FOB
Free On BoardFOB
Incoterms 2020
Sea / inland waterway
When goods pass the ship's rail at the named port of shipment
Cost responsibility
Seller pays until goods are loaded on board. Buyer pays sea freight onward.
Seller obligations
- S1Export clearance
- S2Pre-carriage to port
- S3Loading onto vessel
Buyer obligations
- B1Main sea carriage
- B2Insurance (if desired)
- B3Import clearance
- B4Import duties and taxes
- B5Unloading at destination
When to use FOB
The most commonly used sea freight Incoterm. Buyer nominates the vessel and pays sea freight. Ideal when buyer has favorable freight contracts. Standard in many commodity trades.
When NOT to use FOB
Multi-modal transport or container shipments picked up at an inland point (use FCA instead). Air freight. When seller should arrange sea freight (use CFR or CIF).
Common mistakes with FOB
- !Using FOB for non-sea shipments — FOB is strictly for sea and inland waterway
- !Confusing FOB with the US domestic 'FOB Destination' / 'FOB Origin' convention, which is different from Incoterms FOB
- !Using FOB for container shipments that are delivered to a terminal, not loaded by the seller onto a named vessel