FCA vs FOB for Containers: Why the ICC Recommends FCA

Your seller says the container was delivered to the terminal on Monday. Your carrier says it was loaded onto the vessel on Friday. Somewhere in between, the cargo was damaged.

Who's responsible? Under FOB, the answer isn't clear. This guide explains why FOB creates a liability gap for container shipments and when FCA is the better choice.

Why doesn't FOB work well for containers?

FOB (Free On Board) transfers risk when goods are loaded on board the vessel—not when they arrive at the terminal. This worked fine when cargo moved directly from dock to ship. But containers changed everything.

Containers don't go straight onto ships. They arrive at the terminal, get stacked in the yard, and wait for the vessel. According to Portwise Consultancy, one documented export container sat at the terminal for 4.5 days before being loaded onto the vessel.

During that window, FOB creates ambiguity:

• The seller believes delivery is complete once the container reaches the terminal

• The buyer believes they haven't taken possession until loading

• Both interpretations have merit under the FOB framework

This is why the International Chamber of Commerce (ICC) states that FOB is intended for non-containerized sea freight only.

What happens during the terminal dwell time gap?

If damage occurs while your container sits at the terminal, liability becomes disputed. The seller's obligation under FOB ends at loading. The buyer's risk begins at loading. But neither party clearly owns the risk during the days in between.

Terminal dwell times vary by port and season. During the 2021 supply chain crisis, export containers at the Port of Los Angeles waited an average of 11.85 days before loading, according to project44 data. Even under normal conditions, containers commonly wait 3 to 5 days.

Common scenarios where disputes arise:

• Container damaged by terminal equipment during stacking

• Weather damage while sitting in the open yard

• Theft or tampering before vessel loading

• Delays causing perishable cargo to spoil

Under FOB, none of these situations have clear liability assignment until the container is actually loaded.

Why does the ICC recommend FCA for containers?

FCA (Free Carrier) transfers risk when the seller hands over the goods to the carrier at a named place—which can be the terminal gate. This eliminates the gap entirely.

The ICC has recommended FCA for container shipments since Incoterms 1990, which stated: "When the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off or container traffic, the FCA term is more appropriate to use."

Key differences between FOB and FCA for containers:

• FOB: Risk transfers when goods are loaded on board the vessel

• FCA: Risk transfers when goods are handed to the carrier at the named place

• FOB: Sea and inland waterway transport only

• FCA: Any mode of transport, including multimodal

With FCA, you can specify "FCA [Terminal Name]" and risk transfers the moment the carrier accepts the container. No waiting. No ambiguity.

What changed in Incoterms 2020 for FCA?

Incoterms 2020 added a provision allowing the buyer to instruct the carrier to issue a Bill of Lading with an "on board" notation to the seller. This addressed the main reason traders avoided FCA: Letter of Credit requirements.

Previously, banks issuing Letters of Credit required a Bill of Lading as proof of shipment. Under FCA, the seller hands over goods before loading, so obtaining this document was difficult. The 2020 update in Article A6/B6 solved this by allowing the buyer's carrier to issue the B/L directly to the seller.

This change removed the last major barrier to using FCA for container shipments while still meeting documentary credit requirements.

Quick checklist: When to use FCA instead of FOB

• You're shipping containerized cargo (not bulk or break-bulk)

• Containers will sit at the terminal before vessel loading

• You want clear risk transfer at a specific point

• You're using multimodal transport (sea + rail or truck)

• You need to specify a delivery point other than the ship

When FOB still makes sense:

• Bulk cargo loaded directly onto the vessel (grain, oil, minerals)

• Break-bulk cargo handled piece by piece

• Situations where goods move from dock to ship without terminal storage

FOB has worked for centuries. It still works—for the cargo it was designed for. For containers, FCA is the cleaner choice. The ICC has said so since 1990.