Differences Between FAS and FOB Incoterms

What is the difference between FAS and FOB?

Free Alongside Ship (FAS) and Free on Board (FOB) are two Incoterms used for regulating international trade using sea freight transport. Differentiating FAS from FOB can be tricky because they share a lot of similarities, but we have put together this guide to help clear any confusion. Let us walk you through the differences between FAS and FOB shipping terms so you can choose the right Incoterm for your operations.

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Differences between FAS and FOB Incoterms

The main difference between FAS and FOB is the point at which the risk transfers from the seller to the buyer. Under FOB, the seller is responsible for loading the goods on the selected vessel; from that moment, the risk passes to the buyer. Under FAS, the seller only needs to make them available for loading alongside the ship, so the risk transfers to the buyer at this earlier stage, making the buyer responsible for loading the goods.

Both FOB and FAS Incoterms are meant to be used for maritime and inland waterway cargo transport. However, FOB is sometimes used for other types of transport as well, such as air freight.

Read more about each Incoterm:

FAS vs FOB Incoterms: Difference between FOB Origin or Destination

Now that the main difference between FAS and FOB Incoterms is clear, let’s add another complexion to the matter. The FOB Incoterm has two variants: FOB Origin and FOB Destination. The main difference between them is the definition of the point at which the cargo must be delivered by the seller, which may be in the country of origin or destination, respectively.

  • FOB Origin: The seller is only responsible for loading the goods in the selected vessel that is docked at a port in the country of origin. The seller does not have any responsibility regarding freight shipping.
  • FOB Destination: The seller is responsible for delivering the goods to the buyer’s specified location, which can be a loading dock, building or warehouse, which is normally located in the country of destination. In this case, the seller is consequently responsible for shipping the goods to the defined destination.

Before signing the contract, it is important to define which version of the FOB Incoterm you will be using. Compared to the FAS Incoterm, FOB Destination has yet another difference: the responsibility of arranging and paying for the freight shipping falls on the seller instead of the buyer.

FAS vs FOB: Pros and cons of using each Incoterm

Advantages and disadvantages of shipping under FAS

For the buyer:

Since the buyer is responsible for the freight shipping, they can have more control over how the cargo is loaded and which type of vessel is used for transport. However, it often happens that there is miscommunication between the buyer and the seller, and the goods are waiting at the port to be loaded, which can cause extra fees and damage to the cargo. Since the seller’s responsibility ends when the goods are delivered, these costs are borne by the buyer.

For the seller:

Shipping under FAS is easier for the seller as they have fewer responsibilities compared to FOB. But everything should be arranged with total coordination between both parties; otherwise, the seller may get complications when making the goods available at the port if not all documents are arranged beforehand.

Advantages and disadvantages of shipping under FOB

For the buyer:

The buyer has fewer responsibilities and, if shipping under FOB Destination, gets the cargo delivered to the destination country, which means they are not liable for any damage during transport. However, the overall costs may be higher if the buyer is able to get better freight prices if arranging the transport themselves.

For the seller:

FOB is one of the most popular Incoterms, so if the seller is able to comply with the rules established under FOB, it may play in their favour when negotiating new clients. On the other hand, when FOB Destination is used, the seller has more responsibilities and needs to deal with international freight transport, being liable for anything that happens until the delivery.

FOB vs FAS Incoterms: customs clearance procedures

Understanding how the customs procedures work for each Incoterm, FAS and FOB, is essential before agreeing to any shipping term. Fortunately for you, both FAS and FOB Incoterms have very similar terms when it comes to customs when exporting and importing:

  • The seller is responsible for clearing the goods for export in the country of origin and all the costs or documents associated with it.
  • The buyer is responsible for the import procedures in the country of destination and all costs or documents associated with it.

Learn more about customs procedures

Differences between FOB vs FAS: a summary

FASFOB OriginFOB Destination
Type of transportSea freightSea freightSea freight
Export dutiesSellerSellerSeller
Transport to the port of originSellerSellerSeller
Loading the goods on the named vesselBuyerSellerSeller
Freight chargesBuyerBuyerSeller
Import chargesBuyerBuyerBuyer
Unloading and handling upon arrival at the named placeBuyerBuyerBuyer
Domestic transport to the named destinationBuyerBuyerBuyer
Risk transferOnce the goods are made available at the port of origin alongside the shipWhen the goods are loaded onboard the selected vesselWhen the goods are delivered at the selected destination

Want more information about Incoterms?

As you have seen, the differences between FAS and FOB may seem slight, but they are very important to be understood before any contract is signed. Read our other Incoterms guides to get even more familiar with the topic:

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FAQ – What is the difference between FAS and FOB?

FAS and FOB are terms used for which kind of transport?
Both FAS and FOB are Incoterms used for sea freight transport. Since FOB is so popular among shippers, it is also used for other modes of transport under special agreements.
Can I use FOB or FAS Incoterms for containerised cargo?
No, one commonality of FOB vs FAS is that neither term is suitable for shipping container cargo because containers have to be loaded on the ship using specific port infrastructure. FOB and FAS Incoterms are suited for shipping bulk goods, such as raw materials.
The Incoterm that the ICC recommends for containerised cargo is the Free Carrier (FCA).
What is better, FOB or FAS?
The suitability of FOB vs FAS depends on the type of goods, the position of the importer and exporter, and the price of the goods. If the goods are difficult to load or the origin port charges very high handling costs, sellers might want to choose FAS terms for their cargo. However, FOB terms can be more convenient for the buyer, as they will not have to pay the loading charges.
Read more about the pros and cons of using FAS or FOB Incoterm for shipping.
Is it mandatory to purchase insurance when using FAS or FOB Incoterms?
No, when using FOB or FAS Incoterms, it is not compulsory to purchase insurance coverage. However, both exporter and importer are advised to add insurance coverage to the cargo when they are liable for it.