Incoterms 2020 FAS Leave a comment

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Incoterms 2020 FAS- Introducation

Welcome back to “Extripod Academy”, this is the fourth video for “Incoterm 2020”. We finished the EXW and FCA. so today we talk about the New F group rule that is FAS which means Free Alongside Ship.

Incoterms rules define the division of the risk and costs between seller and buyer in international trade. It is noteworthy that rules from group F require specifying the sending port in advance. Incoterms FAS indicates that the risk transfers to the buyer when the goods are placed alongside the ship. However, it is not recommended to use this rule if the buyer is not able to pay the costs related to the export of the goods.

We learn the FAS rule as before step, from the cost, obligation, delivery and insurance and conclusions, so let’s go to learn the first section — allocation of costs.

Incoterms 2020 FAS – Allocation of costs

Allocation of costs which the seller bears:
1. The costs of export formalities: customs, taxes, export authorization, export security clearance and the cost of obtaining all official permits;
2. The cost of providing the buyer with proof that the goods have been delivered under the contract;
3. The costs related to the shipment of goods until they are delivered;
4. The costs of control activities, such as quality control, measurement, weighing, counting, delivery of labeled packaging.
Those are the cost from the seller, how about the buyer?

Allocation of cost whcih The buyer bears:
1. The costs of import and transit formalities: customs, taxes, import permit, import security clearance and costs of obtaining all official permits;
2.The costs of obtaining the contract of carriage, any additional costs if the buyer fails to fulfil its obligations;
3. The costs related to the conclusion of the contract of carriage.
So it is easy to understand the seller and buyer costs, seller cost for export, when the good arrive to alongside of shipping, then the buyer cost for import, also including the sea shipping cost. Let check the obligations maybe can be more details to understands.

What are the seller’s obligations?
At first, we also talk about the seller’s obligation first. The seller obligation
1. Carrying out all the duties under the terms of delivery specified in the contract. This means delivery of the goods along with a commercial invoice in conformity with the contract of sale and other related documents.
2. Delivering goods by placing them alongside the ship within the prior specified period and at the named port indicated by the buyer.
3. Informing the buyer in advance of the delivery of the goods.
4. Providing at his own expense a document confirming delivery of the goods to the buyer. If such proof is a transport document, the seller must assist the buyer, at his request, risk, and cost, in obtaining it.
5. At the buyer request, risk and cost in obtaining any documents necessary for transit and import clearance formalities.
6. Packaging and marking the goods.
7. Operating according to all transport-related security requirements until delivery of the goods to the buyer.
Those are the seller’s obligations. OK, let see that happen in the buyer’s obligations?

What are the buyer’s obligations?
1.Concluding the contract of carriage from the named port of shipment, except where the contract of carriage is made by the seller (at the buyer’s expense and risk).
2.Assisting the seller, at his request, risk, and cost, in obtaining any documents necessary for the export clearance formalities.
3.The buyer must notify the seller in advance of any safety requirements related to transport, ship name, loading point and the delivery date within the period agreed in the contract.
There are only three obligations from the buyer’s side. Then how about the delivery of goods.

Delivery of goods

The FAS Incoterms rule considers a delivery complete when the seller delivers the goods by placing them alongside the ship indicated by the buyer or at the point of loading/port (if any) or when purchasing already delivered goods.

In the case of FAS Incoterms, it is recommended to determine as clearly as possible the loading point at the named port of shipment where the goods are to be transferred from the quay or barge to the ship. This is because handling charges and the transport of goods from the quay or barge may vary depending on the port’s practice.

Insurance of goods on the terms of Incoterms 2020 FAS

In the case of FAS Incoterms, there is no obligation to make a contract of insurance. So this is also no need to buy for insurance. How about transport?
The FAS rule is used only for sea or inland waterway transport.
The seller must provide goods and a commercial invoice under the contract of sale and any other proof of compliance that may be required by the contract. At the same time, these documents provided in both paper and electronic form.
So FAS it is accessible from cost, obligation, delivery and insurance, it is not like FCA. So let go to the final part, conclusion for FAS.

Conclusion.

FAS and other Incoterms rules
It is recommended to apply the FCA rule instead of FAS Incoterms when the goods are handed over to the carrier before placing them alongside the ship, for example when the goods are handed over to the carrier at the container terminal. This is due to the allocation of costs and risks between the seller and the buyer. Or you can move to use the New rule, FOB, FOB Incoterms is one of the most frequently used rules in maritime transport. So next time we learn the FOB.

