Free in and out (FIO). As a rule, owners have to pay the cost of loading and discharging the cargo, it being the duty of charterers to deliver the cargo free alongside at the port of loading and for consignees to take delivery from alongside at the port of destination, in each case free of charge to the vessel.
Some charterers retain the right to nominate the stevedores at a fixed rate per tonne not exceeding current rate.
The expression “free in and out” means it is the responsibility of the charterers to load, or the consignees to discharge, the cargo for their respective accounts (that is, “free of expense to the owners”). This expression leaves some doubt whether the cost of stowage is for shippers’ account and in order to eliminate any misunderstanding the clause can be worded as follows:
“Free in and out, stowed and trimmed”
“Loaded, stowed, trimmed and discharged free of expense to the vessel.” (FIOST)
The advantage of the stipulation “free out” or “free discharge” lies in the fact that apportionment of cost of discharge is unnecessary. Under normal conditions shipowners deliver the cargo over the ship’s rail to consignees, who have to provide the necessary means for receiving the cargo, but the whole operation may be done by ore stevedoring firm The apportionment of discharging expenses may give rise to disputes, which can be eliminated by agreeing to “free discharge”.
In some instances, the total stevedoring expenses are borne by charterers, e.g., if loading or discharging operations take place alongside charterers’ own establishments.
Generally speaking, shipowners will be in favour of fixing their ships on f.i.o. terms, especially when stevedoring costs for loading and discharging have a tendency to rise without warning. With a f.i.o. charter, shipowners need not worry about loading and discharging costs which have to be borne by shippers and receivers. Fixtures on an f.i.o. basis often imply that charterers insist upon appointing their own nominees to act as “ship’s agent” at both ends. This procedure may give rise to difficulties. Although these so-called “charterers’ agents” are paid for by the shipowners and should therefore fully protect their interests, it is natural that in case of clashing interests they may be inclined to be more concerned about protecting charterers’ interests than owners’ interests. The only solution for the shipowners may be to appoint supervisory (or “protecting”) agents to whom the master can apply in case of difficulties, although this procedure involves the payment of a double agency fee.
From the shipowners’ point of view such a condition is attractive, the more so as the loading costs in some ports can vary considerably from port to port. Without knowing the ports to which the ship may be ordered to load, it is difficult to make an accurate estimate of the loading charges if the condition “free in and out” would not apply.