What does FAS refer to in international trade? What are the characteristics?
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In international trade, various trade rules have emerged in order to better standardize the transaction process, clarify the responsibilities and obligations of both parties, and avoid possible misunderstandings and disputes.
FAS (Free Alongside Ship)It is a trade term commonly used in international trade. It stipulates the division of responsibilities, risks and expenses between buyers and sellers during the delivery of goods. FAS is part of Incoterms and is formulated by the International Chamber of Commerce (ICC).
Below, we will analyze in detail the meaning, scope of application, responsibilities and obligations of buyers and sellers, etc. of FAS.
Definition of FAS
FAS, the full name is Free Alongside Ship, which means "delivery alongside the ship (...designated port of shipment)". This term refers to the seller transporting the goods stipulated in the contract to the designated port of shipment within the agreed time and completing the delivery obligation at the shipside designated by the buyer. In other words, delivery is deemed complete when the seller places the goods alongside the vessel designated by the buyer, and all risks and expenses of the goods thereafter are borne by the buyer.
Scope of application of FAS
FAS terminology mainly applies to maritime trade. Due to the characteristics of large transportation volume, low cost and long transportation distance, maritime transportation occupies an important position in international trade. The introduction of FAS terminology enables buyers and sellers to clearly define their responsibilities and obligations for the handover of goods at the port of shipment, thereby ensuring the smooth progress of the transaction.
Responsibilities and obligations of buyers and sellers
1. Responsibilities and Obligations of the Seller
• The seller is responsible for transporting the goods to the designated port of shipment and completing delivery alongside the ship designated by the buyer. This includes domestic logistics to the terminal, such as using bulk trucks or trailers to move goods from warehouses to terminals.
• The seller needs to bear all risks and expenses of the goods before delivery, including risks of damage, loss, etc. during transportation, as well as transportation fees, insurance premiums and other related expenses.
• The seller is responsible for entering into an appropriate transportation contract with the carrier and ensuring that the ship arrives at the loading port on time. If the buyer's ship cannot dock, the seller also needs to use a barge to transport the goods to the ship's rail for delivery.
2. Buyer’s Responsibilities and Obligations
• The buyer is responsible for all risks and costs of cargo from alongside the ship. This includes shipping costs, insurance, additional costs that may be incurred during transportation, etc.
• The buyer needs to arrange the ship by itself and bear the relevant costs to ensure that the ship arrives at the shipping port to pick up the goods within the agreed time.
• The buyer is required to pay for shipping, insurance and other related charges and bears all risks of the goods, such as loss, damage, etc.
Comparison of FAS with other trade terms
A similar trade term to FAS is FOB (Free On Board). FOB means that the seller is responsible for loading the goods onto the ship designated by the buyer and bears all risks until the goods are loaded on the ship. In contrast, the delivery location of FAS is next to the ship, while the delivery location of FOB is on the ship. Therefore, under FAS conditions, the buyer needs to bear more risks and costs, including the costs and risks of loading the goods from the side of the ship onto the ship.
Things to note when using FAS
1. The buyer and seller should specify the delivery terms and related details of FAS in the contract to ensure the smooth completion of the transaction.
2. The buyer should arrange the ship in advance and ensure that the ship arrives at the shipping port to pick up the goods within the agreed time.
3. The seller should ensure that the goods are shipped to the designated port of shipment within the agreed time and the delivery is completed alongside the ship. At the same time, the seller also needs to bear all risks and expenses before delivery.
Summarize
As one of the commonly used terms in international trade, FAS plays an important role in standardizing transaction processes and clarifying the responsibilities and obligations of both parties. By having an in-depth understanding of the meaning, scope of application, and responsibilities and obligations of buyers and sellers of FAS, we can better conduct international trade activities, reduce transaction risks, and improve transaction efficiency.
