FOB
Category: trade
Free On Board — seller's responsibility ends when goods are loaded onto the vessel.
FOB (Free On Board) is an Incoterm where the seller delivers goods onto the vessel at the named port of shipment, and risk transfers to the buyer at that point. The buyer is responsible for freight, insurance, and all costs from the port of origin. FOB pricing excludes shipping and insurance, so customs duties are calculated on the FOB value plus freight and insurance charges.
Examples
- • A seller quoting FOB Shenzhen means they deliver goods to the Shenzhen port and load them onto the vessel; the buyer pays for ocean freight and insurance from that point.
- • Under FOB terms, the buyer controls freight costs and carrier selection, which can be advantageous for large-volume importers.
- • Customs valuation on FOB terms typically adds freight and insurance charges to the declared value for duty calculation.