Incolearn – Learning more about Incoterms 2000

FREE ALONGSIDE SHIP (FAS) PART I
The International Chamber of Commerce (ICC) defines the third Incoterm, Free Alongside Ship (FAS), at a named port of shipment, as “the seller delivers when the goods are placed alongside the vessel at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment”. This term requires that the seller needs to clear the goods for export. It is important to note that this is a reversal of Incoterms 1990, which required that the buyer should arrange for export clearance. However, if the contracting parties should want the buyer to clear the goods for export, wording to such effect should be included in the contract of sale. Free Alongside Ship is the second of three (3) F-terms also known as the main carriage unpaid terms, the other being Free Carrier (FCA), and Free on Board (FOB). It is important to remember that this term can be used only for sea or inland waterway transport. According to Professor Jan Ramsberg, the chairman of the ICC Working Party on Trade Terms, the seller’s primary duty is to deliver the goods alongside the ship, provide an ‘alongside receipt’, and provide export clearance. The buyer’s primary duty is to nominate the carrier, and to contract for carriage The documents required in terms of the contract of sale should be the commercial invoice, the customary clean receipt, and an export licence if necessary. The other documents that could be considered for stipulation in the contract of sale could be any documents needed for the transit of the goods through any country or for import clearance. The three (3) critical points of FAS are: firstly, that the carriage be arranged by the buyer; secondly, that the risk transfers from the seller to the buyer when the goods have been placed alongside ship; and thirdly, that the cost transfers from the seller to the buyer when the goods have been placed alongside the ship. Next week’s column will focus on the seller’s obligations under Free Alongside Ship (FAS).