What Is a Free Carrier?

A free carrier is a term used to identify a situation in which a seller is no longer held responsible for a shipment of goods to a customer once those goods have been delivered to the entity that will actually handle the shipment. At that point, any of the costs associated with the transportation of the goods as well as any risk relating to the shipping process is assumed by the buyer. A free carrier situation typically requires that the buyer take precautions such as securing insurance on the ordered goods in order to minimize risk of loss or damage in transit.

With a free carrier arrangement, the function of the seller is to prepare any type of documentation that the shipper will require in order to receive the order. In addition, the seller must package the order in a manner that is in compliance with safety and other regulations related to the goods that are being shipped. Taking the time to understand and comply with these regulations expedites the acceptance of the packages by the shipper, allowing the seller to fulfill his or her responsibilities in the transaction.

The type of transport that may be involved with a free carrier arrangement can involve just about any type of shipping method necessary. The goods may be shipped by rail, air, roadway, or on a ship. In any scenario, once the seller has delivered the shipment to the transport company, and that company has determined that all is in order and accepted the order, the seller is under no further obligation.

Buyers who agree to a free carrier situation will take steps to protect the order, usually by specifying how the order will be shipped and securing insurance that can help offset losses that could occur. The scope of the insurance coverage will vary, with the more typical solutions calling for covering the insured party in the event of loss of the goods during transit. That scope of the coverage may include protection in the event of damage sustained to the goods that occur at some point after the carrier accepts them from the seller, and even total losses that occur due to piracy, theft, or some sort of natural disaster. The extent of the coverage will depend on the nature of goods being shipped, the assessed value of the goods involved, and the degree of protection that the buyer wishes to secure.