Internationally, FCA and FOB are two commonly used terms that stand for "free carrier" and "free on board at the port of shipment", respectively. There are distinct differences between the two terms in terms of delivery methods, demarcation of risk boundaries and applicable modes of transport. Below we'll explain these differences in detail and show how the two terms can be used in real business.
First, the difference in delivery methods.
Under FCA terms, the seller is required to deliver the goods to the named carrier at the designated place to complete the delivery obligation. This means that the seller is responsible for delivering the goods to the designated place and going through the relevant formalities with the carrier. Once the goods are delivered to the carrier, the risk passes from the seller to the buyer.
In FOB terms, the seller is required to load the goods onto the designated vessel at the designated port of shipment to complete the delivery obligation. This means that the seller is responsible for transporting the goods to the port of shipment and loading them onto the designated vessel. Once the goods are loaded onto the ship, the risk passes from the seller to the buyer. It can be seen that the mode of delivery under FOB terminology is more explicit, involving specific ports of shipment and vessels.
2. The difference between the boundaries of risk demarcation.
Under FCA terms, the boundary at which the risk of the goods passes from the seller to the buyer is when the goods are handed over to the named carrier at the designated place. Until then, any damage to or loss of the goods shall be borne by the seller. Whereas, under FOB terms, the boundary between the transfer of risk from the seller to the buyer of the goods is when the goods are loaded onto the named vessel at the port of shipment. Until then, any damage to or loss of the goods shall be borne by the seller. It can be seen that the boundaries of risk delineation under FOB terminology are more clear.
3. Differences in applicable modes of transport.
FCA terminology has been developed to adapt to the development of contemporary modes of transportation (such as container transportation, RoRo transportation and multimodal transportation) and can be applied to any mode of transportation, including international multi-step transportation, and has a wide applicability. The FOB terminology only applies to traditional maritime or inland waterway shipping. Therefore, the specific mode of transport needs to be considered when choosing the first term.
Fourth, how to use these two terms in real business.
In real business, choosing the right terminology is very important for both parties. In general, if modern modes of transport such as container shipping or multimodal transport are employed, the FCA term can be chosen;If you are using the traditional sea or inland waterway shipping method, you can choose the FOB terminology. Of course, there are other factors that need to be considered when making a specific choice, such as contract terms, transportation costs, delivery deadlines, etc.
In addition, there are a few things to keep in mind when using these two terms: first, make sure that the terms of the contract are clear and specific to avoid ambiguity;Secondly, it is necessary to choose the right carrier and vessel to ensure that the goods can reach their destination on time;Finally, it is necessary to be cautious and meticulous in handling the relevant procedures to avoid mistakes.
In conclusion, FCA and FOB are two commonly used terms that differ significantly in terms of delivery methods, risk demarcation boundaries, and applicable shipping methods. In actual business, it is necessary to choose the appropriate terms according to the specific situation and operate cautiously to ensure that the interests of both parties are fully protected.