FOB means Free on Board, the shipper will arrange the consignment on Port of Loading as mentioned in the agreement.

Definition

In an international transaction, the incoterm FOB is a form for "free on board" or “freight on board”. The seller has passed the responsibility and ownership of the goods to the buyer. The seller is not responsible if the products are damaged or destroyed in transit. The customer pays for transporting the products from the factory and assumes full responsibility upon delivery.

If the shipping document mentions “FOB destination”, then the seller has to take the risk until the goods reach the buyer.

Responsibilities and Considerations

Transfer of Responsibility

The seller is responsible for loading the goods onto the buyer's designated shipping vessel.

Once the goods pass the ship's rail at the port of shipment, the responsibility and risk transfer to the buyer.

Cost Allocation

The seller covers all costs up to the point of loading, including domestic transport, export clearance, and loading charges.

The buyer takes on costs from the point of loading onwards, including sea freight, insurance, import clearance, and inland transport at the destination.

Applicable Mode of Transport

FOB is typically used for sea and inland waterway transport.

Usage Considerations

It's important to specify the port of shipment to avoid ambiguity in responsibility.

While suitable for bulk and break-bulk cargo, FCA (Free Carrier) might be more appropriate for containerized goods.

※The terms of sale in any deal are set by the participants, the buyer and the seller, not the country.

A buyer with no logistics team may prefer CIF so they don’t have to arrange the shipping where a large importer with their own team of shipping experts can arrange cheaper freight than the seller.

Being aware of Incoterms allows you to navigate through international shipping, and in need of a reliable international logistics carrier, contact us.