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Free Carrier, abbreviated as FCA, is one of the 11 Incoterms rules published by the International Chamber of Commerce that defines how delivery responsibilities, costs, and risk are divided between a seller and buyer in international trade. Under FCA, the seller delivers the goods to a named place, which can be the seller's premises, a freight terminal, a port, or any other agreed location, and the risk transfers from the seller to the buyer at that delivery point. Once the carrier takes possession of the goods at the named location, the seller's responsibility ends.
Think of FCA as handing a package to a courier at your front door: once the courier has it, what happens to it is no longer your problem.
The delivery mechanics under FCA depend on where the named delivery point is located.
Free on Board, or FOB, is the Incoterm that FCA largely replaced for container shipping, but FOB remains more widely used in practice despite being less appropriate for containerized cargo. The difference matters for who bears risk during container terminal handling, which is one of the highest-risk stages of a shipment.
| FCA | FOB | |
|---|---|---|
| Risk Transfer Point | When carrier takes possession at named location | When goods pass the ship's rail at port of loading |
| Container Suitability | Appropriate for containerized cargo | Technically inappropriate; terminal handling risk unclear |
| Export Clearance | Seller's responsibility | Seller's responsibility |
| Main Carrier Contract | Buyer arranges and pays | Buyer arranges and pays |
The 2020 revision of the Incoterms rules introduced an important change to FCA that addresses a common problem in letter of credit transactions. Under letters of credit, banks typically require a shipped-on-board bill of lading confirming that goods have been loaded on the vessel. Under traditional FCA terms, the seller's responsibility ends before loading, so the seller could not obtain an on-board bill of lading to present to the bank.
Incoterms 2020 added an option allowing the seller and buyer to agree that the buyer will instruct its carrier to issue an on-board bill of lading to the seller after loading, even though the seller's delivery obligation ended when the carrier first took possession. This option makes FCA compatible with letter of credit payment arrangements that require on-board documentation.
Under FCA, the seller always bears responsibility for export clearance. This includes filing Electronic Export Information through the Automated Export System in the United States, obtaining any required export licenses, and ensuring the goods comply with all export control regulations. The seller also bears any export duties or taxes, though these are uncommon for most goods in major trading relationships.
This allocation makes FCA inappropriate for transactions where the seller does not have the legal ability to export the goods from its country, such as a subsidiary selling on behalf of a foreign parent that holds the export license. In those cases, EXW, or Ex Works, where the buyer handles all export formalities, may be more appropriate.
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