FOB, or Free on Board, is an Incoterm used in ocean and inland waterway shipping to define when risk transfers from the seller to the buyer. Under FOB, the seller is responsible for delivering export-cleared goods onto the vessel named by the buyer at the agreed port of shipment. Once the goods are on board, the buyer assumes the risk of loss or damage and usually pays for the main ocean freight, insurance, destination charges, import clearance, and onward delivery.
Key Responsibilities Under FOB
- Seller: export clearance, delivery to named port, loading goods on board
- Buyer: ocean freight, cargo insurance, import clearance, all destination costs
When FOB Is Used
- Most commonly used Incoterm for ocean freight between Asia and the U.S.
- When the buyer wants to control carrier choice and ocean freight cost
- When the buyer has a freight forwarder in the country of export
Related terms: EXW, FCA, Incoterms, Export Declaration.
