What is the Difference Between FOB and FCA?
🆚 Go to Comparative Table 🆚The main difference between FOB (Free On Board) and FCA (Free Carrier) lies in the point of risk transfer from the seller to the buyer and the responsibilities each party has during the shipment process. Here are the key differences between FOB and FCA:
- Applicability: FOB is only used for waterway shipments, while FCA can be used for all modes of transport, including air, land, and sea.
- Risk Transfer: Under FOB, the risk is transferred from the seller to the buyer once the goods are loaded onto the vessel. In contrast, under FCA, the risk transfer takes place at an agreed-upon point between the seller and the buyer.
- Responsibility: In FOB, the seller is responsible for loading the cargo onto the vessel, while in FCA, it is the buyer's responsibility.
- Customs Clearance: Both FCA and FOB require the seller to clear their products through the respective customs agency before loading them onto the buyer's vehicles.
- Costs: Generally speaking, FCA tends to be cheaper than FOB because the seller has fewer responsibilities and, therefore, fewer costs.
When deciding between FOB and FCA, factors such as the mode of transport, the type of goods, the preferences of the parties, and market practices should be considered. FOB terms should be used for non-containerized shipments, such as bulk or break-bulk cargoes, where the seller can supervise loading and obtain a clean bill of lading. On the other hand, FCA terms should be used for containerized shipments, as the seller can deliver the container to the carrier at the terminal.
Comparative Table: FOB vs FCA
The main difference between Free on Board (FOB) and Free Carrier (FCA) lies in the point of delivery and the mode of transport. Here's a comparison table highlighting the differences between FOB and FCA:
| Aspect | FOB | FCA |
|---|---|---|
| Definition | FOB requires the seller to deliver goods to a designated port or shipment point, and the buyer assumes responsibility for transportation costs from that point forward. | FCA allows for flexibility in delivering goods and permits the seller to choose between different modes of transport, as well as the location of risk transfer. |
| Mode of Transport | FOB only allows product delivery via the sea or inland waterways. | FCA suits all shipping modes, including aircraft, shipping vessels, trains, and road freight. |
| Delivery Point | FOB requires the seller to place the goods on the vessel, with the buyer determining the mode of transport ahead of time. | FCA requires the seller to deliver the goods at a chosen location, which can be the seller's premises or another location. |
| Risk Transfer | The risk transfer occurs when the goods reach the designated shipping point in FOB. | The risk transfer can occur at different points depending on the agreement between the buyer and the seller in FCA. |
Both FOB and FCA are recognized shipping terms that allocate title, risk transfer, and responsibility for transportation costs. Ultimately, the choice between FOB and FCA depends on the specific needs and preferences of the buyer and seller.