F.O.B
Definition
Abbreviation (International Trade):
- Free On Board: A standard international trade term (Incoterm) used in sales contracts. It specifies that the seller is responsible for the costs and risks of delivering goods onto a vessel (ship, airplane, etc.) at a named port of shipment. Once the goods are loaded, the risk transfers to the buyer.
Adjective/Adverb:
- Describing a price quote or agreement structured according to the F.O.B. terms.
- Example (in price): The cost is listed as F.O.B. Ho Chi Minh City Port.
Usage Examples
- In a contract clause:
- Hàng hóa được bán theo điều kiện F.O.B. cảng Hải Phòng. (The goods are sold under F.O.B. Hai Phong port terms.)
- In pricing:
- Giá là 10,000 USD F.O.B. Đà Nẵng. (The price is 10,000 USD F.O.B. Da Nang.)
Advanced Usage
- F.O.B. Origin: Indicates the buyer bears all transportation costs and risks from the moment the seller releases the goods at their premises.
- F.O.B. Destination: Sometimes used colloquially to mean the seller is responsible for costs and risk until the goods arrive at a named destination, though this is not the standard modern Incoterm definition.
Variants and Related Words
- C.I.F. (Cost, Insurance, and Freight): A different Incoterm where the seller pays for costs, insurance, and freight to bring the goods to a named port of destination. Risk still transfers to the buyer once goods are loaded on the vessel at the origin port.
- Incoterms: The standardized set of international trade terms published by the International Chamber of Commerce (ICC), which includes F.O.B.
Synonyms
- Free On Board: The full, unabbreviated term.
- FOB: A common alternative spelling without periods.
Important Notes
- Risk Transfer: The key concept in F.O.B. is the precise point where the risk of loss or damage shifts from seller to buyer (the ship's rail at the port of loading, in traditional interpretation).
- Costs: The seller typically pays for all costs (export packaging, documentation, inland freight, loading, origin port charges) until the goods are loaded. The buyer pays for main carriage (ocean/air freight), insurance, unloading, and destination charges.