Learn/Incoterms

FCA vs FOB: Which Incoterm to Use for Containers

FOB transfers risk when goods are placed on board the vessel and applies only to sea or inland waterway. FCA transfers risk when the seller hands goods, export-cleared, to the named carrier at the named place, and works for any mode. For containers the ICC recommends FCA, because the box leaves the seller days before it is on board.

The risk-transfer gap on containers

Under FOB the seller's delivery is complete when the goods are on board. A container is typically gated into the terminal two to five days earlier. Damage, theft, or a terminal mishandling in that gap sits in a grey zone: the seller has already lost control, but FOB says risk has not yet passed. FCA names the actual handover — seller's warehouse, a CFS, or the container yard — so the contract matches the logistics.

FOB, FAS, CFR, and CIF are the four sea-only Incoterms 2020 rules. Using them on a multimodal container move is the first of the two weekly mistakes on the Incoterms overview. FCA, CPT, and CIP are the container-correct F- and C-term equivalents.

Who books, who pays, who sees the freight

Commercially both FCA and FOB usually put main-carriage booking with the buyer (or the buyer's forwarder). That is why importers who want to control routing buy FOB or FCA rather than CIF. The difference is not who pays ocean freight — it is where the seller's job ends. FCA seller: export-cleared, handed to the buyer's carrier at the named place. FOB seller: export-cleared, on board, and typically responsible for origin terminal handling up to loading.

Name the place with precision. 'FCA Shanghai' is incomplete. 'FCA seller's warehouse, Qingpu, export-cleared' is a different job from 'FCA Yangshan CY'. The first includes origin trucking and export clearance in the goods price; the second makes the buyer collect. Vague FCA places are how origin trucking disappears from an RFQ and reappears as a dispute.

The letter-of-credit and on-board B/L problem

Banks still ask for an 'on board' bill of lading. Under classic FOB the carrier can issue that bill because delivery is on board. Under FCA, delivery happened at the terminal or warehouse, so the first document may be a received-for-shipment bill. Incoterms 2020 explicitly lets the parties agree that, under FCA, the buyer will instruct the carrier to issue an on-board bill to the seller so the seller can present into the credit. If that instruction is missing, FCA + L/C is a document discrepancy waiting to happen.

Worked choice: containerised electronics, buyer in Los Angeles, seller in Shenzhen, payment by L/C. Prefer FCA Yangshan CY, with the L/C requiring an on-board B/L and the booking clause that the carrier issues it to the seller. Using FOB 'because the bank said FOB' keeps the risk gap the ICC warned about. Using FCA without the on-board instruction keeps the risk logic clean and fails the credit.

When FOB is still the right rule

Breakbulk, project cargo, and bulk that is actually placed on board alongside the vessel still fit FOB. Some commodity trades and older form contracts are written in FOB language that counterparties will not reopen. In those files, do not relabel the Incoterm in the quote — flag the terminal-gap risk in the booking notes and make sure origin insurance covers up to on-board. For anything in a dry van, reefer, or high-cube, start from FCA and argue back to FOB only if the contract forces it.

Frequently Asked Questions

What is the difference between FCA and FOB?

FOB transfers risk when goods are on board a vessel and is sea-only. FCA transfers risk when goods are handed to the named carrier at the named place and works for any mode. For containers, that handover is usually days before the vessel.

Why shouldn't I use FOB for containers?

Because the seller loses control of the box at the terminal gate, while FOB says risk passes only once it is on board. The ICC recommends FCA (and CPT/CIP instead of CFR/CIF) for containerised cargo for that reason.

Who pays ocean freight under FCA?

The buyer, as with FOB. FCA is an F-term: seller delivers to the buyer's carrier. The named place decides whether origin trucking and export clearance are in the seller's price.

Can I use FCA with a letter of credit?

Yes, if the parties agree the buyer will instruct the carrier to issue an on-board bill of lading to the seller so the seller can present into the credit. Incoterms 2020 contemplates that arrangement. Without it, banks may refuse a received-for-shipment bill.

Is FCA the same as EXW?

No. EXW makes the buyer collect at the seller's premises and, in practice, often handle export clearance — a burden many buyers cannot legally perform. FCA requires the seller to export-clear and deliver to the named carrier.