FCA vs CIP – who pays for what?
FCA is Free Carrier and CIP is Carriage and Insurance Paid To. We compare who pays for transport, customs clearance and duty, and where risk passes to the buyer.
Key differences
Under CIP, the seller also covers the main freight and insurance. Under FCA, the buyer pays for this instead – except for insurance, which is not compulsory under FCA. Under both rules, risk passes to the buyer on handover to the carrier in the country of dispatch.
- Main carriage (freight)
- FCABuyerCIPSeller
- Insurance
- FCANo obligationCIPSeller
Full cost breakdown
| Cost | FCA | CIP |
|---|---|---|
| Export clearance | Seller | Seller |
| Transport to the port or terminal | Seller | Seller |
| Loading for main carriage | Seller | Seller |
| Main carriage (freight) | Buyer | Seller |
| Insurance | No obligation | Seller |
| Unloading at destination | Buyer | Buyer |
| Import clearance | Buyer | Buyer |
| Import duty and VAT | Buyer | Buyer |
| Risk passes | When the seller hands the goods over to the buyer’s carrier: at the seller’s premises – once they are loaded; at another place (e.g. a terminal) – when the goods are on the seller’s means of transport, ready for unloading. | When the seller hands the goods over to the first carrier – even though the seller pays for transport and insurance. |
| Mode of transport | Any mode of transport (sea, rail, air, road) | Any mode of transport (sea, rail, air, road) |
Notes
- FCA – transport to the port or terminal and loading depend on the place of delivery. If it is the seller’s premises, the seller loads the goods onto the buyer’s vehicle, and transport to the port or terminal is then the buyer’s responsibility. If it is another place (e.g. a terminal), the seller brings the goods there on its own means of transport, and unloading them is the buyer’s responsibility.
- Unloading at destination: if unloading costs are included in the contract of carriage concluded by the seller, the seller pays them and cannot charge them to the buyer afterwards.
- Insurance: only the seller is obliged to insure, and only under CIF (at least Institute Cargo Clauses (C), 110% of the value) and CIP (Institute Cargo Clauses (A), 110% of the value). Under the other rules, nobody has to insure the goods – but once risk has passed, any loss is borne by the buyer.
What to watch for when importing from China
FCA Free Carrier
FCA has two variants. If the place of delivery is the factory, the supplier loads the goods onto the vehicle you send. If it is a terminal or your forwarder’s warehouse, the supplier only delivers the goods there, and unloading is your responsibility. State the exact place in the contract, e.g. “FCA Ningbo, forwarder’s warehouse”, not just “FCA Ningbo”.
More about FCA →CIP Carriage and Insurance Paid To
In Incoterms 2020, CIP requires broader insurance than CIF: Institute Cargo Clauses (A) – “all risks” – at 110% of the value of the goods. Even so, the risk passes to you in China, when the goods are handed over to the carrier. The policy protects you, but the supplier takes it out – ask for a copy before shipment.
More about CIP →When to use FCA and when to use CIP?
- FCA – for container shipments and for rail freight from China, when the supplier is to handle export clearance and deliver the goods to the terminal (e.g. Xi’an, Chengdu), and you arrange transport to Poland.
- CIP – for any mode of transport, when the supplier arranges carriage and broad insurance cover (Clauses (A)), while you handle customs clearance in Poland.
Buying on FCA terms? You choose the forwarder
We organise transport from China – by rail, sea or air – together with customs clearance in Poland and cargo insurance. Send us your cargo details and we will prepare a quote tailored to your shipment.
Request a quoteFAQ
What is the main difference between FCA and CIP?
Under CIP, the seller also covers the main freight and insurance. Under FCA, the buyer pays for this instead – except for insurance, which is not compulsory under FCA. Under both rules, risk passes to the buyer on handover to the carrier in the country of dispatch.
Where does risk pass to the buyer under FCA?
When the seller hands the goods over to the buyer’s carrier: at the seller’s premises – once they are loaded; at another place (e.g. a terminal) – when the goods are on the seller’s means of transport, ready for unloading.
Where does risk pass to the buyer under CIP?
When the seller hands the goods over to the first carrier – even though the seller pays for transport and insurance.
Can FCA and CIP be used for rail freight from China?
Yes. FCA and CIP can be used with any mode of transport: sea (including containers), rail, air and road.
Compare other pairs
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). This page is an independent, simplified summary of how costs and risks are divided – it is not affiliated with or approved by the ICC. When drafting contracts, use the official text of the Incoterms® 2020 rules published by the ICC.