Incoterms Rules
FCA vs FOB: what is the difference
FCA works for any mode of transport, and the risk passes when the goods are handed to the buyer's carrier at the named place. FOB is for sea and inland waterway transport only, and the risk passes once the goods are on board the vessel. In both rules the seller clears the goods for export and the buyer pays the main carriage.
Side by side
| FCA Free Carrier | FOB Free On Board | |
|---|---|---|
| Transport | Any mode | Sea and inland waterway |
| Export clearance | Seller | Seller |
| Import clearance | Buyer | Buyer |
| Main carriage paid by | Buyer | Buyer |
| Insurance | Not required | Not required |
| Risk passes to the buyer | When the goods are handed to the buyer's carrier at the named place | When the goods are loaded on board the vessel at the port of shipment |
Which one to choose
Use FOB for bulk cargo such as grain loaded straight onto the vessel. Use FCA for containers, which are handed over at a terminal before loading, and for road, rail or air: under FOB the seller would carry the risk for goods it no longer controls. Under FCA in Incoterms 2020 the parties may agree that the buyer instructs its carrier to issue an on-board bill of lading to the seller, which helps with letters of credit.