FOB (Free On Board) means delivery is completed when the seller places the goods on board the vessel nominated by the buyer at the specified port of shipment. Risk transfers to the buyer once the goods are loaded on board. The seller is responsible for export customs clearance and all costs before loading, while the buyer bears freight, insurance, and import customs clearance after loading. It applies to sea or inland waterway transport. Usage scenario: The buyer usually has a designated freight forwarder or shipping company and can secure favorable freight rates. Precautions: The port of shipment must be specified (e.g., FOB Shanghai); the seller must promptly send a shipping notice, otherwise the buyer may be unable to insure; if the vessel nominated by the buyer fails to arrive on time, risk transfers earlier. Unlike CIF and CFR, under FOB the buyer arranges transport and insurance, and the seller does not bear freight or insurance costs. Compared with FCA, FOB applies only to water transport and has a different risk transfer point. In practice, non-standard expressions such as 'FOB factory' should be avoided.
📝 Examples
1. We quote on FOB Shanghai terms; please designate the shipping company and pay the ocean freight. (This indicates the seller delivers at the port of shipment and the buyer is responsible for transport.)
2. The contract stipulates FOB Ningbo; the seller must notify the buyer 48 hours before shipment so that the buyer can arrange insurance. (This emphasizes the seller's notification obligation and the risk transfer point.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner