The further clarify, let’s track the FOB shipping process: Once on the ship, all liability transfers to the buyer.Įxpert's Note The FOB incoterm is only applied to shipments being sent by sea or waterway. ‘On board’ simply means that the goods are on the ship.Īs such, FOB shipping means that the supplier retains ownership and responsibility for the goods until they are loaded ‘on board’ a shipping vessel. In other words, the supplier is “free” of responsibility.
The term ‘free’ refers to the supplier’s obligation to deliver goods to a specific location, later to be transferred to a carrier. What is the Difference Between FOB and CIF?įirst, let’s define what FOB (free on board) means by breaking it down word-by-word.What is the Difference Between FOB and CFR?.What is the Difference Between FOB and FAS?.FOB Pricing: What is the Difference Between FOB and other ocean shipping incoterms?.What is the Difference Between FOB Shipping Point and FOB Destination?.This guide cuts through the legal jargon and explains everything you need to know about this common incoterm in plain English. Of the 11 different incoterms that are currently used in international freight, Free on Board (FOB) is the one that you will encounter most frequently.
It also has implications for your total freight costs. It plainly lays out how far along into the process the supplier will ensure that your goods are moved and at what point the buyer takes over the shipment process. Simply put, an incoterm is the standard contract used to define responsibility and liability for the shipment of goods. One of the most prominent examples of this standardization is the International Commercial Term, or incoterm. This means that no matter where you ship from, you will encounter the same regulations. Part of the Comprehensive Incoterms GuideĪnd while no two countries have exactly the same laws, when it comes to freight there are many precepts that are standardized worldwide.
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