There are minor differences between FCA vs DDP incoterm – please read our article about the 2020 incoterm. This guide will show you the biggest differences between FCA and DDP incoterm for your shipping, which is of essential importance to avoid legal complications when shipping high-value cargo internationally. If you want to avoid costly legal battles with lawyers involved, you must be aware of the key differences.
For a full summary of all incoterms, check out our guide: Incoterms 2020, Shipping, and Trade Terms defined // Complete Guide.
The FCA Incoterms
FCA stands for ‘Free Carrier incoterm, ‘ and this incoterm applies when three parties are involved in a transaction. The three parties are the vendor, the buyer, and the carrier/transport company. The vendor is usually responsible for providing the right set of goods for the transport. The buyer is responsible for unloading the goods, and the carrier is responsible for transporting the goods.
Under the 2020 FCA incoterm, the buyer and vendor agree that the carrier bears sole responsibility for transporting the goods. According to FCA incoterm, the FCA incoterm means that all the responsibility for damages falls upon the carrier company. This incoterm benefits both the buyer and the vendor because the carrier bears full responsibility. The incoterm is also flexible, allowing carriers to use multiple modes of transport until they deliver the goods.
The DDP Incoterm
DDP stands for ‘Delivered Duty Paid,’ and the vendor has to pay for the transportation costs. Under a DDP arrangement, the vendor will calculate the total cost of the transport and the unloading fee/import duties in the final bill delivered to the buyer. The buyer has to do minimal work because they pay for all their duties in a single bill.
Under the DDP incoterm, the responsibility is shared between the vendor and the carrier – not the buyer. DDP benefits buyers because the responsibility falls only on the vendor and the carrier. The buyer does not bear direct responsibility for any damage or lost items under this arrangement. DDP is akin to ordering something from an online store. If the goods do not arrive on time or if the goods are damaged, the Buyer retains the right to consult the vendor for a refund or a replacement.
FCA Legal Cases: Who Loses?
In a legal dispute, under the FCA incoterm, there are always three parties who share the responsibility among each other. None of them is bound for insurance of the cargo in transit. The buyer and vendor must have a crystal clear understanding of their responsibilities during the transit. In this arrangement, the vendor usually shares a lesser part of responsibility than the carrier/shipping company. The vendor’s primary responsibility is safe packing. The shipping company loses in this case.
DDP Legal Case
In a DDP incoterm legal case, the vendor loses if the goods are damaged or lost. The legal aspect is why the vendor has to establish solid communication with the shipping company. DDP is ideal for buyers because all the responsibility falls on the vendor. The only downside is that the vendor might impose a higher shipping cost in addition to the cargo cost, thereby justifying taking up higher responsibility. The vendor loses in this case.
FCA Vs DDP Final thoughts
When picking the right incoterm or trade term for your shipment is critical. We compared FCA vs DDP, two common trade terms to compare them head to head so that you can decide. We really can’t pick the best one for you, but we wanted to give an overview so that you can decide. Every shipment is different, and every client has their own needs. Even beyond FCA vs DDP, there are still other terms that may be better than the ones mentioned. This is why you need to do your due diligence and research the trade terms and figure out which is best for you!
1 thought on “FCA vs DDP Incoterms // The Best Trade Term for your Shipment for FBA, Shopify, or Alibaba?”
Kudos for the great article. I am glad I have taken the time to learn this.