What Does Free Alongside Ship (FAS) Mean?

Free Alongside Ship, abbreviated as FAS, is one of the International Commercial Terms (Incoterms) used in global trade. In simple terms, FAS means that the seller fulfills their delivery obligation once the goods are placed alongside the ship at the agreed port of shipment. From that point on, the buyer is responsible for all costs and risks associated with the shipment.

The Basics of FAS

• Seller’s Responsibility: Deliver goods alongside the vessel at the port.
• Buyer’s Responsibility: Handle the shipping costs and all risks once goods are alongside the ship.
• Commonly Used For: Bulk cargo, such as grain, coal, or oil.

FAS in Action

Let’s walk through a typical FAS transaction to see how it works in practice.

• Contract Agreement: The buyer and seller agree on the FAS terms as part of their sales contract.
• Preparation: The seller prepares the goods for shipment and ensures they reach the port.
• Delivery Alongside: The seller delivers the goods alongside the ship at the designated port.
• Transfer of Risk and Cost: Once the goods are alongside the ship, the risk and cost transfer to the buyer.
• Shipping Arrangements: The buyer arranges for the loading of goods onto the ship and handles all subsequent shipping logistics.

Benefits of Using FAS

• Clarity in Responsibilities: Clearly defines when the seller’s job is done and when the buyer takes over.
• Cost Management: Helps buyers manage shipping costs effectively by taking charge of the shipping process from the port.
• Risk Allocation: Clearly allocates the risk, so both parties know when the risk shifts from seller to buyer.

FAS and Shipping Costs

Shipping costs can be a major concern in international trade. With FAS, the buyer has control over these costs once the goods are alongside the ship. This control can be advantageous if the buyer has better shipping rates or more experience in handling freight logistics.

How FAS Impacts Shipping Costs

• Negotiation Power: Buyers can negotiate shipping rates directly with carriers.
• Flexibility: Buyers can choose shipping schedules and routes that best suit their needs.
• Cost Efficiency: By managing shipping directly, buyers can potentially reduce costs through strategic partnerships or bulk shipping arrangements.