FREE ALONGSIDE SHIP (FAS)

Cross border transactions have been made feasible owing to the transparency in terms of contracts and bifurcation of costs. When it comes to multiple carriers on which the goods are meant to be sent, the cost of freight makes or mars the deal. In case the division of costs and obligations of exporter and importer are clear, international transactions can be carried out with ease, thus ensuring better trade and exposure to overseas markets.

What is Free Alongside Ship (FAS)?

It is an Incoterm defined by the International Chamber of Commerce which says that the seller is responsible for the delivery of the cargo till the buyer’s vessel at the mentioned port. This means that the exporter has to assume the obligation of safe transfer of the goods to the buyer’s vessel (meaning free) so that the goods can be loaded and shipped (meaning alongside).

Free Alongside Ship is possible when the goods have to be transported through sea or inland waterway. In this case, it becomes important to mention the exact location especially in the case of large ports because the goods have to be delivered right next to the vessel.

In case of material which cannot be put into containers, FAS serves as the appropriate agreement and such cargo is called Out of Gauge Cargo.

Following are the circumstances when delivery under FAS is the most viable option:

• Sale of bulk commodities like grains
• Chemicals
• Liquids
• Oil

Obligations of the Buyer and Seller:

Seller:

1. The seller is responsible for all the charges until the point of origin. He has to ensure safe delivery to the port and must produce an invoice to show the delivery.
2. The seller is not responsible for insurance or delivery after the point of origin at the port.
3. He has to arrange for all the necessary export documents and license for smooth flow of transactions and to enable the importer to make the necessary arrangements at his end.
4. Risk of loss shifts to the buyer the moment the goods are transferred to the ship.
5. The costs associated with the customs formalities, duties and taxes are borne by the seller. In addition to this, the cost of operations, packaging and quality control is also the responsibility of the seller.

Buyer:

1. Must pay for the goods as agreed upon in the terms of the contract.
2. Buyer must assume all the risk associated with the goods once the cargo gets transferred to the ship. In case of any delay, the buyer has to bear the loss.
3. He must pay for the import permits and seek the necessary documentation to bring the goods safely out from the port after they reach the desired destination.
4. Seeking insurance is not mandatory though it is advised to get the goods insured.
5. All the subsequent charges upon loading are to be borne by the buyer.