Incoterms 2020
FOB, Free on Board
The most used and most misused Incoterm. Risk passes once the goods are on board the vessel, which only makes sense if you are actually loading them onto one.
- Group
- F
- Mode
- Sea and inland waterway only
FOB is the term everyone knows, and it is genuinely simple: the seller loads the goods on board the vessel the buyer has nominated and clears them for export. From the moment the cargo is on board, risk and cost sit with the buyer.
The problem is that almost nobody who uses FOB is actually loading goods onto a ship. Containerised cargo is delivered to a terminal, where it is out of the seller’s control for days before it is loaded. Under a literal reading of FOB the seller still carries risk during that period, without any ability to manage it. For containers, FCA at the terminal describes what actually happens and is the correct choice.
Despite that, FOB remains the default in a great deal of Asian trade, and if your supplier insists on it, understanding exactly where your risk begins matters more than winning the argument.
The seller is responsible for
- Deliver the goods on board the nominated vessel
- Clear the goods for export
- Pay all costs up to and including loading
- Provide the commercial documents and proof of delivery
The buyer is responsible for
- Nominate the vessel and contract the ocean carriage
- Pay the ocean freight and all onward costs
- Bear all risk once the goods are on board
- Handle import clearance, duty and taxes
Risk transfers
When the goods are on board the vessel at the named port of shipment.
Costs transfer
At the same point, including loading costs.
Best used for
Bulk and breakbulk cargo genuinely loaded aboard a named vessel.
Watch out for
For containers the seller keeps risk in the terminal with no control over the goods. FCA is the correct rule, even if FOB is the habit.
Related services
Tell us what you need to move.
Send the supplier city or port of loading, the volume and weight, and the date the goods are ready. We will come back with a landed cost and a realistic transit time, usually within one working day.