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FOB Free on Board.

Seller loads the goods on board the vessel the buyer nominated. ICC advises FCA instead for containers, which are handed over at a terminal, not at the ship's rail.

Where risk passes

FOB named port of shipment
SellerCarrierAlongsideOn boardImport portDestinationUnloaded
Risk passesOn board the vessel at the port of shipment
Transport modeSea and inland waterway only
Main carriage booked byBuyer
Cargo insuranceNot required; buyer insures if he wants to
Export clearanceSeller
Import clearance and dutiesBuyer
Seller pays5 of 13 cost steps

Who pays what under FOB

CostPaid by
Loading at originSeller
Export customs declarationSeller
Carriage to port of exportSeller
Unloading of truck in port of exportSeller
Loading on vessel/airplane in port of exportSeller
Carriage (sea/air) to port of importBuyer
InsuranceBuyer
Unloading in port of importBuyer
Loading on truck in port of importBuyer
Carriage to place of destinationBuyer
Import customs clearanceBuyer
Import duties and taxesBuyer
Unloading at destinationBuyer

Sources: ICC, Incoterms® 2020; cost split as given inWikipedia, Incoterms (section "Allocations of costs"). Duties, fit and pitfalls below are Navo's own summary, not ICC text. Incoterms® is a trademark of the ICC.

When FOB fits

Bulk and break-bulk loaded straight onto the vessel the buyer nominated.

What to watch

  • Widely used for containers, but ICC advises FCA there: the seller loses control at the terminal yet keeps the risk until the box is on board.
  • Terminal handling charges at origin (THC) are a frequent dispute; state who pays them.
  • The buyer nominates the ship; delays by the buyer's vessel move risk and cost to the buyer.
  • Shipping under FOB? Compare freight rates and check sailings.