Incoterms FOB: Free on Board

Named Place Requirement: Port of Shipment

Applies to:       Sea and inland waterway  Sea and inland waterway only

Free on Board Incoterms FOB
(Click to enlarge)

Under the terms of FOB (short for “Free on Board”), the seller clears the goods for export and ensures they are delivered to and loaded onto the vessel for transport at the named port of departure.

The buyer takes over risk and costs, including import clearance and duties, as soon as the goods are loaded onto the transport vessel at the port of departure.

FOB only applies to ocean or inland waterway transport. As such, the named place is always a port. It does not apply if the main carriage is via air, ground or rail.

This term is commonly used for bulk cargo (such as oil or grain) or freight from Asia.

lightbulb   Seller pays all costs up to main carriage, then buyer takes over all cost responsibility.

 

FOB Incoterm Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation
  • Export packaging and marking
  • Export licenses and customs formalities
  • Pre-carriage and delivery
  • Loading charges
  • Delivery onboard vessel at named port of shipment
  • Proof of delivery
  • Cost of pre-shipment inspection

Buyer’s Obligations

  • Payment for goods as specified in sales contract
  • Main carriage
  • Discharge and onward carriage
  • Import formalities and duties
  • Cost of pre-shipment inspection (for import clearance)

Get ‘Free on Board’ guidance from Incoterms 2020 experts

AIT’s global network of experienced transportation management professionals is well-versed in the Incoterms rules and all shipping terms. Have a question about FOB obligations? Contact a representative today.

AIT has a robust global logistics network, with more than 60 offices worldwide.

See our Global Network