What is the FCA delivery term? Transfer of risk and the difference from FOB

What FCA means

FCA is short for Free Carrier. It is one of the Incoterms 2020 rules suited to any mode of transport. It can be used for road, air, rail, sea, and intermodal carriage.

The core of the rule is this: the seller delivers the goods to the carrier nominated by the buyer, or to another person indicated by the buyer, at the place stated in the contract. Export customs formalities and their cost belong to the seller. The main contract of carriage, transit formalities, and import customs belong to the buyer.

What distinguishes FCA is that the obligations change depending on whether the delivery place is the seller’s premises. The delivery place can be the seller’s factory, or equally a port terminal, an airport cargo agent’s warehouse, the carrier’s consolidation depot, or a bonded facility.

Incoterms rules only govern delivery, cost, risk, and document responsibilities. They do not govern when ownership passes, the method of payment, the applicable law, or the forum for dispute resolution. These must be set out separately in the sales contract.

Where costs and risk transfer

Under FCA, the transfer of risk and of the seller’s costs happens at the same moment: on delivery. However, exactly when delivery occurs depends on the place chosen. These two scenarios are where the most confusion arises in practice.

Scenario 1 — the delivery place is the seller’s premises: the goods are considered delivered when they are loaded onto the means of transport arranged by the buyer. Loading is the seller’s obligation and cost.

Scenario 2 — the delivery place is somewhere else (a terminal, the carrier’s depot, an agent’s warehouse): the seller brings the goods to that place using its own means of transport. The goods are considered delivered once they are placed at the carrier’s disposal on the seller’s arriving vehicle, ready for unloading. The seller is not obliged to unload the vehicle. Unloading is on the buyer’s side.

In short: if the delivery place is the seller’s premises, loading onto the vehicle belongs to the seller; if it is elsewhere, the seller is not obliged to load but only to leave the goods ready for unloading on its vehicle, and unloading from the vehicle belongs to the buyer. Which one applies depends on whether the named address is the seller’s own premises.

FCA is clear on insurance. Neither party is obliged to take out insurance. Under Incoterms 2020, the obligation to insure falls on the seller only under CIF and CIP. Under FCA, if the buyer wants to insure the cargo for its own benefit from the moment it assumes risk, it does so under its own policy. Without a policy, damage arising during the main carriage stays with the buyer, who has borne the risk since delivery; its claim against the carrier is limited by the liability limits of the relevant conventions (CMR, Montreal, Hague-Visby).

Item	Seller	Buyer
Export-suitable packaging and marking	✓
Export customs declaration, permits, and costs	✓
Pre-carriage to the delivery place (if not the seller’s premises)	✓
Loading onto the vehicle at the seller’s premises	✓
Unloading from the vehicle at the named delivery place		✓
Terminal handling costs after delivery		✓
Main contract of carriage and freight		✓
Cargo insurance	not required	not required
Transit country formalities		✓
Import customs, taxes, and duties		✓
Unloading at destination		✓

The seller’s obligations

• Deliver the goods in conformity with the contract, and provide the commercial invoice and any required evidence of conformity.
• Complete the export customs declaration, obtain export permits and licences, and bear the costs.
• Package and mark the goods appropriately for export.
• Bring the goods to the named place; if that place is its own premises, load them onto the vehicle.
• There is no obligation to conclude a contract of carriage; however, if the buyer so requests, or if it is commercial practice and the buyer does not give timely instructions to the contrary, the seller may arrange carriage on usual terms at the buyer’s risk and cost.
• Bear all costs and the risk of loss or damage up to the moment of delivery.
• Provide the buyer with the usual proof that delivery has taken place.
• Assist, at the buyer’s request, risk, and cost, in obtaining any documents needed for transit and import (for proof of origin, EUR.1/EUR-MED or a certificate of origin; the ATR, which shows free circulation under the customs union with the EU, is a movement certificate, not a proof of origin). In Türkiye, the ATR and EUR.1 are obtained by the exporter and endorsed by customs at export.

The buyer’s obligations

• Nominate the carrier, conclude the contract of carriage, and pay the freight.
• Notify the seller of the carrier’s name, the delivery date, and the delivery point with sufficient notice.
• Bear the risk and costs from the moment of delivery.
• Arrange unloading if the delivery place is not the seller’s premises.
• Handle import customs clearance, taxes, and transit formalities.
• Cover any additional costs arising from a delay in notification or from its nominated carrier failing to arrive on time. If the goods have been clearly identified as the contract goods, the risk of loss or damage also passes to the buyer from the agreed date (or the end of the agreed delivery period).

