FAS Incoterms (Free Alongside Ship)
FAS Incoterms define seller responsibilities until goods are placed alongside the vessel at the named port of shipment. This maritime-specific term is particularly attractive for bulk cargo and commodities trading where buyers control loading operations.
Alongside Vessel
Sea/Waterway Only
Buyer Pays
What Are FAS Incoterms?
FAS (Free Alongside Ship) is an international commercial term that defines specific responsibilities between buyers and sellers in maritime shipping transactions. Under FAS terms, the seller delivers goods alongside a nominated vessel at a designated port, completing their obligation once the cargo reaches the ship's side.
The International Chamber of Commerce (ICC) established FAS as one of 11 Incoterms in their standardized framework for global trade. These terms apply exclusively to sea and inland waterway transport, making them essential for businesses involved in maritime commerce.
Risk transfers from seller to buyer when goods are placed alongside the vessel at the named port of shipment. The seller bears all risks until this precise moment, after which the buyer assumes responsibility for the goods including loading, ocean transit, and final delivery.
Key Characteristics of FAS Terms
- Risk Transfer Point: Alongside ship at the named port of shipment
- Seller covers transportation to port, export clearance, and port handling
- Buyer arranges and pays for loading, ocean freight, and insurance
- Applies only to sea and inland waterway transport
- Ideal for bulk commodities, heavy machinery, and charter party shipments
Key Responsibilities Under FAS Terms
Seller's Obligations
The seller's obligations end when goods are placed alongside the vessel at the named port of shipment.
Buyer's Obligations
The buyer assumes responsibility once goods are placed alongside the vessel, including loading operations.
FAS Cost Distribution
Under FAS, the seller covers all costs until goods are placed alongside the vessel. The buyer pays for loading, ocean freight, insurance, and all subsequent costs.
| Cost Component | Seller Pays | Buyer Pays |
|---|---|---|
| Product Cost | ||
| Export Packaging | ||
| Inland Transport to Port | ||
| Export Clearance & Documentation | ||
| Port Handling (to quayside) | ||
| Loading onto Vessel | ||
| Ocean Freight | ||
| Marine Insurance | ||
| Destination Port Charges | ||
| Import Clearance & Duties | ||
| Delivery to Final Destination |
Risk Transfer and Insurance Considerations
Critical Risk Transfer Point
Risk transfers from seller to buyer at a specific moment under FAS terms. This transfer occurs when goods rest alongside the vessel's hull—before loading operations commence.
- Physical placement alongside vessel determines transfer timing
- Documentation of delivery time establishes the exact moment
- Weather conditions at transfer affect risk exposure
Insurance Requirements
Proper insurance coordination is essential to avoid coverage gaps during FAS transactions.
- Seller: Coverage for inland transit and port storage until quayside
- Buyer: Marine cargo insurance from quayside through loading and voyage
- Coordinate overlap periods to prevent gap insurance scenarios
Advantages and Disadvantages of FAS
Advantages
Buyer Controls Loading Operations
Buyers with established relationships with stevedoring companies can manage loading directly, often securing better rates and timing.
Ideal for Bulk Commodities
FAS works exceptionally well for coal, grain, minerals, and other bulk cargo where buyers have specialized loading expertise.
Lower Purchase Price
Sellers exclude loading costs from quotations, potentially resulting in lower initial purchase prices compared to FOB terms.
Charter Party Alignment
When buyers charter entire vessels, FAS terms align perfectly with their control over loading operations and vessel scheduling.
Disadvantages
Buyer Assumes Early Risk
Risk transfers when goods are placed alongside the vessel—before loading begins. Buyers bear loading risks including crane accidents and drops.
Complex Port Coordination
Buyers must coordinate directly with stevedores and port authorities for loading operations, scheduling, and managing labor crews.
Limited Transport Mode
FAS applies only to sea and inland waterway transport, limiting flexibility for multimodal shipments or air freight alternatives.
Timing Dependencies
Buyers must ensure vessel arrives when goods are ready at quayside. Delays in vessel arrival can result in storage fees and cargo exposure.
FAS vs Other Maritime Incoterms
| Aspect | FAS | FOB | CFR | CIF |
|---|---|---|---|---|
| Risk Transfer Point | Alongside vessel | On board vessel | On board vessel | On board vessel |
| Loading Costs | Buyer | Seller | Seller | Seller |
| Ocean Freight | Buyer | Buyer | Seller | Seller |
| Marine Insurance | Buyer | Buyer | Buyer | Seller |
| Export Clearance | Seller | Seller | Seller | Seller |
| Transport Mode | Sea/Waterway | Sea/Waterway | Sea/Waterway | Sea/Waterway |
FAS vs FOB
FAS and FOB differ primarily in loading responsibility. Under FAS, buyers arrange and pay for loading onto the vessel, while FOB requires sellers to handle these tasks. FAS typically results in lower purchase prices since sellers exclude loading expenses.
FAS vs CFR
CFR includes ocean freight in the seller's obligations, while FAS places all shipping arrangements on the buyer. FAS enables buyers to negotiate freight rates directly with shipping lines, potentially securing better rates through existing contracts.
When to Use FAS Incoterms
Suitable Cargo Types
- Bulk commodities: coal, iron ore, grain shipments
- Heavy machinery and industrial equipment
- Project cargo: wind turbines, oil rig parts
- Liquid bulk: petroleum, vegetable oils, chemicals
- Charter party shipments where buyer controls vessel
Port Requirements
- Adequate quayside space for cargo placement
- Water depth of 12-15 meters for larger vessels
- Mobile harbor cranes with 100+ ton capacity
- Storage facilities near berths (5,000-10,000 sqm)
- ISPS-certified security infrastructure
Common Challenges and How to Avoid Them
Documentation Errors
Missing export licenses, incorrect commercial invoices, and incomplete packing lists cause 65% of FAS shipment delays. Create master checklists and submit documents 72 hours before vessel arrival.
Timing and Coordination Issues
Late arrivals cost $500-$2,000 per hour in demurrage charges. Confirm vessel berthing 48 hours in advance and build buffer time into delivery schedules.
Risk Transfer Disputes
Disagreements about the exact moment of risk transfer generate 30% of FAS-related insurance claims. Document delivery with timestamped photographs and obtain signed receipts from port authorities.
Port Infrastructure Limitations
Not all ports have adequate facilities for FAS operations. Verify crane capacity, quayside depth, and storage areas before committing to FAS terms at a specific port.
Cargo Damage Prevention
Goods placed alongside vessels face weather exposure, handling damage, and theft. Use weather-resistant packaging and arrange security patrols during quayside storage.
Frequently Asked Questions
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