For cargo that travels in a container, FCA (Free Carrier) is usually a better fit than FOB (Free On Board) under Incoterms 2020. FOB is written around goods that the seller delivers on board the vessel, but a container is normally handed to the carrier or a terminal days before it is lifted onto the ship. Under FOB the seller's risk and cost run until the goods are on board, long after the seller has lost any control over them. FCA moves the handover to the point where control really changes. This guide builds on our Incoterms 2020 overview and the comparison in DDP vs DAP vs FOB (Incoterms 2020 is the edition in use as of October 2026).
0:44What FOB and FCA mean in Incoterms 2020
FOB (Free On Board) is one of the four rules reserved for sea and inland waterway transport. The seller delivers when the goods are on board the vessel nominated by the buyer at the named port of shipment, or procures goods already delivered that way. Risk passes at that moment, and the seller clears the goods for export.
FCA (Free Carrier) works for any mode of transport, including sea. The seller delivers the goods, cleared for export, to the carrier or another person nominated by the buyer, at the seller's premises or at another named place. There are two versions of delivery:
- Named place is the seller's premises: delivery happens when the goods are loaded on the vehicle the buyer has arranged. The seller loads.
- Named place is somewhere else (a terminal, a depot, a freight station): delivery happens when the seller's vehicle arrives at that place with the goods ready for unloading and at the disposal of the buyer's carrier or nominee. The seller does not unload.
In both cases the buyer arranges and pays for the main carriage, and neither rule obliges anyone to buy cargo insurance.
Why FOB does not fit containers well
Picture a typical full container load. The exporter stuffs and seals the container at the factory, a truck takes it to the container terminal, and it is gated in. It may then wait there several days for its vessel, stacked under the control of the terminal and the shipping line, before a crane finally lifts it aboard.
Under FOB, risk stays with the seller until that last lift. For all that time the seller is carrying the risk of cargo it cannot see, supervise or control, and it has to prove what happened if something goes wrong. The cost allocation has the same problem. The rule puts the seller's costs up to "on board", but terminal and loading charges at the port are usually billed through the carrier's freight arrangement, which the buyer holds. The result is recharges and disputes about who owes what.
The ICC's own guidance on FOB points the same way: FOB is not appropriate where the goods are handed to the carrier before they are on board, as with containers delivered to a terminal, and FCA should be used instead. I could not re-open the ICC rule text for this update, so read that guidance note in your own copy of the Incoterms 2020 rules before you rely on exact wording in a contract.
The misconception: "FOB and FCA are the same for sea freight"
They are not. People say it because both are "buyer arranges the main carriage, seller clears export", and because on a quote sheet they often cost the same. But the delivery point, the point where risk passes, the transport mode they cover and the documents that follow are all different. The practical effects are:
- Different risk window. Under FOB the seller carries the risk through trucking, gate-in, terminal storage and loading. Under FCA that risk ends at the handover.
- Different insurance gaps. A buyer who buys cover that starts "on board" and then agrees FCA leaves the stretch from handover to loading uninsured by anyone.
- Different paperwork. A container gated in at a terminal normally gets a bill of lading that reads "received for shipment". The on-board notation comes later, after loading. FCA has a mechanism for that (below); FOB assumes the goods are already on board.
A second misconception runs the other way: that FCA means "seller pays for carriage". It does not. FCA is a buyer-arranges-carriage term, like FOB.
FCA and the on-board bill of lading option
Letters of credit commonly require a bill of lading showing the goods were shipped on board. Under FCA the seller delivers before loading, so the seller has no on-board document of its own to present. Incoterms 2020 added an option for this in articles A6/B6: if the buyer and seller agree to it, the buyer instructs its carrier to issue to the seller a bill of lading stating that the goods have been loaded, and the seller then passes that document to the buyer, often through the banks (ICC, Incoterms 2020 overview page, checked October 2026).
Things to know before you rely on it:
- It only applies if the contract says so. It is an agreed option, not a default.
- It does not move the delivery point or the risk. Delivery still happens at the handover, and the on-board bill of lading is only a document that follows later.
- The instruction comes from the buyer to the buyer's carrier, at the buyer's cost and risk. The seller cannot make a carrier issue it, so a seller who needs this document should make sure the buyer commits to giving the instruction, and should check the carrier's practice, in good time.
