FOB Value

FOB Value (Free On Board Value) is a commonly used price term in international trade, meaning that the seller completes delivery once the goods are loaded on board the vessel nominated by the buyer at the port of shipment, and the risk then passes to the buyer. The FOB price composition includes the cost of goods, inland transportation, loading charges, and export customs clearance fees, but excludes international freight and insurance premiums. It is mostly used in sea or inland waterway transport, where the buyer is responsible for chartering space and paying freight and insurance. Precautions: the name of the port of shipment must be specified (e.g., FOB Shanghai), and the seller must promptly notify the buyer of the loading information so that insurance can be arranged; if the buyer nominates a shipping company, the seller should verify its credibility. The difference from CIF and CFR is that under CIF the seller pays freight and insurance, under CFR the seller pays freight but the buyer bears insurance, while under FOB both freight and insurance are borne by the buyer. In addition, FOB applies only to water transport, not to air or land transport. Foreign trade practitioners should accurately understand the point of risk division to avoid disputes caused by unclear delivery location or cost bearing.