28/01/2021 FOB – Free on Board (Port of Shipment) - Incoterms 2020 - Incoterms

FOB – Free on Board (Port of Shipment) - Incoterms 2020

Explained

By using FOB the seller must clear the goods for export and delivers when the goods pass the ship’s rail at the
agreed port. This term is only used for water transportation either sea or inland water. If both parties do not
agree to have goods delivered on board, then FCA is the term to be used.

Doing Business

This term was commonly used when commodities were sold and the carrier con rmed the reception of goods
“on board”. When goods are packed in containerized cargo, then FCA is the most recommended term to use.
Because goods will be delivered in the container terminal prior to being loaded on the vessel. The term is used
in commodities like oil, bulk cargo or grain. There is a common misuse of this term when goods are loaded onto
a truck, in that case FCA is the right term to use. In FOB, origin terminal handling charge and all other costs
associated to move the goods on board are paid by the seller.

FOB suits better for bulk cargo and not containerized cargo (use FCA instead). FOB can only be used for ocean
transportation, the seller’s responsibility ends when the goods are placed on board of the vessel. All cost after
loaded onboard must be assumed by the buyer.

Export customs clearance and origin terminal handling charge must be assumed by seller. This term is
traditionally created for bulk transportation, where some cargo can be lost during the process of loading (i.e.
grains taken away by wind or boxes dropped in the ocean). It is still the most misused term.

https://internationalcommercialterms.guru/incoterms-fob/ 1/4
28/01/2021 FOB – Free on Board (Port of Shipment) - Incoterms 2020 - Incoterms

Examples

Buying bulk corn:

FOB Valparaiso port, Chile - Incoterms® 2020

Buying bulk potatoes:

FOB Port of Cape Town - Incoterms® 2020

Seller and Buyer obligations

THE SELLER’S OBLIGATIONS THE BUYER’S OBLIGATIONS

1. General 1. General
The seller must deliver the goods, commercial invoice, The buyer must pay the price of goods as agreed.
and any evidence of conformity.

2.
THEDelivery
SELLER’S OBLIGATIONS 2.
THETaking Delivery
BUYER’S OBLIGATIONS
Deliver the goods by placing on board the vessel The buyer takes the goods after delivered.
https://internationalcommercialterms.guru/incoterms-fob/ 2/4
28/01/2021 FOB – Free on Board (Port of Shipment) - Incoterms 2020 - Incoterms

nominated by the buyer at the loading point, in the

agreed date or period. In a customary manner at the
port

3. Risks 3. Risks
All risk of loss/damage until goods have been All risk of loss/damage from the time or end of the
delivered period agreed for delivery. If the buyer fails to
nominate a carrier, or if the carrier doesn’t arrive, the
risk is under the buyer.

4. Carriage 4. Carriage
No obligation to make a contract of carriage. Provide Contract the carriage from the place of delivery unless
at buyers risk and cost, information for arranging agreed the seller will contract the carrier.
carriage. If agreed, the seller must contract the carrier.

5. Insurance 5. Insurance
No obligation. Provide at buyers risk and cost, any No obligation to insure the goods.
required information.

6. Delivery/transport document 6. Delivery/transport document

Proof of delivery at sellers cost and a transport Accepts the proof of delivery
document if arranged by seller

7. Export/Import clearance 7. Export/Import clearance

All export clearance expenses (license, security, Assist with export clearance. Pay for import clearance
inspection, etc). Assist with import clearance and formalities (licenses, security, o cial
documentation).

8. Checking 8. Checking
The seller must check, count, weight, mark, and No obligation.
package goods

9. Allocation of cost 9. Allocation of cost

Pay all the cost until delivery. Cost of proof of delivery. Pay from the time goods delivered. All costs for
Duties and taxes for export. All costs related to assistance on getting carriage, insurance, delivery, and
providing assistance in obtaining documents to the customs documentation. Pay duties and taxes for
buyer import or transit. Any additional cost if the carrier is
not nominated or carrier fails to collect goods.

10. Notices 10. Notices

Give notice that
THE SELLER’S goods have been delivered or the
OBLIGATIONS Notify the vessel
THE BUYER’S name, loading point and time or
OBLIGATIONS
vessel failed to collect the goods. period.
https://internationalcommercialterms.guru/incoterms-fob/ 3/4
28/01/2021 FOB – Free on Board (Port of Shipment) - Incoterms 2020 - Incoterms
essel a led to collect t e goods. pe od.

email address

Subscribe

https://internationalcommercialterms.guru/incoterms-fob/ 4/4