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FAS

A1 GENERAL OBLIGATIONS
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B1 GENERAL OBLIGATIONS
The buyer must pay the price of the goods as provided in the contract of sale.
Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 DELIVERY
The seller must deliver the goods either by placing them alongside the vessel nominated by the buyer at the loading point, if any, indicated by the buyer at the named port of shipment or by procuring the goods so delivered.
The seller must deliver the goods
1. on the agreed date,or
2. at the time within the agreed period notified by the buyer under B10,or
3. if no such time is notified, then at the end of the agreed period and
4. in the manner customary at the port.
If no specific loading point has been indicated by the buyer, the seller may select the point within the named port of shipment that best suits its purpose.

B2 TAKING DELIVERY
The buyer must take delivery of the goods when they have been delivered under A2.

A3 TRANSFER OF RISKS
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2,with the exception of loss or damage in the circumstance described in B3.

B3 TRANSFER OF RISKS
The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.
If:
a) the buyer fails to give notice in accordance with B10; or
b) the vessel nominated by the buyer fails to arrive on time to enable the seller to comply with A2, fails to take the goods, or closes for cargo earlier than the time notified in accordance with B10;
then the buyer bears all risks of loss of or damage to the goods:
(i) from the agreed date, or in the absence of an agreed date,
(ii) from the date selected by the buyer under B10, or, if no such date has been notified.
(iii) from the end of any agreed period for delivery.
provided that the goods have been clearly identified as the contract goods.

A4 CARRIAGE
The seller has no obligation to the buyer to make a contract of carriage.However,the seller must provide the buyer,at the buyer´s request, risk and cost, with any information in the possession of the seller, including transport-related security requirements, that the buyer needs for arranging carriage. If agreed, the seller must contract for carriage on the usual terms at the buyer´s risk and cost.
The seller must comply with any transport-related security requirements up to delivery.

B4 CARRIAGE
The buyer must contract at its own cost for the carriage of the goods from the named port of shipment, except when the contract of carriage is made by the seller as provided for in A4.

A5 INSURANCE
The seller has no obligation to the buyer to make a contract of insurance. However, the seller must provide the buyer, at the buyer´s request, risk and cost, with information in possession of the seller that the buyer needs for obtaining insurance.

B5 INSURANCE
The buyer has no obligation to the seller to make a contract of insurance.

A6 DELIVERY/TRANSPORT DOCUMENT
The seller must provide the buyer, at the seller´s cost, with the usual proof that the goods have been delivered in accordance with A2.
Unless such proof is a transport document, the seller must provide assistance to the buyer, at the buyer´s request, risk and cost, in obtaining a transport document.

B6 DELIVERY/TRANSPORT DOCUMENT
The buyer must accept the proof of delivery provided under A6.

A7 EXPORT/IMPORT CLEARANCE
a)Export clearance
Where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:
•export licence
•security clearance for export
•pre-shipment inspection; and
•any other official authorisation
b) Assistance with import clearance
Where applicable, the seller must assist the buyer at the buyer´s request, risk and cost, in obtaining any documents and/or information related to all transit/import clearance formalities, including security requirements and pre-shipment inspection, needed by any country of transit or the country of import.

B7 EXPORT/IMPORT CLEARANCE
a) Assistance with export clearance
Where applicable, the buyer must assist the seller at the seller´s request, risk and cost in obtaining any documents and/or information related to all export clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export.
b)Import clearance
Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:
• import licence and any licence required for transit;
• security clearance for import and any transit;
• pre-shipment inspection; and
• any other official authorisation.

A8 CHECKING/PACKING/MARKING
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the good in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

B8 CHECKING/PACKING/MARKING
The buyer has no obligation to the seller.

A9 ALLOCATION OF COSTS
The seller must pay:
a)all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;
b) the costs of providing the usual proof to the buyer under A6 that the goods have been delivered;
c)where applicable, duties, taxes and any other costs related to export clearance under A7(a); and
d) the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).

B9 ALLOCATION OF COSTS
The buyer must pay:
a)all costs relating to the goods from the time they have been delivered under A2, other than those payable by the seller under A9;
b)the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A4, A5, A6 and A7(b);
c)where applicable, duties taxes and any other costs related to transit or import clearance under B7(b); and
d) any additional costs incurred, either because:
(i) the buyer has failed to give notice under B10, or
(ii) the vessel nominated by the buyer under B10 fails toarrive on time, fails to take the goods, or closes for cargo earlier than the time notified in accordance
with B10.
provided that the goods have been clearly identified as the contract goods.

A10 NOTICES
The seller must give the buyer sufficient notice either that the goods have been delivered in accordance with A2 or that the vessel has failed to take delivery of the goods within the time agreed.

B10 NOTICES
The buyer must give the seller sufficient notice of any transport-related security requirements, the vessel name, loading point and, if any, the selected delivery date within the agreed period.

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