Distinguish between CFR and FCA under Inco terms 2020 (2024)

FAQs

What is the difference between CFR and FCA Incoterm? ›

What Is the Difference Between FCA and CFR? CFR refers to "cost and freight" while FCA refers to "free carrier." FCA stipulates that the seller and buyer must agree on the point of delivery, as that is the point where responsibility passes from the seller to the buyer.

CPT is similar to the Incoterms^® 2020 rule CFR, except that CFR only applies to goods shipped by sea, whereas the CPT rule can be used for any form or forms of transport, including land and air, as well as ocean.

What is Free Carrier? Free Carrier, or FCA Incoterms, is a commonly used trade term that signifies that the seller is required to drop off the shipment to a named destination or seller's premise, as outlined by the buyer. From here, it is transferred to the shipping carrier by the buyer.

CPT can be used for all forms of transport and is similar to an FCA agreement; however, unlike FCA, the delivery point is not a defined location.

Under CFR terms (short for “Cost and Freight”), the seller is required to clear the goods for export, deliver them onboard the ship at the port of departure, and pay for transport of the goods to the named port of destination. The risk passes from seller to buyer when the seller delivers the goods onboard the ship.

The main difference between CIF and CFR shipping terms is insurance. On both CFR and CIF shipping terms, the risk of the cargo transfers from seller to buyer once the goods are loaded on the selected vessel at the port of origin, but under CIF, the seller must purchase insurance for the cargo.

Free on Board means the seller is responsible for the product only until it is loaded on board a shipping a vessel, at which point the buyer is responsible. With CFR, the seller must arrange and pay all costs to ship the product to a destination port, at which point the buyer becomes responsible.

Disadvantages. The seller will usually have to pay the freight before obtaining the bill of lading, thus typically before they have received payment from the buyer.

Carriage Paid To (CPT) rules require the seller to clear the goods and arrange carriage (by one or more transport modes) to the named place of destination. The seller does not need to obtain or pay for insurance.

Under FOB, the seller is responsible for loading the cargo onto the vessel, but with FCA, it is the buyer's responsibility. FCA transfer risk takes place at an agreed-upon point, whereas with FOB, the buyer assumes the risk on the vessel.

What shipping term is FCA? ›

What Is Free Carrier (FCA)? Free carrier is a trade term dictating that a seller of goods is responsible for the delivery of those goods to a destination specified by the buyer. When used in trade, the word "free" means the seller has an obligation to deliver goods to a named place for transfer to a carrier.

Under the Incoterms 2020 rules, FCA means the seller loads the goods on the buyer's transport at the seller's premises, or the seller delivers them to another named place. Most often, the buyer hires a transport that picks up the goods at the seller's warehouse.

What is the difference between CPT and CFR Incoterms? Cost and Freight (CFR) is only applicable for goods that are being transported by ocean, while CPT applies to all goods irrespective of the mode of transportation.

Carriage Paid To (CPT) is an international commercial term (Incoterm) denoting that the seller incurs the risks and costs associated with delivering goods to a carrier to an agreed-upon destination. With multiple carriers, the risks and costs transfer to the buyer upon delivery to the first carrier.

Under the Free Carrier, or FCA Incoterms® rule, the buyer is responsible for all freight costs.

FCA vs CIF

Free Carriage Arrangement (FCA) places more responsibility on the buyer than CIF does. Under the FCA Incoterm, buyers are responsible for charges at the origin port, shipment to the destination port, and all charges at the destination port.