FOB - Free on Board
Also known as: FOB clause, Free on Board
Incoterms® clause exclusively for sea transport: the seller delivers on board a ship nominated by the buyer at the port of shipment; from that moment the buyer bears costs and risk.
Description
FOB (Free on Board) is one of the oldest and still most widely used Incoterms® clauses — it originated in 19th-century British maritime trade. Under Incoterms® 2020 it applies exclusively to sea and inland waterway transport; for containers pre-carried by truck or rail to a terminal the ICC recommends FCA instead.
The seller bears all costs and risks until the goods are on board the vessel nominated by the buyer at the agreed port of shipment — this includes packaging, inland transport to the port, export formalities and loading. From the moment the goods are on board, all costs (sea freight, insurance, discharge in the destination port, import) and risks pass to the buyer. In Far East textile sourcing FOB is the standard for container shipments particularly from China, Bangladesh, Vietnam and India: the seller delivers to a nominated port such as Shanghai, Chittagong or Ho Chi Minh City, the buyer books the shipping line, customs and onward carriage. Typical invoice lines in textile exports therefore read FOB Shanghai or FOB Ningbo.
Properties
| Mode of transport | Sea or inland waterway only |
|---|---|
| Cost/risk transfer | On board the vessel at port of shipment |
| Seller bears | Packaging, pre-carriage, export, loading |
| Buyer bears | Sea freight, insurance, import, onward carriage |
Related product categories
Sources & references
1- ICC Incoterms® 2020 iccwbo.org https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/
