Free Alongside Ship (FAS): Definition, Obligations & Practical Examples

While technically possible, FAS is poorly suited for container shipping. Modern container terminals operate on integrated systems where containers are delivered directly to terminal stacking areas, not positioned alongside specific vessels. FCA (Free Carrier) is the recommended Incoterm for containerized shipments, as it better reflects actual port operations and terminal handling procedures.

Terminal handling charges (THC) fall on the buyer under FAS terms. Since the seller's obligation ends when goods are placed alongside the vessel, all subsequent costs including THC, loading, lashing, and port security fees are buyer expenses. This contrasts with some other Incoterms where terminal costs may be included in the seller's delivery obligations.

Vessel delays create complex cost allocation issues under FAS. If goods are already positioned alongside the vessel, the seller may incur demurrage or storage charges. However, these costs typically become negotiable based on the cause of delay. Contracts should specify whether the seller must maintain goods quayside indefinitely or can relocate them after a reasonable waiting period, with associated costs addressed.

Neither party is obligated to provide insurance under FAS terms, unlike CIF or CIP where the seller must arrange minimum coverage. However, buyers should obtain comprehensive marine insurance starting from the quayside delivery point. Without insurance, the buyer bears full risk of damage or loss from the moment goods are positioned alongside the vessel through final destination.

FAS requires precise identification of the named port of shipment, ideally including the specific berth or quay location. Generic port names like "FAS New York" create ambiguity about the exact delivery point. Best practice involves specifying "FAS Berth 42, Port Newark, New Jersey" to eliminate uncertainty about where the seller must position goods and when delivery obligations are fulfilled.

Yes, the seller retains responsibility for export customs clearance under FAS, including obtaining all necessary licenses, permits, and documentation required by the country of export. This obligation remains consistent across most Incoterms where the seller controls the goods in the export country. Only import-related licenses and clearances fall to the buyer.

No, FAS applies exclusively to sea and inland waterway transport. The term "alongside ship" inherently requires a vessel, making it incompatible with air, road, or rail transport modes. For air shipments, appropriate Incoterms include FCA (Free Carrier), CPT (Carriage Paid To), or CIP (Carriage and Insurance Paid To), depending on the desired cost and risk allocation.

The seller must provide proof of delivery alongside the vessel, typically a dock receipt or quay delivery confirmation stamped by port authorities. Additionally, the seller supplies export customs documentation, commercial invoice, packing list, and any certificates of origin or compliance required for export clearance. Unlike FOB, the seller does not provide a bill of lading, as this is issued to the party arranging vessel loading.

Weather poses significant risks under FAS since goods positioned on open quaysides may be exposed to elements before loading. Sensitive cargo like electronics or paper products can suffer damage from rain or humidity during the transfer period. Buyers should factor weather exposure into their risk assessment and insurance coverage, while sellers may need weather-protected staging areas to preserve cargo condition until handover.

Port charges under FAS are split between parties based on the delivery point. Sellers typically pay wharfage or quay rental fees for positioning cargo alongside the vessel. Buyers pay stevedoring charges, crane rental, lashing/securing costs, port security fees, and any terminal handling charges associated with vessel operations. Total buyer port costs often range from 5-15% of the FOB value depending on cargo type and port infrastructure.

FAS is generally impractical for small shipments due to the complexity of coordinating quayside delivery for less-than-container loads. The term works best for bulk commodities, project cargo, or situations where the buyer operates regular vessel charters and can efficiently consolidate multiple FAS purchases. For small shipments, FCA or EXW provide more flexible and cost-effective alternatives with simpler logistics coordination.