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