FOB Value (Free On Board) is a commonly used price term in international trade. It means the seller fulfills its delivery obligation once the goods are loaded on board the vessel nominated by the buyer at the specified port of shipment, and the risk then passes to the buyer. The FOB price typically includes the cost of goods, inland freight, loading charges, and export customs clearance fees, but excludes international freight and insurance. It is mostly used in sea or inland waterway transport, where the buyer is responsible for chartering/book ing space and paying freight and insurance. Points to note: the seller must deliver the goods at the specified port of shipment within the stipulated time and notify the buyer promptly; the buyer must arrange the vessel on time, otherwise it may bear additional costs. Compared with CIF (Cost, Insurance and Freight), under FOB the buyer bears more responsibilities and costs; compared with CFR (Cost and Freight), FOB does not include international freight. Foreign trade practitioners need to clarify the port of shipment, the point of risk transfer, and the allocation of costs to avoid disputes.
📝 Examples
1. The FOB value of this batch of goods is USD 50 per piece, with Shanghai Port as the port of shipment; the buyer needs to arrange ocean shipping and pay the freight. (Note: The seller completes delivery at Shanghai Port, the risk passes to the buyer, and the buyer bears subsequent freight and insurance.)
2. According to the contract, we conclude the deal on FOB Dalian terms; the seller is responsible for loading the goods onto the vessel nominated by the buyer and bears all costs before loading. (Note: This clarifies that the seller's responsibility ends upon loading, and the buyer is responsible for chartering the vessel and subsequent costs.)
💡 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