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FCR in shipping refers to a trade document that is issued by a freight forwarding company/freight forwarder to the seller who is exporting goods. This document is important if the seller wants to submit a Letter of Credit issued by the international buyer to the bank. A freight forwarder could be an agent or company who facilitates the cross-border passage of goods.
What is FCR in shipping?
FCR stands for Forwarders Cargo Receipt and is issued by the forwarder to the exporter once the former receives the consignment that is to be shipped to its destination. As the name implies, this document is a receipt which proves that the freight forwarder has received the shipment in good condition.
The document signifies the passage of responsibility of the goods from the seller to the freight forwarder. This document is not to be confused with a transport bill as this is not a legal requirement under India’s export regulations.
FCR full form – Forwarders Cargo Receipt
FCR meaning in shipping – A document issued by the freight forwarding company indicating that it has received the goods for export in a good condition from the seller. In India FCR often refers to a goods receipt issued by the shipping company.
In the global shipping market, FCR is a trade document issued by freight forwarders, who are members of FIATA (International Federation of Freight Forwarders Associations).
When issuing an FCR a freight forwarder will ensure that:
- The shipment has been taken over by the forwarder completely and the disposal of these goods is his/her responsibility
- The goods are in good order and condition
- The details on the document matches the instructions received by the forwarder
- The conditions of freight documents do not oppose obligations in the FCR document
Laws governing FCR
In India RBI has put across two rules governing FCR when it comes to submission of FCR to banks and companies:
- Banks may accept Forwarder’s Cargo Receipts (FCR) issued by IATA approved agents, in lieu of bills of lading, for negotiation/collection of shipping documents, in respect of export transactions backed by letters of credit.
- Authorised dealers may accept FCR issued by shipping companies of repute/IATA approved agents (in lieu of bill of lading), for purchase/discount/collection of shipping documents even in cases, where export transactions are not backed by letters of credit.
The first rule states that if you want to submit a letter of credit to a bank you can submit an FCR instead of a Bill of Lading and the bank will accept this document. This FCR must be approved by FIATA (mentioned as IATA by RBI) for the banks to accept this as a valid document instead of the Bill of Lading.
The second rule states that companies who are exporting can accept an FCR issued by “shipping companies of repute” and IATA approved FCRs when export transactions are not backed by letters of credit. In many countries an FCR can only be issued by forwarders who are a part of FIATA.
Functions of FCR
An FCR issued by the freight forwarder performs the following functions:
- Proves that the consignment has been received by the freight forwarder and is in his/her possession
- Proves that the packaging is intact and is ready to be shipped
- Indicates that the responsibility of the goods has passed from the exporter to the forwarder
- Passes the liability of the safety of goods to the freight forwarder
- Can be used while submitting a letter of credit issued by the buyer
Details mentioned on an FCR
Let us have look at all the information that is presented on an FCR:
- Suppliers or forwarders principals: This indicates the name of the shipper or the freight forwarder. It could also mention the name of the exporter.
- Consignee: The buyer of the goods is mentioned here along with his/her company name and other details.
- Marks and numbers: The marks and numbers that can uniquely identify the shipment
- Number and kind of packages: The type of packaging and exact quantity of the packages to be shipped. For example: 100 cartons
- Description of goods: Short descriptions of goods inside the packages
- Gross weight: The weight of the total package being shipped
- Measurement: The dimensions of the package being shipped
- Place of issue – The place where the FCR document was issued by the forwarder.
- Date of issue – The date when the FCR document was issued.
Points to remember
Here are a few points to remember about FCR in shipping:
- FCR is issued by a freight forwarder usually at the CFS
- This trade document signifying receipt of goods rather than a contractual obligation
- This document cannot be treated as a transport bill
- FIATA issued FCR can be submitted instead of bill of lading at banks in India for transactions involving Letter of Credit
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