to use your own freight forwarder. FCA gives you cost transparency — you see the product cost and the freight cost as separate line items.
When to choose DAP over FCA: Choose DAP when you want the seller to manage the logistics and you just want goods delivered to your door (minus import clearance). DAP is simpler for the buyer — fewer moving parts to manage. But you lose visibility of the freight cost, which may be embedded in the seller’s price with a markup.
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FCA applies to all transport modes. This is its biggest differentiator from FOB, CFR, CIF, and FAS, which are restricted to sea and inland waterway transport.
Sea freight (FCL and LCL). FCA is the ICC’s recommended Incoterm for containerised sea freight. “FCA Shanghai (Yangshan Container Terminal)” transfers risk at the terminal, eliminating the ambiguity that FOB creates for containers. FCA also works for breakbulk and bulk cargo, though FOB is more commonly used for these.
Air freight. FCA is the correct Incoterm for air shipments. “FCA Shenzhen Bao’an Airport” or “FCA Istanbul Cargo Terminal” are standard formulations. Risk passes when goods are handed to the airline or air cargo agent at the named airport. If a supplier quotes “FOB” for an air shipment, the term is technically wrong — ask for FCA instead.
Road freight. For UK imports from Europe, FCA is the natural choice. “FCA Poznan (seller’s warehouse)” or “FCA Rotterdam (freight depot)” work for goods moving by truck to the UK via the Channel Tunnel or ferry crossings.
Rail freight. For shipments using rail — increasingly common for UK-China trade via the China-Europe rail corridors — FCA is the correct Incoterm. “FCA Chengdu (rail terminal)” or “FCA Xi’an (intermodal hub)” are valid formulations.
Multimodal shipments. Where goods travel by more than one mode — for example, truck to a port, then sea to the UK — FCA handles this cleanly because it is not tied to any specific transport mode. The risk transfers at the named place regardless of what mode of transport follows.
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Yes. FCA received the most significant change of any Incoterm in the 2020 revision: the on-board bill of lading provision.
The on-board bill of lading provision (Article A6/B6). Under Incoterms 2020, the buyer and seller can agree that the buyer will instruct the carrier to issue an on-board bill of lading to the seller after the goods have been loaded on the vessel. This was added specifically to solve a long-standing problem.
Why this matters: Many international trade transactions are financed through letters of credit. Banks issuing letters of credit often require an on-board bill of lading as proof that goods have been loaded onto a vessel. Under FOB, the seller gets this document automatically because risk transfers on board the vessel. Under FCA, risk transfers earlier — at the named place — so the seller traditionally had no mechanism to obtain an on-board bill of lading. This meant that even when FCA was the technically correct Incoterm, traders used FOB because the letter of credit required an on-board bill.
The 2020 provision fixes this. The buyer instructs the carrier to issue the on-board bill of lading to the seller, and the seller presents it to the bank under the letter of credit. It is an opt-in provision — it only applies if the paletter of credit>This is significant because it removes the last major barrier to adopting FCA for containerised sea freight. Before 2020, traders had a legitimate reason to stick with FOB for letter of credit transactions. That reason no longer exists.
Other changes in 2020:
If your contracts still reference “Incoterms 2010,” update them to specify “Incoterms 2020” to take advantage of the on-board bill of lading provision.
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FCA is increasingly used by UK businesses, particularly for European road freight and containerised sea freight. Here is what you need to know.
You are the importer of record. Under FCA, you, the UK buyer, are responsible for UK import customs clearance. You need a UK EORI number. Without one, you cannot import goods commercially into the UK. Register through HMRC — it typically takes 3–5 working days.
Import declarations go through CDS. The UK Customs Declaration Service (CDS) replaced the old customs clearancee filed through CDS. Your customs broker shouldUK EORI numberlies. The rate depends on the commodity code of your goods. HMRC calculates the customs value for duty purposes on the CIF-equivalent value — that is, the FCA price plus the cost of carriage and insurance to the UK port of entry. This means your duty is assessed on a higher value than the FCA price alone. HMRC’s guidance on how Incoterms affect customs valuation is at rules of origin are met and the seller provides proof of origin).
