Incoterms Rules
FOB — Free On Board
Under FOB (Free On Board) terms, the seller is responsible for delivering the goods to the port of shipment and loading them on board the vessel. The risks transfer to the buyer once the goods are on board. The seller clears the goods for export; the buyer pays for the sea freight, insures the cargo if it wishes, and clears import. FOB is one of the most commonly used terms in maritime trade, especially for bulk commodities such as grain.
Who does what
| Transport | Sea and inland waterway |
|---|---|
| Export clearance | Seller |
| Import clearance | Buyer |
| Main carriage paid by | Buyer |
| Insurance | Not required |
| Risk passes to the buyer | When the goods are loaded on board the vessel at the port of shipment |
When to use it
The classic term for bulk commodities such as grain loaded at a port: the seller loads on board, the buyer books the vessel and pays the sea freight. Sea and inland waterway only.
What to watch
Risk passes once the goods are on board, not at the ship's rail as under older editions. Do not use FOB for containers handed over at a terminal: use FCA.