Free Alongside – Definition

Cite this article as:"Free Alongside – Definition," in The Business Professor, updated December 15, 2019, last accessed October 29, 2020, https://thebusinessprofessor.com/lesson/free-alongside-definition/.

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Free Alongside Definition

Free Alongside Ship (FAS) is a shipping rule that states that a seller is obligated to deliver goods purchased by the buyer next to a particular vessel that the buyer designates. This rule is often used in a scenario when a buyer has a direct link to the vessel designated which can be used for loading of the goods purchased.

A Little More on What is Free Alongside (FAS)

The Free alongside (FAS) is a shipping rule only applies to goods transported by sea or inland waterway, this rule is often used in international trade.  When FAS is used in a shipping contract between two parties, the seller is obligated to deliver the goods purchased at a given port and near (alongside) the specific vessel that the buyer nominates.

As a contractual agreement, FAS stipulates the port of delivery, the expected time of delivery of goods, payment plans, the party that is liable for risks and losses (and at what time do the risks shift to the other party), among other details. When using FAS, the buyer and seller are also required to reach an agreement on who pays the freight costs and insurance costs.

Free Alongside and Incoterms

Free Alongside (FAS) are commonly used as international commercial terms (Incoterms) in international trade. At the international level, a trade occurs between two parties from different countries and regions, with the presence of FAS, both parties can engage in trade without the fear of goods not being delivered to the buyer. All commercial terms (Incoterms) related to international trade are released in a publication by the International Chamber of Commerce (ICC). ICC works effectively in fostering trade and commerce globally which will improve the economy of countries.

Free Alongside Steps

When the Free Alongside (FAS) rule is used in a trade, there are certain meanings attributed to the rule, they are;

  • Free: This means that the seller is obligated to deliver the goods purchased at a particular port where the goods can be easily transferred to a carrier.
  • Alongside: This word also means the seller is obligated to deliver the goods near a particular vessel designated by the buyer. This means if the goods are not delivered to (near) the vessel, they might not be within the reach of the carrier.

Both the seller and the buyer have obligations, while the seller is responsible for export clearance, the buyer us liable for the cost of insurance, transportation, and loading of the goods into the designated vessel.

Delivered Ex Ship, Delivered Ex Quay, and Ex Works

Free Alongside as a shipping rule in international trade differs from many other rules. For instance, Delivered Ex Ship (DES), Ex Works (EXW), Delivered EX Quay DEQ) are all shipping rules that may sound the same as FAS but they all have different meanings. They also have variants of obligations that both the buyer and the seller are exposed to.

As a trader, it is recommended that enquires are made from an international trade lawyer, especially one that is well-versed with the laws of the country where the seller is in order to know which rule is most applicable.

References for “Free Alongside – FAS”

https://www.investopedia.com/terms/f/fas.asp

https://www.incotermsexplained.com/the-incoterms-rules/the…/free-alongside-ship/

https://www.tradefinanceglobal.com/freight-forwarding/…/fas-free-alongside-ship/

www.businessdictionary.com/definition/free-alongside-ship-FAS.html

https://www.globalnegotiator.com/international-trade/dictionary/fas-free-alongside/

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