FCA vs FOB
Under FCA (Free Carrier) the seller delivers when it hands the goods, cleared for export, to the buyer's carrier at a named place such as its own dock or a container terminal; FCA works for any mode. Under FOB (Free On Board) the seller delivers when the goods are on board the vessel; FOB is for sea only. For containers, FCA is the better fit.
Where risk passes
This is the core difference. Container cargo is delivered to the terminal, then waits, then is loaded. Under FOB the seller is still at risk while the box sits in the terminal, outside its control. Under FCA, risk passes when the terminal or carrier receives it.
| Job | FCA | FOB |
|---|---|---|
| Export clearance | Seller | Seller |
| Loading at origin | Seller if at seller's premises | Seller |
| Main carriage | Buyer | Buyer |
| Insurance | No obligation | No obligation |
| Unloading at destination | Buyer | Buyer |
| Import clearance and duties | Buyer | Buyer |
Choosing the named place under FCA
- FCA seller's premises: the seller loads the buyer's truck; the buyer handles transport from there.
- FCA a terminal or forwarder's warehouse: the seller delivers there, ready for unloading; the buyer's carrier unloads.
- Give a precise address. 'FCA Shenzhen' is too vague to show where risk passes.
Letters of credit
Banks often ask for an on-board bill of lading, which a seller under FCA would not normally hold because delivery happened before loading. Incoterms 2020 added an option: the parties can agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller.
When FOB is still right
Bulk and break-bulk cargo loaded directly on the ship (grain, steel, machinery on deck) suits FOB. For the many container shipments still sold FOB, agree in the contract who pays terminal handling charges and when risk passes.
Read the FCA ruleDelivery, risk and costs under Incoterms 2020.Sources
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Common questions
What is the difference between FCA and FOB?
FCA delivers when the goods are handed to the buyer's carrier and works for any mode; FOB delivers when the goods are on board a ship and is for sea only.
Why does the ICC recommend FCA for containers?
Container cargo is handed over at a terminal before loading. Under FOB the seller would carry risk for goods in the terminal that it no longer controls.
Can I use FCA for air freight?
Yes. FCA works for any mode, including air, road and rail. FOB cannot be used for air freight.
Who pays terminal handling charges under FCA?
It depends on the named place. If delivery is at the terminal, origin terminal charges after delivery are usually the buyer's; agree it in the contract.