When it comes to shipping goods across the world for manufacturing, there are several important factors to consider such as the type of shipment, cost-effectiveness, and security. Two commonly used international shipping terms are FCA (Free Carrier) and FOB (Free On Board), however very few understand the difference between these two types of transportation. In this blog post, we will break down both terms so you can determine which one is right for your business needs. So let’s get started!
What is FCA?
FCA, or Free Carrier, is an internationally recognized trade term used in global commerce. FCA indicates that the seller fulfills their obligation to deliver goods to a specified location once the product has been loaded onto the carrier booked by the buyer.
- The FCA terms designate when ownership of goods passes from the seller to the buyer, who then takes responsibility for the delivery along with the costs associated with it.
- FCA gives buyers assurance that their goods will be delivered and shifts the burden away from sellers who are no longer responsible for ensuring goods arrive at their destination.
- FCA trades provide excellent opportunities for both buyers and sellers to mutually benefit and ensure smooth logistics operations on a global scale.
What is FOB?
- FOB, or “Freight on Board”, is a concept used in the shipping and transportation industry that designates where financial responsibility lies for goods being shipped from one party to another.
- FOB indicates when ownership of the goods transfers from seller to buyer but also indicates who has incurred any additional costs involved in arriving at the buyer’s location.
- This allows the shipper and receiver to determine which party will be financially responsible for the full freight cost. FOB is an invaluable tool not only in the supply chain but also when setting payment terms between parties as it helps avoid confusion and ambiguity surrounding a trade transaction.
Difference Between FCA and FOB
FCA and FOB are two different terms used to define the terms of sale between a buyer and seller, particularly in logistics.
- FCA stands for Free Carrier, which means that the seller has to deliver an order to a selected location such as a warehouse or transport hub, where the buyer takes over.
- FOB stands for Freight on Board, which means that the seller is responsible for all shipments until the goods have been loaded onto the shipping vessel.
- FCA is beneficial for buyers since it gives them control over their cargo, while FOB removes liabilities from sellers since they pass on responsibility after loading their cargo onto transportation vessels.
FCA and FOB both offer unique advantages depending on who you are – whether you’re a buyer or a seller – making them extremely important considerations when making transactions.
Conclusion
As you can see, there is a big difference between FCA and FOB. If you are shipping goods to another country, it’s important to be clear on which terms your supplier is using so that there are no misunderstandings about who is responsible for what during the shipment process.
