Free Alongside Ship (FAS): Definition and Use in Contracts

What Is Free Alongside Ship?

Free alongside ship (FAS) is a contractual term used in the international export business that stipulates that the seller must arrange for goods to be delivered to a designated port and next to a specific vessel for easy transfer.

FAS is one of a number of internationally recognized commercial terms used by export and import businesses. Together, they are known as Incoterms.

Understanding Free Alongside Ship

Contracts between a buyer and a seller for the international transportation of goods include details like the time and place of delivery, the payment due, and which party pays the costs of freight and insurance. The contract also will indicate the date when the risk of loss shifts from the seller to the buyer.

Usually, such contracts also include abbreviations for accepted commercial terms, such as FAS.

When an international trade contract includes "free alongside ship" or FAS, the word "free" means the seller must deliver the goods to a specific port, while "alongside" means that the goods must be within reach of the designated ship's lifting tackle.

At that point, they are considered to be delivered and the responsibility for cargo loss or damage shifts to the buyer.

Generally, the seller is responsible for ensuring that the goods are cleared for export. The buyer is responsible for costs of re-loading goods, subsequent ocean transportation, and insurance.

Incoterms 

FAS is one of the trade terms called Incoterms, or international commercial terms. Incoterms are published by the International Chamber of Commerce (ICC), an industry organization that fosters global trade and commerce.

The ICC standardized terms so that they could be understood by parties to a transaction anywhere in the world.

Incoterms are divided into two categories:

• Rules governing any mode of transport
• Rules governing sea and inland waterway transport

Incoterms' three-letter codes in some cases are identical to those used in other standards, such as the American Uniform Commercial Code, but the meanings are different. As a result, trade contracts expressly indicate which code that their terms reference.

Other Contractual Terms

As mentioned, FAS is a contractual term used to describe how goods traveling by water are required to be delivered by the seller to the buyer, and which party is responsible for the costs. Other shipping contract terms include:

• Free on Board (FOB): Goods must be delivered to and loaded aboard a designated ship. The buyer bears the responsibility for import clearance and the shipping expense to the final destination. The risk of loss or damage shifts to the buyer when goods are actually on board.
• Cost and Freight (CFR): Goods must be delivered to and loaded aboard a designated ship. The seller must also handle customs export matters and any required inspections. The seller is not responsible for arranging shipment insurance. The risk of loss or damage shifts to the buyer when goods are actually on board.

Other terms have become archaic in recent years.

• Delivered Ex Ship (DES): The seller will deliver the goods to a port, but does not specify a wharf. 
• Delivered Ex Quay (DEQ): The seller will deliver the goods to a specific wharf at the destination port.

The Bottom Line

Free alongside ship and its acronym, FAS, are one of many Incoterms that relate to the shipment of cargo on sea or inland waterways.

It means that a seller of goods is responsible for the costs of delivering those goods to a port and ship which can easily access those goods for loading. At that point, costs and risks of damage to the cargo shift to the buyer.