An FAS Incoterms cost breakdown splits the bill at the quayside: under Free Alongside Ship, the seller pays every cost to get the goods next to the buyer’s nominated vessel at the named port of shipment, and the buyer pays for loading onto the ship and everything after. The rule applies only to sea and inland waterway transport under Incoterms 2020.
What the Seller’s FAS Price Covers
When a seller quotes an FAS price, that single figure bundles together every cost the seller bears up to the dock. The biggest piece is the goods themselves. On top of that, the seller absorbs:
- Inland transportation from the factory or warehouse to the port of shipment
- Export-grade packing
- Terminal handling charges
- Wharfage fees for using dock space
- Labor to move the cargo to the quay edge
- Any temporary port storage while waiting for the vessel
The result is one number representing the full value of the freight sitting on the dock, ready for the buyer’s ship. Nothing beyond that point is in the FAS price.
Export Clearance Sits With the Seller
Getting the goods legally out of the country is entirely the seller’s job. That covers any required export licenses or permits, pre-shipment inspections, and all customs formalities for departure.1ICC Academy. Incoterms 2020 FAS or FOB The Incoterms text also references export duties and taxes “where applicable,” but for U.S.-based sellers this rarely matters because the Constitution prohibits the federal government from taxing exports.2Congress.gov. Article I Section 9 Clause 5
U.S. sellers also handle the Electronic Export Information filing through the Automated Export System when the shipment exceeds $2,500 per Schedule B number, or at any value when an export license is required. Shipments at or below $2,500 per Schedule B number with no license requirement are exempt.3International Trade Administration. Filing Your Export Shipments Through the Automated Export System AES License applications go through the Bureau of Industry and Security’s SNAP-R portal.4Bureau of Industry and Security. SNAP-R
The Delivery Point That Catches Sellers Off Guard
FAS delivery is not simply “goods on the dock.” The vessel has to be berthed. Placing cargo on an empty quay before the ship arrives does not satisfy the delivery requirement, and the seller stays on the hook until the nominated ship is actually there and the goods are positioned alongside it.
Once the cargo is in place, the seller takes a signed dock receipt from the terminal operator as proof of delivery and sends the buyer prompt notice that the goods are either delivered or ready for a vessel that failed to arrive on time.1ICC Academy. Incoterms 2020 FAS or FOB That receipt and notice together close out the seller’s obligations.
What the Buyer Pays and When Risk Transfers
The second the goods sit alongside the vessel, both cost and risk slide onto the buyer. The buyer pays for:
- Loading the cargo from the dock onto the ship’s deck
- Ocean freight
- Marine cargo insurance for the voyage
- Import clearance at the destination
- Import licenses, duties, and taxes
Risk follows the same line. If a crane drops a crate during loading, or cargo is lost overboard mid-ocean, the loss is the buyer’s.1ICC Academy. Incoterms 2020 FAS or FOB Most buyers hire a customs broker at the destination port to handle import formalities and keep the shipment moving.
FAS vs. FOB: The One-Step Difference
FAS and FOB look similar because both deliver goods at a named port, but they split costs at different points.
- FAS (Free Alongside Ship): Seller delivers to the quayside. Buyer pays for loading and takes on risk while the cargo is still on the dock.
- FOB (Free on Board): Seller delivers goods loaded on board. Seller pays for loading and carries risk until the cargo clears the ship’s rail.
That single step moves the loading bill and the liability for loading accidents between parties, which matters for heavy or awkward cargo where crane work carries real risk. FAS tends to appear in bulk commodity and break-bulk trades where the buyer already has loading arrangements with the terminal or vessel. FOB is far more common for containerized freight.1ICC Academy. Incoterms 2020 FAS or FOB
One boundary worth flagging: both rules are limited to sea and inland waterway transport. If the goods are moving by air, rail, or truck, FAS does not apply, and the Incoterms 2020 framework provides seven other rules for those shipments.5International Trade Administration. Know Your Incoterms
Who Pays When the Schedule Slips
FAS is unusually exposed to timing because the seller’s cargo and the buyer’s vessel both have to show up at the same berth at the same time. When the ship arrives late, the goods pile up storage fees on the dock. Because the buyer is the party that nominated the vessel, those delay costs generally land on the buyer.
Terminal demurrage can escalate quickly, sometimes thousands of dollars per day on large shipments. A sales contract should spell out what happens when the vessel misses its arrival window, including whether the buyer reimburses the seller for storage the seller had to prepay. Sellers who leave this ambiguous often absorb costs that should sit with the buyer.
The other direction matters too. If the seller delivers late and the vessel is waiting, the buyer may face dead freight charges from the carrier. Well-drafted FAS contracts set specific delivery windows and attach financial consequences to a missed schedule on either side.
Picking a Marine Insurance Tier
Since the buyer carries all transit risk from the quayside onward, the cargo insurance choice is one of the more consequential calls in an FAS deal. The international standard is the Institute Cargo Clauses, which come in three tiers:
- Clause A (All Risks): Covers every cause of loss or damage except specific exclusions like willful misconduct, ordinary leakage, inherent vice, delay, and war. Broadest and most expensive.
- Clause B (Named Perils, Broad): Covers fire, explosion, vessel grounding or capsizing, collision, earthquakes, lightning, jettison, washing overboard, and seawater entry. Theft and malicious damage require an endorsement.
- Clause C (Named Perils, Narrow): The most limited standard coverage. Fire, explosion, grounding, collision, jettison, and general average. Natural disasters, water damage, and theft are excluded.
Clause A tends to earn its premium on high-value or moisture-sensitive cargo. Clause C can be adequate for durable bulk commodities that aren’t theft targets. The practical gap between these tiers only becomes obvious after a claim, so the coverage choice should track the actual risks on the specific route rather than default to the cheapest option.