FOB - Free On Board (named port of loading)

The meaning of it is that the delivery is completed for the supplier when the product is on board the ship hired by the recipient. FOB is intended only for transporting goods by sea or inland waterway. The responsibilities of the supplier and the recipient are shared equally. Supplier pays export duty, packaging the goods and transportation of the cargo to the port, loads the goods on board and provides the relevant documentation. Recipient hires and pays the ship, insures the goods, pays import duty, relevant certificates, licenses, etc. FOB is designed to transport goods in bulk or in containers, and also for transportation of heavy equipment

Who covers the logistics charges?

Distribution of costs according to the Incoterm negotiated in the contract. Classification according to the increased level of obligations for the seller.

Seller’s Obligations

• Goods, commercial invoice and documentation
• Export packaging and marking
• Export licenses and customs formalities
• Pre-carriage and delivery
• Loading charges
• Delivery onboard vessel at named port of shipment
• Proof of delivery
• Cost of pre-shipment inspection

Buyer’s Obligations

• Payment for goods as specified in sales contract
• Main carriage
• Discharge and onward carriage
• Import formalities and duties
• Cost of pre-shipment inspection (for import clearance)

Bottom Line

The Free on Board Incoterm is an important tool in international trade. It clearly defines the responsibilities of both the seller and the buyer in a transaction, and is easy to understand and implement. It is important, however, to be aware of the other Incoterms available and to choose the one that best suits the needs of all parties involved in the transaction.