- Check the credit's wording against the document actually issued. Our guide to letters of credit and document discrepancies shows how small mismatches delay payment, and bill of lading types explained covers the document itself.
FOB vs FCA for a container: side-by-side
| Point | FOB | FCA (seller's premises) | FCA (named terminal) |
|---|---|---|---|
| Modes | Sea and inland waterway only | Any mode | Any mode |
| Delivery | Goods on board the vessel | Goods loaded on the buyer's vehicle | Seller's vehicle arrives, ready for unloading |
| Risk passes | On board | On loading at the premises | On arrival at the terminal |
| Who loads | Seller, onto the ship (terminal and carrier do the lift in practice) | Seller, onto the buyer's vehicle | Seller's vehicle; buyer's side unloads |
| Export clearance | Seller | Seller | Seller |
| Inland leg to port | Seller pays | Buyer pays | Seller pays |
| On-board bill of lading | Natural fit | Only by agreement (A6/B6) | Only by agreement (A6/B6) |
The third column answers a common worry. A buyer who wants the seller to keep paying for the trucking to the port, as under FOB, does not need FOB for that. "FCA, named port container terminal" keeps the same commercial split and puts the risk transfer where control actually changes.
Who loads, who clears, who insures
- Loading: at the seller's premises the seller loads the container onto the buyer's truck. Who stuffs and secures the cargo inside the container is a separate point worth writing into the contract, because the delivery rule is about the handover, not the stowage.
- Export clearance: the seller handles export formalities under both FOB and FCA. If your supplier cannot clear the goods for export, neither term works, and you would be drifting toward EXW with its own problems.
- Shipper on the bill of lading: agree who is named as shipper, because that party carries the container weight declaration duty under SOLAS rules. The Incoterm does not settle it on its own.
- Insurance: neither FOB nor FCA obliges anyone to insure. Make sure whoever bears the risk at each stage is covered, and that the policy starts at the right point. See cargo insurance explained and how much cover to buy.
- Terminal handling charges (THC): the Incoterms rules split costs by reference to the delivery point, but THC is a carrier or terminal tariff item and often reaches the party who holds the freight contract. Do not assume the Incoterm decides who ends up paying it. Say in the sales contract who bears origin THC and who reimburses whom, and read the ICC guidance on cost allocation for the term you pick. (I did not re-confirm the exact ICC wording on THC for this update, so treat this point as a drafting prompt, not a ruling.)
When FOB is still reasonable
FOB remains the right rule for cargo that is loaded onto the ship directly, such as bulk, break-bulk or heavy-lift cargo lifted over the rail. Many trades also keep using FOB for containers out of habit, and the parties muddle through because they treat it informally as "delivered to the port". That works until a container is damaged or lost at the terminal and the contract says the seller was still on risk. If your trade partners insist on FOB for containers, at least add a clause that states where and when risk and costs pass in practice.
Decision checklist: FCA or FOB?
- Is the cargo in a container handed over at a terminal or depot? Choose FCA.
- Is the cargo loaded directly onto the vessel by the seller's own arrangement (bulk, break-bulk)? FOB fits.
- Does the seller need to keep paying inland haulage to the port? Use FCA with the port terminal as the named place.
- Does a letter of credit require an on-board bill of lading? Write the A6/B6 option into the sales contract and confirm the buyer and its carrier can deliver it.
- Can the seller clear the goods for export? If not, resolve that before choosing either term.
- Is the insurance cover starting at the same point that risk passes?
- Have you named the exact place and written "Incoterms 2020" next to the term?
What to do next
- Check the Incoterm on your current purchase orders and quotes. If it says FOB and the cargo goes in containers, ask whether FCA fits better.
- Name the place precisely, for example "FCA [your port] container terminal (Incoterms 2020)", and agree who pays the terminal charges at origin.
- If a letter of credit is involved, agree the on-board bill of lading arrangement with the buyer, its forwarder and your bank before booking.
- Align insurance with the risk point and ask your forwarder to quote on the same term, so the quotes are comparable.
More than 29,300 logistics companies are searchable by country and service in the CargoLinked directory, and the public requests board lists freight that shippers have posted for forwarders to quote on directly. State your Incoterm in the request so the quotes you get back cover the same scope.
This guide is general information, not legal, financial or customs advice. Incoterms rules are a contract framework, and the exact obligations depend on the full ICC text and your sales contract. Confirm details with the ICC rules, your bank and a licensed professional before relying on them.