The Incoterms 2020 innovation: a bill of lading with an “on-board” notation

Under earlier versions, FCA had a practical problem. In container exports, the seller delivers the goods at the terminal and receives a receipt of delivery in return. A letter of credit, however, often requires a bill of lading carrying an on-board notation. A seller who is not a party to the contract of carriage could not obtain this document. As a result, sellers on letter-of-credit transactions tended to use FOB instead of FCA.

Incoterms 2020 added an optional mechanism for this. If the parties agree, the buyer instructs its carrier to issue a bill of lading bearing an on-board notation, at the buyer’s cost and risk, in favour of the seller; the seller then forwards this document to the buyer.

Two points matter here. This arrangement is not automatic — it must be explicitly agreed in the sales contract, and the carrier must consent to it. Also, issuing the document does not change the moment risk transfers; risk still passes on delivery.

When it is the right choice

• For container loads. The container is delivered to the terminal or consolidation depot, not loaded directly onto the vessel. FCA correctly reflects this actual situation.
• For air shipments. The goods are delivered to the agent’s warehouse or the cargo terminal.
• For road and rail exports, when the buyer works with its own carrier.
• When the buyer has stronger freight-negotiating power, or its own transport and insurance program.
• As an alternative to EXW. Under EXW, the burden of export formalities lies with the buyer; in Türkiye, however, the export declaration can only be registered in the name of an exporter established in Türkiye, so a buyer abroad cannot practically do this. That creates problems for export recordkeeping and the VAT exemption. Under FCA, export customs stays with the seller.

Why FCA over FOB for container cargo: FAS, FOB, CFR, and CIF are specific to sea and inland waterway transport, and they treat risk as transferring when the goods are loaded on board the vessel. In container exports, however, the seller leaves the container at the terminal, and loading onto the vessel may happen days later. If FOB is written, the seller continues to bear the risk until loading even though the container is no longer in its control. Damage at the terminal, misstowage, or a vessel change remains the seller’s problem. FCA closes this gap.

When it is the wrong choice

• If the buyer lacks the capacity to organize carriage in the country of export. If the carrier’s nomination is delayed, the goods wait in the seller’s warehouse and a dispute arises over storage costs.
• If the buyer expects door delivery. FCA does not cover unloading at destination, import customs, or duties. If door-to-door delivery is wanted, consider DAP (delivered on the arriving vehicle, unloading by the buyer), DPU (delivered unloaded) or DDP (import clearance and duties included); DDP is the only rule that places import duties on the seller.
• If the sale price includes freight and the seller intends to keep control of carriage. In that case CPT or CIP fits better.
• If the delivery place cannot be pinned down precisely. An unclear place means an unclear transfer of risk.

Common mistakes

• Writing an incomplete delivery place. The correct format is “FCA [named premises and full address], Incoterms 2020”. Naming only a city leaves the moment of delivery unclear.
• Not stating the Incoterms version. Without a version, which text applies becomes disputable.
• Confusing the two delivery scenarios. Loading at the seller’s premises belongs to the seller; unloading elsewhere does not.
• Treating FCA as the same as EXW. Export customs sits with the seller under FCA, and with the buyer under EXW.
• Expecting the seller to arrange insurance. There is no insurance obligation under FCA; it must be separately agreed.
• Writing FOB for container cargo. This creates a gap, to the seller’s disadvantage, between the risk transfer point and the actual delivery point.
• Not clarifying terminal costs. Handling before the delivery point belongs to the seller, and after it to the buyer. The line items on the carrier’s invoice do not always reflect this distinction; it should be agreed in writing.
• The buyer notifying the carrier late. This delay shifts additional cost and waiting responsibility onto the buyer; if the goods are clearly identified as the contract goods, risk also passes to the buyer from the agreed date.
• Assuming Incoterms transfers ownership. The transfer of ownership depends on the sales contract and the applicable law.
• Assuming the “on-board” notation arrangement applies automatically. This option only applies if the parties agree to it.

The choice of delivery term needs to be designed together with the mode of transport, customs procedures, and payment method; this can be assessed as part of customs brokerage and regulatory advisory services.