freeonboard

Free On Board, often abbreviated as FOB, is a common shipping term used in international and domestic trade. It specifies the point at which the responsibility for goods transfers from the seller to the buyer. When goods are sold FOB, the seller is responsible for delivering the goods to a specified location, such as a port of origin or a vessel. Once the goods reach this designated point and are loaded onto the buyer's nominated carrier or vessel, the risk of loss or damage passes to the buyer.

The seller's obligations under FOB typically include preparing the goods, arranging and paying for transportation to the named port of shipment, and completing export customs formalities. The buyer, from the point of FOB, assumes responsibility for all subsequent costs and risks. This includes ocean freight, insurance, unloading, import duties, and transportation from the destination port to their final location.

There are variations of FOB, such as FOB Shipping Point and FOB Destination. FOB Shipping Point means the buyer takes ownership and responsibility as soon as the goods leave the seller's premises. FOB Destination means the seller retains responsibility until the goods reach the buyer's specified destination. Understanding the specific FOB term used in a contract is crucial for determining liability and cost allocation during the shipping process.