What Is Free Alongside Ship (FAS)?
Free alongside ship (FAS) is a contractual term used in the international export business that stipulates that the seller must arrange for goods to be delivered to a designated port and next to a specific vessel for easier transfer.
Free alongside ship is one of a number of internationally recognized commercial terms used by export and import businesses.
- In a contract for international trade, free alongside ship means the goods will be delivered right next to the buyer's ship, ready for reloading.
- It is one of a number of so-called incoterms, rules issued by the International Chamber of Commerce governing international transactions.
- Incoterms provide a framework for sellers and buyers, defining which parties are responsible for things like insurance, customs clearance and managing the shipment.
Understanding Free Alongside Ship
Contracts between a buyer and a seller for international transportation of goods include details like the time and place of delivery, the payment due, and which party pays the costs of freight and insurance. The contract also will indicate the date when the risk of loss shifts from the seller to the buyer.
They also typically include abbreviations for accepted commercial terms, such as FAS.
FAS and Other Incoterms
FAS is one of the trade terms called incoterms, or international commercial terms. Incoterms are published by the International Chamber of Commerce (ICC), an industry organization that fosters global trade and commerce. Incoterms divide into two categories: one set of rules governing any mode of transport, and a second set just for sea and inland waterway transport.
Incoterms' three-letter codes in some cases are identical to those used in other standards, such as the American Uniform Commercial Code, but the meanings are different. As a result, trade contracts expressly indicate which code that their terms reference.
When an international trade contract includes the term free alongside shipping or FAS, the word "free" means the seller must deliver the goods to a specific port, while "alongside" means that the goods must be within reach of the designated ship's lifting tackle.
Generally, the seller is responsible for ensuring that the goods are cleared for export. The buyer is responsible for costs of re-loading goods, ocean transportation, and insurance.
Terms used by the International Chamber of Commerce may have slightly different definitions from the same terms used in the American Uniform Commercial Code.
Delivered Ex Ship, Delivered Ex Quay, and Ex Works
FAS is one of several contractual terms that are used to describe how goods are required to be delivered by the seller to the buyer when they arrive on a ship, and which party is responsible for the costs. The terms include:
- Free Alongside Ship (FAS) means that the goods are considered to be delivered when the seller's ship arrives alongside the buyer's ship or destination port. The buyer bears the shipping expense. Responsible for loss or damage to the cargo shifts to the buyer when it arrives.
- Free on Board (FOB) means that the goods must be delivered onboard a designated ship. The buyer bears the shipping expense. The risk of loss or damage shifts to the buyer when it arrives at its ultimate destination.
- Cost and Freight (CFR) is nearly identical to FOB, except that the buyer accepts responsibility when the goods are on board in the port, not when they arrive at their destination.
Some other terms have become archaic in recent years.
- Delivered Ex Ship (DES) stipulates that the seller will deliver the goods to a port, but does not specify a wharf.
- Delivered Ex Quay (DEQ) requires that the seller deliver the goods to a wharf at the destination port.
Frequently Asked Questions
What does free alongside ship (FAS) mean?
FAS is a term used in overseas shipping that denotes delivery has been made when the goods have been offloaded from the seller's ship and cleared through export customs. Under FAS, the buyer is responsible for the cost of clearing export and unloading.
What is the difference between FOB and FAS?
FOB means free on board, and differs from FAS in that the seller will pay the costs of export clearing and unloading.
Why do designations like FAS and FOB apply to shipping?
These acronyms, known as incoterms, determine who is liable—and at which point they become liable—in the international shipment of goods.