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




What is FOB? 

Free on Board (FOB) is an international commercial term, used to indicate when the liability and ownership of goods gets transferred from a seller to a buyer.  

Under the FOB Incoterms, the seller is responsible for all costs and risks, until the goods are loaded aboard the vessel at a port of shipment.

When should FOB be used? 

FOB should only be used for non-containerized ocean freight. Sometimes, the FOB Incoterms are used for incorrect modes of transportation, which introduces contractual risks and complications. The proper Incoterm for all other modes of transport is FCA.  

According to FOB Incoterms, when does the seller’s obligation end? 

The seller’s responsibility ends when the goods are placed on board of the vessel. Because of this, FOB contracts require the seller to deliver goods on a vessel designated by the buyer as customary at the port in question. The seller is responsible for arranging export clearance.  

What is the buyer responsible for according to FOB? 

According to FOB, the buyer is responsible for the cost of ocean freight transportation, Bill of Lading fees, insurance, unloading, and door delivery.  




Tags: incoterms

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