UK import VAT is calculated at 20% on the customs value: £22,500 (goods) + £1,800 (freight) + £65 (insurance) = £24,365. VAT at 20% = £4,873. Hartwood Living uses postponed VAT accounting, so the VAT is accounted for on their next VAT return rather than paid at the border.
The truck delivers directly to Hartwood Living’s Northampton warehouse. No port handling fees — this is a door-to-door road shipment.
Total landed cost summary:
| Cost Element | Amount |
|---|---|
| FCA price (goods) | £22,500 |
| Road freight (Poznan to Northampton) | £1,800 |
| Cargo insurance (Clauses A) | £65 |
| UK import duty (0% under TCA) | £0 |
| UK import VAT (20%, postponed) | £4,873 (on VAT return) |
| Customs clearance (broker fee) | £85 |
| Channel Tunnel crossing (included in freight) | £0 |
| Total landed cost (excl. postponed VAT) | £24,450 |
| Total landed cost (incl. VAT before recovery) | £29,323 |
The key lesson: Hartwood Living’s total product cost before VAT recovery was £24,450 for 150 tables — £163 per table. Because Poland is an EU member state and the goods qualify under the TCA rules of origin, import duty was zero. The FCA price gave Hartwood full control of the road freight from Poznan to Northampton, and because this was a straightforward road shipment, there were no port handling fees or terminal charges. FCA was the natural Incoterm for this European road freight transaction — FOB would not have applied.
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FCA stands for Free Carrier. It is one of the 11 Incoterms 2020 rules published by the International Chamber of Commerce (ICC). Under FCA, the seller delivers goods to the buyer’s nominated carrier at a named place, clears the goods for export, and bears all costs and risks up to that point. Once goods are with the carrier, risk and cost pass to the buyer. FCA works for all transport modes.
Risk passes when the goods are delivered to the buyer’s nominated carrier at the named place. If the named place is the seller’s premises (FCA-A), risk transfers when the goods are loaded onto the buyer’s vehicle. If the named place is an external location such as a terminal or depot (FCA-B), risk transfers when the goods arrive at that place on the seller’s vehicle, ready for the carrier to take over.
No. Under FCA, the seller has no obligation to arrange cargo insurance. The buyer bears the risk from the moment goods are with the carrier and must arrange their own insurance. If you are buying on FCA terms, always arrange insurance before the goods are handed over.
FCA works for all transport modes; FOB is sea-only. FCA transfers risk when goods are handed to the carrier at a named place; FOB transfers risk when goods are loaded on board the vessel. FCA is the ICC’s recommended Incoterm for containerised cargo because the risk transfer point aligns with how containers actually move. FOB creates a risk gap at the container terminal.
Yes. Incoterms 2020 added an on-board bill of lading provision to FCA. The buyer can instruct the carrier to issue an on-board bill of lading to the seller after goods are loaded on the vessel. The seller can then present this to the bank under the letter of credit. This provision removed the last major obstacle to using FCA for letter of credit transactions.
FCA-A applies when the named place is the seller’s premises (factory, warehouse). The seller loads the goods onto the buyer’s vehicle and risk transfers at that point. FCA-B applies when the named place is anywhere else — a terletter of creditthe goods to that location but does not unload. Risk transfers when the goods arrive at the named place on the seller’s vehicle.
Yes. As the UK importer of record under FCA, you need a UK EORI number to clear goods through UK customs and file import declarations through CDS. Without one, you cannot legally import commercial goods into the UK. Apply through HMRC — it typically takes 3–5 working days.
HMRC uses the CIF-equivalent customs value for duty assessment — that is, the FCA price plus the cost of carriage and insurance to the UK port of entrUK EORI numbergher value than the FCA price alone. HMRC’s full guidance on customs valuation and Incoterms is at gov.uk/guidance/customs-valuation/incoterms.
Because FOB’s risk transfer point — “on board the vessel” — does not match how containerised cargo actually moves. The seller hands a container to a terminal operator days before the vessel arrives. If the container is damaged at the terminal before loading, FOB creates ambiguity about who bears the risk. FCA to the container terminal transfers risk at the terminal gate, which is where the seller actually hands over the goods. No gap, no ambiguity.
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This article is part of a learning path — return to explore more topics.
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