fbpx

Speed Commerce

What Is Free on Board (FOB)? | Speed Commerce

What Is Free on Board (FOB)?

3PL Glossary > Free on Board (FOB)

What Is Free on Board (FOB)?

Free on Board (FOB) is an international trade term used in shipping and commerce to define the point at which the seller fulfills their responsibility for delivering the goods to the buyer. It is one of the Incoterms (International Commercial Terms) established by the International Chamber of Commerce (ICC). FOB specifies that the seller is responsible for all costs and risks associated with delivering the goods to a named port and loading them onto the vessel designated by the buyer. The key distinction of FOB is that the transfer of risk occurs when the goods pass over the ship's rail, at which point the buyer assumes responsibility for the shipment.

What Sets FOB Origin Apart From FOB Destination?

Let's Get Started!

A fulfillment expert will get back to you within 1-2 business days.

What We Do

Our Solutions

Speed Commerce is a leader in eCommerce services for retailers and manufacturers. We provide outsourced services for our clients. To learn more, watch this short video. 

Under FOB terms, the seller is obligated to cover the costs associated with transporting the goods to the agreed-upon port of shipment, as well as the expenses related to loading the goods onto the vessel. Once the goods cross the ship's rail, the risk of loss or damage shifts from the seller to the buyer. FOB is often accompanied by a specific named port, such as "FOB Shanghai," indicating the location where the seller's responsibility ends, and the buyer's obligation begins.

FOB is commonly used in international trade and is advantageous for both buyers and sellers. For buyers, it provides transparency regarding the total cost of acquiring the goods up to the point of shipment, and for sellers, it clarifies their responsibilities and liabilities up to the moment the goods are loaded onto the vessel.

FAQs

It depends. In FOB Origin, the buyer is responsible for the costs of onward transportation, insurance, and customs clearance from the port of origin to the final destination. In FOB Destination, the seller covers the transportation costs to the destination port, and the buyer assumes responsibility for subsequent costs.

Yes. FOB provides the buyer with flexibility and control over the shipping process. The buyer can select the carrier and make shipping arrangements from the point of origin, ensuring more influence over the logistics of the shipment.

Yes. In FOB, the seller is responsible for the costs associated with loading the goods onto the vessel at the port of origin. This cost is typically included in the overall arrangement, and once the goods pass the ship's rail, the risk transfers to the buyer.

Get Started Today!

REQUEST A QUOTE

Once your request is submitted, a fulfillment expert will get back to you within 1-2 business days.