The shipping term fob stands free on board. Shipping contracts and purchase orders often spell out the delivery and payment terms, the date when the loss risk switches from the seller to the buyer, and the party responsible for paying insurance and freight premiums. Fob is a shipping term that defines when the buyer or seller becomes liable for the goods transported. Learn the difference between fob origin and fob destination, and the pros and cons of each type for domestic and international transactions. Fob stands for free on board or freight on board and indicates when the seller or the buyer is responsible for the goods in transit.
What does free on board (fob) mean in shipping? If your business buys or sells goods overseas, choosing the best incoterms rule for your cargo can sometimes be confusing, especially if youre new to the world of overseas freight shipping. Fob is a shipping term that indicates when the responsibility and risk of goods transfer from seller to buyer. Learn about the different types of fob contracts, how they affect costs, accounting, and international trade. The term free refers to the suppliers obligation to deliver goods to a specific location, later to be transferred to a carrier. In other words, the supplier is free of responsibility. Free on board, or fob is an incoterm, which means the seller is responsible for loading the purchased cargo onto the ship, and all costs associated. The point the goods are safe aboard the vessel, the risk transfers to the buyer, who assumes the responsibility of the remainder of the transport.
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