Trade & Incoterms
FOB (Free on Board)
An Incoterm where the seller delivers goods on board the vessel at the named port of shipment. Risk and cost transfer to the buyer once the goods are loaded. The buyer typically arranges ocean freight and insurance from that point.
In depth
FOB is a sea and inland waterway rule only. The seller clears the goods for export and delivers them on board the vessel at the named port of shipment; risk transfers at that point, and the buyer arranges and pays for ocean freight, insurance, and import clearance. FOB is widely — and often wrongly — used for containerised cargo. Containers are handed over at a terminal days before loading, so the seller keeps risk during a period when they no longer control the goods. For containers, FCA is the correct rule. FOB remains appropriate for bulk and breakbulk shipped conventionally.
Key points
- Sea and inland waterway transport only
- Risk passes when goods are on board the vessel
- Seller clears for export; buyer books and pays the main carriage
- Wrong choice for containers — use FCA instead