What is FOB – Free on Board (named port of shipment) ?

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FOB

What is FOB?

FOB, or Free on Board, is an international trade term that describes a trade agreement in which the seller is responsible for clearing goods for export, delivering them to the vessel, and loading them for transport at the named port of departure. 

According to FOB Incoterms, what is each party responsible for?

Under DDP, the seller is responsible for moving the goods to the port of origin and loading them onto the vessel. Once the goods are onboard the vessel, risk and cost is transferred to the buyer. The buyer is then responsible for the main carriage, import clearance, duties, taxes, and transport at the destination. 

When is FOB used?

Free on Board is only applicable to ocean or inland waterway transport and thus can not be used if the main carriage is via air, ground, or rail. With FOB the named place, then, is always a sea port.

Tags: incoterms

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